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As filed with the Securities and Exchange Commission on December 13, 1996.
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Pre-effective Amendment No. [ ]
Post-effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. [ ]
Investment Services for Education Associations Trust
(Exact name of Registrant as Specified in Charter)
568 High Street
Pottstown, Pennsylvania 19464
(Address of Principal Executive Office (ZIP Code))
Registrant's Telephone Number: (610) 327-2255
Michael P. Malloy
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practical after the
effective date of this Registration Statement.
Pursuant to the provisions of Rule 24f-2 under the Investment Act of 1940, the
Registrant hereby elects to register an indefinite number of shares of its
beneficial interest, $.0001 par value per share, of all series and classes of
the Registrant, now existing or hereafter created, under the Securities Act of
1933.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
CROSS-REFERENCE SHEET
Between Items Enumerated in Part A
of Form N-1A and Prospectus
ITEM NUMBER CAPTION
OF FORM N-1A IN PROSPECTUS
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1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial *
Information
4. General Description The Trust; Eligible Participants;
of Registrant Investment Objective and
Policies; General Information
5. Management of Fund Management of the Fund
5a. Management's Discussion *
of Fund Performance
6. Capital Stock and General Information;
Other Securities Distributions and Taxes
7. Purchase of Securities How to Invest in the Fund
Being Offered
8. Redemption or Repurchase Redemptions
9. Pending Legal Proceedings *
Between Items Enumerated in Part B
of Form N-1A and Statement of Additional Information
ITEM NUMBER CAPTION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information *
and History
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13. Investment Objectives Investment Objective and
and Policies Management Policies
14. Management of the Fund Management of the Fund
15. Control Persons and Management of the Fund
Principal Holders of
Securities
16. Investment Advisory Investment Advisory Agreement;
and Other Services Consulting Agreement
17. Brokerage Allocation Portfolio Transactions
and Other Practices
18. Capital Stock and Information About the Fund
Other Securities
19. Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value
Being Offered
20. Tax Status Additional Information About
Taxes
21. Underwriters Distribution Agreement
22. Calculation of Fund Performance
Performance Data
23. Financial Statements *
* Omitted since answer is negative or inapplicable
<PAGE> 4
PART A - PROSPECTUS
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PROSPECTUS _____________, 1996
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INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
The Investment Services for Education Associations Money Market Fund (the
"Fund") is an investment portfolio of the Investment Services for Education
Associations Trust (the "Trust"), which is an open-end, management investment
company. The Fund operates as a money market mutual fund, with the goal to
provide as high a level of current income as is consistent with the preservation
of capital and liquidity. Investment in the Fund is limited to investors who are
education related entities with charitable benevolent purposes.
Participants may invest or redeem shares without charge or penalty.
Unlimited checkwriting redemption privileges are available to Participants.
This Prospectus sets forth concisely information about the Fund that a
person should know before investing. It should be read and retained for future
reference. Additional information about the Fund, contained in a Statement of
Additional Information dated __________, 1996, has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. For a free copy, write to the address or call the telephone number
listed under "General Information" in this Prospectus.
TABLE OF CONTENTS
EXPENSE SUMMARY............................................................ 1
THE TRUST; ELIGIBLE PARTICIPANTS........................................... 2
INVESTMENT OBJECTIVE AND POLICIES.......................................... 2
HOW TO INVEST IN THE FUND.................................................. 5
REDEMPTIONS................................................................ 6
SHAREHOLDER SERVICES....................................................... 7
MANAGEMENT OF THE FUND..................................................... 8
YIELD INFORMATION.......................................................... 10
DISTRIBUTIONS AND TAXES.................................................... 11
GENERAL INFORMATION........................................................ 13
Shares of the Fund are not bank deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by, guaranteed by,
obligations of or otherwise supported by the U.S. Government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other
governmental agency. The Fund seeks to maintain its net asset value per share at
$1.00 for purposes of purchases and redemptions, although there can be no
assurance that it will be able to do so on a continuous basis.
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Investment in the Fund involves investment risk, including the possible loss of
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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EXPENSE SUMMARY
The purpose of the following table is to assist you in understanding the
various costs and expenses borne by the Fund. Investors bear these expenses
indirectly because such expenses reduce the amount of income paid by the Fund to
investors as dividends.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE>
<S> <C>
Management Fees (After Fee Waiver) (1)................................. .30%
Other Expenses (After Expense Reimbursements).......................... .55%
---
Total Fund Operating Expenses (After Fee Waiver and Expense
Reimbursement)......................................................... .85%
===
</TABLE>
(1) No management fees are payable through the period ending ____________,
1997. Thereafter, fees are payable at an annual rate of .30% for the
average daily net assets. Until ____________, 1997, and thereafter subject
to revision or termination upon 90 days' notice to the Fund, Cadre
Financial Services, Inc. ("Cadre Financial") has agreed to waive fees and
reimburse expenses, to the extent necessary, to maintain the Fund's total
operating expenses (excluding interest, taxes and extraordinary expenses)
at an annual rate of not more than .85% of the Fund's average net assets
for the particular fiscal year. Absent these fee waivers and expense
reimbursements, Total Fund Operating Expenses would be ___% of the Fund's
average net assets (of which .30% would consist of management fees).
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS
<S> <C> <C>
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the
end of each time period. $9 $27
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL
INVESTMENT RETURN AND OPERATING EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED. THE FUND IS NEW AND THE ABOVE FIGURES ARE BASED ON ADJUSTMENTS AND
EXPENSES EXPECTED TO BE INCURRED DURING THE FUND'S CURRENT FISCAL YEAR.
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THE TRUST; ELIGIBLE PARTICIPANTS
The Trust is a Delaware business trust. The Fund is a diversified
investment portfolio of the Trust. Only education related entities with
charitable benevolent purposes are eligible to invest in the Fund.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE. The objective of the Fund is to provide as high a
level of current income as is consistent with the preservation of capital and
liquidity. There can be no assurance that the Fund's investment objective will
be achieved.
To achieve its investment objective, the Fund invests in short-term money
market instruments, consisting exclusively of securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, time deposits and
certificates of deposit, bankers' acceptances, repurchase agreements and high
grade commercial paper and other short-term corporate obligations.
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing its securities pursuant to Rule 2a-7 ("Rule 2a-7") under the Investment
Company Act of 1940 (the "1940 Act"), certain requirements of which are
summarized below. There can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
The Fund is required to maintain a dollar-weighted average portfolio
maturity of 90 days or less, and purchase only instruments having remaining
maturities of 13 months or less. It will invest only in U.S. dollar denominated
securities which present minimal credit risks, as determined in accordance with
procedures established by the Board of Trustees, and will be "Eligible
Securities" as defined by the Securities and Exchange Commission. Eligible
Securities are (a) securities that are either (i) rated at the time of purchase
in one of the two highest rating categories for debt obligations by at least two
nationally recognized statistical rating organizations (or one rating
organization if the instrument was rated by only one such organization) or, (ii)
are comparable in priority and security with an instrument issued by an issuer
which has such ratings, and (b) securities that are unrated but are of
comparable quality as determined in accordance with procedures established by
the Board of Trustees. The nationally recognized statistical rating
organizations currently rating instruments of the type the Fund may purchase are
Moody's Investors Service, Inc., Standard and Poor's Rating Group, Division of
McGraw Hill, Duff & Phelps, Credit Co. and Fitch Investors Service, Inc. Their
rating
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criteria are described in the Appendix to the Fund's Statement of Additional
Information.
PORTFOLIO SECURITIES. The Fund may purchase securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government,
for example, Government National Mortgage Association pass-through certificates,
are supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the U.S. Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the discretionary authority of the U.S.
Government to purchase certain obligations of the agency or instrumentality; and
others, such as those issued by the Student Loan Marketing Association, are
supported only by the credit of the agency or instrumentality. Securities issued
or guaranteed by the U.S. Government and its agencies and instrumentalities have
historically involved little risk of loss of principal if held to maturity.
However, no assurance can be given that the U.S. Government would provide
financial support to any agency or instrumentality if it is not obligated to do
so by law.
The Fund may purchase U.S. dollar denominated bank obligations such as
time deposits, certificates of deposit and bankers' acceptances. Time deposits
are non-negotiable deposits maintained in a banking institution for a specified
period of time (in no event longer than seven days) at a stated interest rate.
Certificates of deposit are certificates evidencing the obligation of a bank to
repay funds deposited with it for a specified period of time. Bankers'
acceptances are credit instruments evidencing the obligation of a bank to pay a
draft drawn on it by a customer. These instruments reflect the obligations both
of the bank and of the drawer to pay the face amount of the instrument upon
maturity.
The Fund may also enter into repurchase agreements. Repurchase agreements
involve the acquisition by the Fund of an underlying debt instrument, subject to
the seller's agreement to repurchase the instrument at an agreed upon time and
price. The Fund's custodian or sub-custodian will have custody of, and will hold
in a segregated account, securities acquired by the Fund under a repurchase
agreement. Repurchase agreements are considered by the staff of the Securities
and Exchange Commission to be loans by the Fund. The Fund will enter into
repurchase agreements only with domestic banks with total assets in excess of
one billion dollars or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type in
which the Fund may invest. The seller under a repurchase agreement will be
required to maintain the value of the securities subject to the agreement in an
amount that exceeds the repurchase price, and such value will be
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monitored by Cadre Financial on an ongoing basis. Certain costs may be incurred
by the Fund in connection with the sale of the securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Fund may be delayed or limited.
The Fund will consider on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements.
The Fund's investments in commercial paper consist of short-term,
unsecured promissory notes issued to finance short-term credit needs. The
commercial paper purchased by the Fund may consist of direct obligations issued
by domestic and foreign entities.
The Fund also may purchase floating and variable rate demand notes, which
are obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals not exceeding one year, in each case upon not more than 30
days' notice. Variable rate demand notes include master demand notes which are
obligations that permit the Fund to invest fluctuating amounts, which may change
daily without penalty, pursuant to direct arrangements between the Fund, as
lender, and the borrower. The interest rates on these notes fluctuate from time
to time. The issuer of such obligations normally has a corresponding right,
after a given period, to prepay in its discretion the outstanding principal
amount of the obligations plus accrued interest upon a specified number of days'
notice to the holder of such obligations. The interest rate on a floating rate
demand obligation is based on a known lending rate, such as a bank's prime rate,
and is adjusted automatically each time such obligation is adjusted
automatically at specified intervals. Frequently, such obligations are secured
by letters of credit or other credit support arrangements provided by banks.
Because these obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments will generally be traded,
and there generally is no secondary market for these obligations, although they
are redeemable at face value. Accordingly, where these obligations are not
secured by letters of credit or other credit support arrangements, the Fund's
right to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Such obligations frequently are not rated by credit rating
agencies, and the Fund may invest in unrated obligations only if Cadre Financial
determines that at the time of investment the obligations are of comparable
quality to the other obligations in which the Fund may invest in accordance with
procedures established by the Board of Trustees. The Fund will not invest more
than 10% of the value of its net assets in floating or variable rate demand
obligations as to which it cannot exercise
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the demand feature on not more than seven days' notice if there is no secondary
market available for these obligations, and in other securities that are not
readily marketable. Cadre Financial will continuously monitor the
creditworthiness of issuers of variable and floating rate instruments in which
the Fund invests, and their ability to repay principal and interest.
CERTAIN ADDITIONAL POLICIES. This paragraph describes certain fundamental
policies of the Fund which cannot be changed without approval by the holders of
a majority (as defined in the 1940 Act) of the Fund's outstanding shares. The
Fund (i) may not borrow money or issue senior securities, except to the extent
permitted by the 1940 Act or (ii) purchase the securities of any issuer (other
than obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements collateralized by such obligations,
and other than as permitted under Rule 2a-7) if, as a result, (a) more than 25%
of the value of the Fund's total assets would be invested in the securities of a
single issuer, or (b) with respect to 75% of its total assets, more than 5% of
the value of its total assets would be invested in the securities of a single
issuer, or it would own more than 10% of the outstanding voting securities of a
single issuer.
HOW TO INVEST IN THE FUND
ELIGIBILITY FOR PARTICIPATION. Only education associations with a
charitable benevolent purpose are eligible to invest in the Fund.
INVESTING IN THE FUND. An initial investment in the Fund must be preceded
or accompanied by a properly completed registration form. A properly completed
registration form must be on file when making a redemption from an account. The
registrations should be forwarded to:
Attention: New Accounts
Cadre Financial Services, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
An initial investment of at least $1.00 is required. Subsequent
investments for an existing account may be made by phone and need not be
accompanied by a completed registration form.
All payments should be in U.S. dollars by wire transfer, Depository
Transfer Check ("DTC"), Automated Clearing House Credits ("ACH") or by check.
Purchases will not be effected until payments made in other than Federal Funds
are converted to Federal Funds, which is ordinarily within two business days of
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receipt. Purchase orders are only effected on a day on which both the Fund's
custodian and the New York Stock Exchange (the "Exchange") are open for business
(a "Business Day"). If an order is received by Cadre Financial by 12:00 noon New
York Time on a Business Day and Federal Funds are received by 4:00 pm New York
Time on the same Business Day, the order will be effected that Business Day at
the net asset value per share next determined after receipt by Cadre Financial
of the order. If an order is received by Cadre Financial after 12:00 noon New
York Time on a Business Day or Federal Funds are received after 4:00 pm New York
Time on the same Business Day, the order will be effected on the next Business
Day.
For purchases by wire transfer call the Fund's toll-free number
1-800-221-4524, Ext. 2, and for purchases by DTC or ACH call the Custodian's
toll-free number 1-800-245-6524.
The net asset value per share of the Fund is the value of all securities
and other assets owned by the Fund, less its liabilities, divided by the number
of outstanding shares of the Fund. The net asset value per share of the Fund is
determined on each Business Day as of 12:00 noon New York Time. In computing net
asset value, the Fund uses the amortized cost method of valuation as described
in the Statement of Additional Information under "Determination of Net Asset
Value."
REDEMPTIONS
GENERAL. Participants may request redemption of shares at any time.
Redemption requests should be transmitted to Cadre Financial Services, Inc., 905
Marconi Avenue, Ronkonkoma, New York 11779-7255. When a request is received in
proper form, the Fund will redeem the shares at the next determined net asset
value. Written redemption requests must be signed by an authorized person noted
on the registration form.
Redemption proceeds of at least $10,000 will be wired to any member bank
of the Federal Reserve System, for deposit in a Participant's account, in
accordance with the redemption request. Amounts under $10,000 will be paid by
check.
The Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend or postpone the recordation of the
transfer of its shares) for such periods as are permitted under the 1940 Act.
CHECK REDEMPTION PRIVILEGE. Participants may use the Fund's
free and unlimited checkwriting services by completing a
checkwriting authorization form and signing the two custodian
bank signature cards. Participants may issue checks in any
dollar amount. Checks will be honored only if they are properly
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signed by a person authorized on the signature card. Although the checkwriting
service is free, there is a charge for stop-payments or if the Fund cannot honor
a redemption check due to insufficient funds or other valid reasons.
Checkwriting privileges may be modified or terminated at any time by the Fund.
REDEMPTION BY WIRE OR TELEPHONE. Shares may be redeemed by wire or
telephone as long as the person requesting such withdrawal has been authorized
on the registration form. Wire or telephone requests will generally be honored
the same Business Day as long as the Fund is notified by 12:00 noon New York
Time (earnings stop the same day). The redemption proceeds will be wired to the
Participant's bank account, so long as the amount is $10,000 or more. If less, a
check will be issued in payment of the redemption. No charge is currently
imposed for wiring redemption proceeds. The Fund reserves the right to wire
redemption proceeds up to seven days after receiving the redemption order if, in
the judgment of the investment adviser, an earlier payment could adversely
affect the Fund. In making redemption requests the names of the registered
shareholders and their account numbers must be supplied.
Neither the Fund nor any service provider of the Fund will be responsible
for any loss or expense for acting upon any telephone instructions that are
reasonably believed to be genuine. In attempting to confirm that telephone
instructions are genuine, the Fund will use such procedures as are considered
reasonable.
REDEMPTION PAYMENT BY AUTOMATED CLEARING HOUSE (ACH). Redemption payments
may be by ACH as long as the person requesting the ACH debit is authorized on
the registration form. A participant may call the Fund's toll-free number
1-800-221- 4524, Ext. 2, by 5:00 pm New York Time, and request an ACH
withdrawal. Such withdrawal will become effective the following business day and
will be in the Participant's designated bank account in "collected funds."
Earnings on the Participant's account continue the day the withdrawal request is
initiated but stop the next business day. There is no minimum redemption
payments required for redemption payments by ACH.
SHAREHOLDER SERVICES
Participants may open as many accounts with the Fund as they desire. Each
account may utilize the Fund's free and unlimited checkwriting services.
Participants may call the Fund's toll-free number 1-800-221- 4524, Ext. 2,
prior to 12:00 noon New York Time any Business Day to make an internal transfer
between their different Fund accounts the same day. (Earnings stop accruing in
an account
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when the withdrawal is effected, and start accruing when such transfer is
effected). Participants may call up to 5:00 pm New York Time to make an internal
transfer for the following Business Day. (Earnings continue to accrue until the
transfer takes place).
Participants will receive the confirmation reflecting an opening balance,
activity and closing balance each day their account has activity. A monthly
statement will be sent to each participant, reflecting an opening balance, all
transactions for the month and a closing share balance. In addition, the
statement will reflect the earnings for the month (also year-to-date) and
capital gains for the year.
Participants currently receive the Fund's unaudited financial statements
after the end of each calendar quarter. Once a year, participants will receive
the Fund's audited annual financial statements.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES. The Board of Trustees of the Trust is responsible for
the general supervision of the business and affairs of the Trust.
INVESTMENT ADVISER. Cadre Financial Services, Inc., located at 905 Marconi
Avenue, Ronkonkoma, New York, 11779-7255, serves as the Fund's investment
adviser. Subject to the direction of the Board of Trustees, it is responsible
for the overall management of the Trust's investment affairs under the terms of
an Investment Advisory Agreement. Pursuant to such Investment Advisory
Agreement, Cadre Financial is responsible for supervising continuously the
investment program of the Fund, determining what investments shall be purchased
or sold by the Fund and arranging for the purchase and sale of investments held
by the Fund. Cadre Financial will be paid fees monthly for its services as
investment adviser calculated as a percentage of the Fund's average daily net
assets. Such fees are payable at an annual rate of .15% of such assets. However,
no fees are payable through the period ending _____________, 1997. Cadre
Financial has established and operated collective, short-term investment funds
for a number of local governmental municipal and health care entities. Only one
of those funds is registered under the 1940 Act. As of December 31, 1995, Cadre
Financial and its affiliates managed or administered approximately $5.5 billion
in assets for more than 2,500 investors.
ADMINISTRATOR. Cadre Financial also serves as the Fund's administrator
under the terms of an Administration Agreement. Pursuant to such Administration
Agreement, Cadre Financial is responsible for: furnishing to the Fund
facilities, equipment
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<PAGE> 15
and personnel to carry out administrative services, including reports to
shareholders and the Securities and Exchange Commission; calculating the net
asset value for the Fund's shares; paying the costs of maintaining the Fund's
offices and necessary equipment; preparing the Fund's tax returns; maintaining
the Fund's books and records; providing facilities to receive and process
applications to invest in Fund shares; and answering inquiries during normal
business hours from shareholders concerning the status of their account and the
Fund's investment program. Cadre Financial will be paid fees monthly for its
services as administrator as a percentage of the Fund's average daily net
assets. Such fees are payable at an annual rate of .15% of such assets. However,
no fees are payable through the period ending _____________, 1997.
During the period ending _____________, 1997, and thereafter subject to
revision or termination upon 90 days' notice to the Fund, Cadre Financial has
agreed to waive fees and reimburse expenses, to the extent necessary, to
maintain the Fund's total operating expenses (excluding interest, taxes, and
ordinary expenses) at an annual rate of not more than .85% of the Fund's average
net assets for the particular fiscal year. This has the effect of lowering the
overall expense ratio of the Fund and increasing the yield to the participants
at the time such amounts are reimbursed. The Fund will not pay Cadre at a later
time for any fees waived or operating expenses reimbursed. See "Management of
the Fund - Trust Expenses."
TRANSFER AGENT AND DISTRIBUTOR. Cadre Financial is the Fund's transfer and
dividend disbursing agent, and Cadre Securities, Inc. ("Cadre Securities"), an
affiliate of Cadre Financial, also located at 905 Marconi Avenue, Ronkonkoma,
New York, 11779-7255, is the Fund's distributor.
CUSTODIAN. Bank One Columbus, NA, 100 East Broad Street, Columbus, OH
43271 is the Fund's custodian.
CONSULTANTS. Cadre Financial has entered into a Consulting Agreement with
the Association of School Business Officials International. It will provide
management consulting, but not distribution or investment advisory, services to
Cadre Financial. Cadre Financial will pay the Association of School Business
Officials International a monthly consulting fee at an annual rate of .02% of
the Fund's average daily net assets and .05% of the average daily net assets of
participants who are members of Association of School Business Officials
International. The Fund is not obligated to pay these fees. No consulting fees
are payable through the period ending on _______________, 1997.
Association of School Business Officials International has the right to
retain education associations and other persons to assist it in providing
consulting services under the Consulting
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<PAGE> 16
Agreement, and may, in its discretion, pay, or direct Cadre Financial to pay, to
any such retained person a portion of the fees otherwise payable to Association
of School Business Officials International under the Consulting Agreement.
TRUST EXPENSES. The Fund's service contractors bear all expenses in
connection with the performance of their services (including expenses of all
employees or office space and facilities necessary to provide services) and the
Fund bears the expenses incurred in its operations (including interest, taxes,
expenses of Trustees, legal and audit expenses and custodial fees). From
time-to-time, Cadre Financial and/or the Fund's other service contractors may
waive fees and/or assume certain expenses of the Fund. This will have the effect
of increasing yield to investors at the time such fees are not received or
amounts are assumed and decreasing yield when such fees or amounts are
reimbursed.
Cadre Financial has paid all of the Fund's organizational expenses. It
will be reimbursed by the Fund for those expenses when the net asset value of
the Fund reaches $25,000,000 for a period of 30 consecutive days. Reimbursement
payments will be made ratably during the period ending December 31, 20___.
YIELD INFORMATION
From time to time, yield and effective yield of the Fund may be quoted in
advertisements, sales literature or reports to shareholders. Both yield figures
are based on historical earnings and are not intended to indicate future
performance. It can be expected that these yields will fluctuate substantially.
The yield of the Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertisement).
This income is then annualized. That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52 week
period and is shown as a percentage of the investment. The effective yield is
calculated similarly, but, when annualized, the income earned by an investment
in the Fund is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment. The Fund's yield and effective yield may reflect fee waivers
and/or absorbed expenses pursuant to any undertaking that may be in effect.
Yield information is useful in reviewing the Fund's performance, but
because yields will fluctuate, under certain conditions such information may not
provide a basis for comparison with domestic bank deposits, other investments
which pay a fixed yield for a stated period of time, or other investment
companies which may use a different method of
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<PAGE> 17
computing yield. Yield is generally a function of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses and
market conditions.
The yields of the Fund may be compared to those of other mutual funds, and
to those of products offered by banks and thrifts, to other relevant indices or
to rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, the
Fund's yields may be compared to Donoghue's Money Fund Averages, which are
averages compiled by Donoghue's Money Fund Report. Yield data as reported in
national financial publications, including Lipper Analytical Services, Inc.,
IBC/Donoghue's Money Fund Report, Forbes, Barron's, The Wall Street Journal and
The New York Times, or in publications of a local or regional nature, may also
be used in comparing the yield of the Fund.
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. Shareholders of the Fund are entitled to
dividends and distributions arising from net investment income and net realized
gains, if any, earned by investments held by the Fund. The Fund declares
dividends from net investment income daily and pays such dividends monthly.
Shares begin accruing dividends on the day the purchase order for the shares is
executed and continue to accrue dividends through and including the day before
the redemption order for the shares is executed. Although the Fund does not
expect to realize net long-term capital gains, any such capital gains as may be
realized will be distributed at least once a year.
Dividends are paid in the form of additional full and fractional shares of
the Fund, unless the shareholder elects to receive dividends in cash. Reinvested
dividends receive the same tax treatment as dividends paid in cash. Such
election or any revocation thereof must be made in writing to Cadre Financial at
905 Marconi Avenue Campus, Ronkonkoma, New York 11779-7255, and will become
effective with respect to dividends paid after its receipt by the dividend
disbursing agent.
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
it is intended that the Fund will qualify as a regulated investment company as
long as such qualification is in the best interest of its shareholders. Such
qualification generally relieves the Fund of liability for federal income taxes
to the extent its earnings are distributed in accordance with applicable
provisions of the Code.
In connection with such tax qualification, the Fund contemplates declaring
as dividends at least 90% of its
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<PAGE> 18
investment company taxable income for each taxable year. An investor in the Fund
who receives a dividend derived from investment company taxable income (which
includes any excess of net short-term capital gain over net long-term capital
loss) must treat it is as ordinary income in the computation of his gross
income, whether such dividend is paid in cash or additional shares of the Fund.
Because all of the net investment income of the Fund is expected to be
derived from earned interest, it is anticipated that all dividends paid by the
Fund will be taxable as ordinary income to shareholders who are not exempt from
Federal income taxes and that no part of any distribution paid by the Fund will
be eligible for the dividends received deduction for corporations.
Although the Fund anticipates that it will not have net long-term capital
gain, any distribution of the Fund's excess of net long-term capital gain over
its net short-term capital loss will be taxable to shareholders of the Fund as
long-term capital gain regardless of how long the shareholders has held shares
of the Fund.
Dividends declared in December of any year payable to shareholders of
record on a specified date in December will be deemed for Federal income tax
purposes to have been paid by the Fund and received by shareholders on December
31, if such dividends are paid during January of the following year.
Shareholders will be advised at least annually as to the Federal income
tax consequences of dividends and distributions made each year. The information
above is only a summary of some of the federal tax consequences generally
affecting the Fund and its Participants.
OTHER TAX INFORMATION. In addition to federal taxes, participants may be
subject to state or local taxes on their investment. Participants should consult
their tax advisers to determine whether the Fund is suitable to their particular
tax situation.
When participants sign their registration form, they will be asked to
certify that their Social Security or Taxpayer Identification Number is correct
and that they are not subject to back-up withholding for failing to report
income to the IRS. If participants do not comply with IRS regulations, the IRS
can require the Fund to withhold 31% of distributions from their account.
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<PAGE> 19
GENERAL INFORMATION
The Trust was organized as a Delaware business trust on December 4, 1996.
The Amended and Restated Agreement of Trust (the "Trust Instrument") permits the
Board of Trustees to issue an unlimited number of full and fractional shares of
beneficial interest of one or more investment portfolios ("Portfolio"), or
classes thereof, as the Trustees shall from time to time create and establish.
Each share represents an equal proportionate interest in the Fund. All dividends
and distributions on shares of a Portfolio will be distributed pro rata to
shareholders of that class. The Trustees may classify or reclassify any unissued
shares of any Portfolio, or class thereof, into one or more additional
Portfolios or classes. The Fund does not intend to issue share certificates. The
Fund is the initial Portfolio of the Trust.
Shareholders are entitled to one vote for each full share held and a
proportionate fractional vote for each fractional share held, and will vote in
the aggregate, except as otherwise expressly required by law or when the Board
of Trustees determines that the matter to be voted on affects only the interest
of shareholders of a particular Portfolio or class thereof.
The Trust is not required under Delaware law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. However,
pursuant to the Trust Instrument, special meetings of shareholders will be
called by the Trustees upon written request of shareholders owning, at least a
majority of the shares outstanding and entitled to vote, except to the extent
that a lesser percentage is prescribed by the 1940 Act. Additionally, pursuant
to an undertaking by the Trust with the SEC, shareholders have the right to call
a meeting of shareholders to consider the removal of one or more Trustees and
such meeting will be called when requested in writing by the holders of record
of 10% or more of the Trust's outstanding shares. To the extent required by law,
the Trust will assist in shareholder communications in such matters. The Board
of Trustees will call a meeting of shareholders for the purpose of electing
Trustees if, at any time, less than a majority of the Trustees holding office at
the time had been elected by shareholders.
Cadre Financial maintains a record of share ownership and sends investors
confirmations and statements of account. Shareholder inquires may be made by
writing to the Fund at 905 Marconi Avenue, Ronkonkoma, New York 11779-7255, or
by calling 1-800-221-4524, Ext. 215.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND IN
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<PAGE> 20
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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<PAGE> 21
PART B - STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 22
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INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information, which is not a prospectus,
should be read in conjunction with the current Prospectus of the Investment
Services of Education Associations Money Market Fund (the "Fund") dated
______________, 1996, as it may be revised from time to time. To obtain a copy
of the Fund's Prospectus, please write to Cadre Financial Services, Inc. at 905
Marconi Avenue, Ronkonkoma, New York 11779-7255 or call (800) 221-4524, Ext. 2.
Cadre Financial Services, Inc. ("Cadre Financial") serves as the Fund's
investment adviser and transfer and dividend disbursing agent. Cadre Securities,
Inc. ("Cadre Securities"), an affiliate of Cadre Financial, is the Fund's
distributor.
Capitalized terms used but not defined herein have the same meaning as in
the Prospectus.
TABLE OF CONTENTS
Page
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES............................. 1
MANAGEMENT OF THE FUND................................................... 2
INVESTMENT ADVISORY AGREEMENT............................................ 3
ADMINISTRATION AGREEMENT................................................. 4
DISTRIBUTION AGREEMENT................................................... 5
CONSULTING AGREEMENT..................................................... 6
DETERMINATION OF NET ASSET VALUE......................................... 6
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION........................... 7
FUND PERFORMANCE......................................................... 7
ADDITIONAL INFORMATION ABOUT TAXES....................................... 10
PORTFOLIO TRANSACTIONS................................................... 12
INFORMATION ABOUT THE FUND............................................... 12
CUSTODIAN, COUNSEL AND INDEPENDENT AUDITORS.............................. 14
MISCELLANEOUS............................................................ 14
APPENDIX................................................................. 15
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
the Prospectus in connection with the offering made by the Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Fund, Cadre Financial or Cadre Securities. The
Prospectus does not constitute an offering by the Fund, Cadre
<PAGE> 23
Financial or by Cadre Securities in any jurisdiction in which such offering may
not lawfully be made.
_________________, 1996
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<PAGE> 24
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation shall be determined immediately after and
as a result of the Fund's acquisition of such security or other asset.
Accordingly, any later increase or decrease beyond the specified policy or
limitation resulting from a change in values, net assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations.
The Fund's fundamental investment limitations cannot be changed without
approval of a "majority of the outstanding voting securities" (as defined in the
Investment Company Act of 1940 (the "1940 Act")) of the Fund. However, except
for the fundamental investment limitations set forth below and those identified
as such in the Prospectus, the investment policies and limitations described in
this Statement of Additional Information and the Prospectus are not fundamental
and may be changed without shareholder approval.
The following and those described as "certain fundamental policies" in the
Prospectus are the Fund's fundamental investment limitations. The Fund may not:
(1) Purchase any securities which would cause 25% or more of the value of
its total assets at the time of purchase to be invested in the securities of one
or more issuers conducting their principal business activities in the same
industry, provided that (a) there is no limitation with respect to obligations
issued or guaranteed by the U.S. Government, any state, territory or possession
of the United States, the District of Columbia or any of their authorities,
agencies, instrumentalities or political subdivisions and repurchase agreements
secured by such instruments, (b) wholly-owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of the parents, (c) utilities will
be divided according to their services, for example, gas, gas transmission,
electric and gas, electric and telephone will each be considered a separate
industry, and (d) personal credit and business credit business will be
considered separate industries.
(2) Underwrite the securities of other issuers, except to the extent that
the purchase of securities directly from the issuer thereof in accordance with
the Fund's investment objective, policies and limitations may be deemed to be
underwriting.
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<PAGE> 25
(3) Purchase or sell real estate unless acquired as the result of
ownership of securities (but this shall not prevent the Fund from purchasing and
selling marketable securities issued by companies or other entities or
investment vehicles that deal in real estate or interests therein, nor shall
this prevent the Fund from purchasing interest in pools of real estate mortgage
loans).
(4) Make loans to others, except through the purchase of debt obligations
and through repurchase agreements as described in the Prospectus.
(5) Purchase or sell commodities or commodity contracts, except it may
engage in futures contracts, and related options and options on securities or
indices of securities and similar instruments.
The following are nonfundamental policies that may be changed without
shareholder approval. The Fund may not:
(1) Sell securities short, or write or purchase put or call options,
except in connection with futures contracts, and related options and options on
securities or indices of securities and similar instruments.
(2) Invest in companies for the purpose of exercising control.
(3) Invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation or acquisition of assets and
except as may be otherwise permitted under the Investment Company Act of 1940.
(4) Purchase securities on margin, make short sales of securities or
maintain a short position, except (a) in connection with the purchase or sale of
commodities or commodities contracts, including futures contracts, and related
options and in options on securities or indices of securities and similar
instruments, and (b) the Fund may obtain short-term credit as may be necessary
for the clearance of purchases and sales of portfolio securities.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to their
principal business occupations during at least the last five years, are shown
below.
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<PAGE> 26
Positions with Principal Occupation
Name and Address the Trust Age During Past Five Years
- ---------------- -------------- --- ----------------------
[To be added by Amendment]
No Trustee receives fees for serving in that capacity. However, each
Trustee who is not an affiliate of Cadre Financial receives reimbursement of
expenses incurred in attending meetings.
INVESTMENT ADVISORY AGREEMENT
The Fund employs Cadre Financial to furnish investment advisory services.
Under Cadre Financial's Investment Advisory Agreement with the Fund dated
_______________, Cadre Financial acts as investment adviser and, subject to the
supervision of the Board of Trustees, directs the investments of the Fund in
accordance with its investment objective, policies and limitations as described
in the Fund's Prospectus. Cadre Financial also provides the Fund with all
necessary office facilities and personnel for servicing the Fund's investments,
and pays the salaries of all personnel of Cadre Financial and its affiliates
performing services relating to research, statistical and investment activities.
Cadre Financial will be paid fees monthly for its services as investment
advisor calculated as a percentage of the Fund's average daily net assets. Such
fees are payable at an annual rate of .15% of such assets. However, no fees are
payable through the period ending ________, 1997.
The Investment Advisory Agreement provides that Cadre Financial shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with the performance of the Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from
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<PAGE> 27
willful misfeasance, bad faith or gross negligence in the performance of its
duties or from reckless disregard by it of its duties and obligations
thereunder. The Agreement will continue in effect until _____________ and
thereafter will be extended for successive periods of one year, provided that
each such extension is specifically approved (a) by vote of a majority of those
members of the Trust's Board of Trustees who are not interested persons of any
party to the Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trust's Board of Trustees or by vote of
a majority of the outstanding voting securities of the Fund. The Agreement is
terminable at any time without cause and without penalty by the Trust's Board of
Trustees or by a vote of a majority of the Trust's outstanding shares upon 60
days' notice to Cadre Financial, or by Cadre Financial upon 60 days' notice to
the Trust, and terminates automatically upon its "assignment" (as defined in the
1940 Act).
Cadre Financial and its affiliates are controlled by members of the
family of William T. Sullivan, Jr. William T. Sullivan, Jr. serves the Fund as a
trustee. Mr. Sullivan is a director and officer of Cadre Financial. Mr. Sullivan
does not receive compensation as a Trustee of the Fund.
ADMINISTRATION AGREEMENT
Cadre Financial or its affiliate, subject of the supervision of the Board
of Trustees, provides the administrative services necessary for the operation of
the Fund. These services include providing office space and office equipment and
related services; supervising all aspects of the Fund's operations, other than
investment operations managed by the investment adviser, marketing the Fund's
shares, and those operations managed by the Fund's custodian; and furnishing
reports, evaluations and analysis for the Board of Trustees. Cadre Financial
will bear all expenses in connection with the performance of its services under
the Administration Agreement. Cadre Financial will be paid fees monthly for its
services as administrator calculated as a percentage of the Fund's average daily
net assets. Such fees are payable at an annual rate of .15% of such assets.
However, no fees are payable through the period ending ________________, 1996.
The Administration Agreement provides that Cadre Financial shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of the Agreement, except a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard by it of its duties and
obligations thereunder. The Agreement will continue in effect until
_____________ and thereafter will be extended for
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<PAGE> 28
successive periods of one year, provided that each such extension is
specifically approved (a) by vote of a majority of those members of the Trust's
Board of Trustees who are not interested persons of any party to the Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. The Agreement is terminable at any
time without cause and without penalty by the Trust's Board of Trustees or by a
vote of a majority of the Trust's outstanding shares upon 60 days' notice to
Cadre Financial, or by Cadre Financial upon 60 days' notice to the Trust, and
terminates automatically upon its "assignment" (as defined in the 1940 Act).
DISTRIBUTION AGREEMENT
The Fund has entered into a Distribution Agreement with Cadre Securities,
Inc. an affiliate of Cadre Financial, dated ________________. Cadre Securities,
Inc. will act as the Fund's distributor, selling shares on a continuous basis as
agent, although Cadre Securities, Inc. is not obligated to sell any particular
amount of shares. The distributor bears the costs and expenses of printing and
distributing to prospective investors copies of any prospectuses, statements of
additional information and annual and interim reports of the Fund (after such
items have been prepared and set in type by the Fund) which are used in
connection with the offering of shares, and the costs and expenses of preparing,
printing and distributing any other literature used by the distributor or
furnished by it in connection with the offering of the Fund's shares for sale to
the public. The Agreement will continue in effect until _____________ and
thereafter will be extended for successive periods of one year, provided that
each such extension is specifically approved (a) by vote of a majority of those
members of the Trust's Board of Trustees who are not interested persons of any
party to the Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trust's Board of Trustees or by vote of
a majority of the outstanding voting securities of the Fund. The Agreement is
terminable at any time without cause and without penalty by the Trust's Board of
Trustees or by a vote of a majority of the Trust's outstanding shares upon 60
days' notice to Cadre Securities, Inc., or by Cadre Securities, Inc. upon 60
days' notice to the Trust, and terminates automatically upon its "assignment"
(as defined in the 1940 Act).
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<PAGE> 29
CONSULTING AGREEMENT
Cadre Financial executed a Consulting Agreement on _________________,
1996, with Association of School Business Officials International ("ASBO") for
management consulting, but not distribution or investment advisory services to
assist Cadre Financial in providing management services to the Fund. Cadre
Financial, and not the Fund, will pay ASBO's fees as described in the
Prospectus.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is calculated by adding the
value of all portfolio securities and other assets belonging to the Fund,
subtracting the liabilities charged to the Fund, and dividing the result by the
number of shares of the Fund outstanding.
The valuation of the Fund's instruments using amortized cost and the
concomitant maintenance of the Fund's net asset value at $1 per share is
permitted in accordance with Rule 2a-7 under the 1940 Act, pursuant to which the
Fund must adhere to certain conditions. Amortized cost involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in valuations that are higher or lower
than the price the Fund would receive if it sold the instrument.
The Board of Trustees has established procedures designed to stabilize, to
the extent reasonably practicable, the Fund's net asset value calculated on the
basis of amortized cost. The Trustees will review the Fund's holdings, at such
intervals as they deem appropriate, to determine whether the net asset value
calculated by using available market quotations deviates from $1 per share and,
if so, whether such deviation may result in material dilution or is otherwise
unfair to existing shareholders. If the Trustees determine that such a deviation
exists, they will consider such corrective action, if any, as they deem
necessary or appropriate, which may include, without limitation, selling
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity, withholding dividends, reducing the number
of outstanding shares without monetary consideration, redeeming shares in kind,
or establishing net asset value by using available market quotations.
-6-
<PAGE> 30
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund are sold on a continuous basis by Cadre Securities. As
described in the Prospectus, shares of the Fund are sold and redeemed at their
net asset value as next determined after receipt of the purchase or redemption
order.
The Trust may suspend the right or redemption or postpone the date of
payment for shares of the Fund for more than seven days during any period when
(a) trading in the markets the Fund normally utilizes is restricted, or an
emergency, as defined by the rules and regulations of the SEC, exists; (b) the
New York Stock Exchange is closed (other than customary weekend and holiday
closings); or (c) the SEC has by order permitted such suspension. (The Trust may
also suspend or postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions.)
If the Trust's Board of Trustees determines that conditions exist which
make payment of redemption proceeds wholly in cash unwise or undesirable, the
Trust may make payment wholly or partly in readily marketable securities or
other property. In such an event, a participant would incur transaction costs in
selling the securities or other property. The Trust has committed that it will
pay all redemption requests by a participant of record in cash, limited in
amount with respect to each participant during any ninety-day period to the
lesser of $250,000 or 1% of the net asset value at the beginning of such period.
FUND PERFORMANCE
The Fund may quote its performance in various ways. All performance
information supplied by the Fund in advertising is historical and is not
intended to indicate future returns. The Fund's yield and total return fluctuate
in response to market conditions and other factors.
YIELD CALCULATIONS. To compute the Fund's current yield for a period, the
net change in value of a hypothetical account containing one share (such net
change being inclusive of the value of any additional shares issued in
connection with distributions of net investment income as well as net investment
income accrued on both the original share and any such additional shares, but
exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) is divided by the value of the account
at the beginning of the period to obtain a base period return, which is
multiplied by 365/7. The Fund may also calculate an "effective yield" with
respect to shares of the Fund by adding 1 to the base period return (calculated
as above), raising the sum to a power equal to
-7-
<PAGE> 31
365 divided by 7, and subtracting 1 from the result. Yields quoted in
advertising may be based on historical seven-day periods.
Yield information may be useful in reviewing the Fund's performance and in
providing a basis for comparison with other investment alternatives. However,
the Fund's yield fluctuates, unlike investments that pay a fixed interest rate
over a stated period of time. When comparing investment alternatives, investors
should also note the quality and maturity of the portfolio securities held by
the respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates the
Fund's yield will generally tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the Fund's yield will generally
tend to be somewhat lower. Also, when interest rates are falling, the inflow of
net new money to the Fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the Fund's
portfolio, thereby reducing the current yield of the Fund. In periods of rising
interest rates, generally the opposite can be expected to occur.
The Fund's performance may be compared in advertisements, sales literature
or in reports to shareholders to the performance of other mutual funds in
general or to the performance of particular types of mutual funds, especially
those with similar objectives. This comparative performance could be expressed
as a ranking prepared by Lipper Analytical Services, Inc. ("Lipper"), an
independent service that monitors the performance of mutual funds. The Lipper
performance analysis ranks funds on the basis of yield, assuming reinvestment of
distributions, but does not take sales charges or redemption fees into
consideration, and is prepared without regard to tax consequences. In addition
to performance rankings, the Fund may compare its total expense ratio to the
average total expense ratio to the average total expenses ratio of all money
market funds as tracked by Lipper. A fund's total expense ratio is a significant
factor in comparing money market investments because of its effect on net yield.
Advertisements, sales literature or reports to shareholders may from time to
time also include a discussion and analysis of the Fund's performance, including
without limitation, those factors, strategies and techniques that, together with
market conditions and events, materially affected the Fund's performance.
The Fund may also include calculations in communications to shareholders
that describe hypothetical investment results. (Such performance examples will
be based on an express set of assumptions and are not indicative of the
performance of any Fund.) Such calculations may from time to time include
discussions or illustrations of the effects of compounding in
-8-
<PAGE> 32
advertisements. "Compounding" refers to the fact that, if dividends or other
distributions on a Fund investment are reinvested by being paid in additional
Fund shares, any future income of a Fund would increase the value of the Fund
investment more quickly than if dividends or other distributions had been paid
in cash. The Fund may also include discussions or illustrations of the potential
investment goals of a prospective investor (including but not limited to tax
and/or retirement planning), investment management techniques, policies or
investment suitability of the Fund, economic conditions, legislative
developments (including pending legislation), the effects of inflation and
historical performance of various asset classes. From time to time
advertisements or communications to shareholders may summarize the substance of
information contained in shareholder reports (including the investment
composition of a Fund), as well as the views of the investment adviser as to
current market, economic, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and related matters
believed to be of relevance to a Fund. The Fund may also include in
advertisements charts, graphs or drawings which illustrate the potential risks
and rewards of investment in various investment vehicles. In addition,
advertisements or shareholder communications may include a discussion of certain
attributes or benefits to be derived by an investment in the Fund and may
include testimonials as to the investment adviser's capabilities by clients.
Such advertisements or communications may include symbols, headlines or other
material which highlight or summarize the information discussed in more detail
therein. With proper authorization, the Fund may reprint articles (or excerpts)
written regarding the Fund and provide them to prospective shareholders.
Performance information with respect to the Fund is generally available by
calling __________________.
The Fund may also compare its performance to several products offered by
banks and thrifts. Unlike the Fund, certain bank and thrift products such as
Money Market Deposit Accounts, Super NOW Accounts, and Certificates of Deposit
are insured by the Federal Deposit Insurance Corporation. The Fund may compare
its yield, both the 7-day annualized current yield and the "effective yield," to
those of Money Market Accounts, Super NOW Accounts, and Certificates of Deposit
quoted in the Bank Rate Monitor National Index, an average of the quoted rates
for 100 leading banks and thrifts in 10 U.S. cities, chosen to represent the 10
largest Consumer Metropolitan Statistical Areas. In addition, the Fund may
compare its yield to the Auction Average Discount Rate for 182-day Treasury
Bills. Six-month Treasury Bills are issued at a discount from their face value
in weekly auctions. Consequently, their yield is quoted as a yield to maturity
reflecting the accretion of the discount as the bill matures. The Fund may also
compare its yield to the Federal
-9-
<PAGE> 33
Funds rate, which is the interest rate that banks charge each other for
overnight loans through the Federal Reserve System to meet reserve requirements.
Both the yield on 6-month Treasury Bills and the Federal Funds rate are
considered to be sensitive indicators of interest rates trends.
In addition to the publications listed in the Fund's Prospectus, yield
data as reported in the following publications may be used in comparing the
yields of the Fund to those of other mutual funds with similar investment
objectives: Business Week, Investor's Business Daily, Kiplinger, U.S. News,
Financial World, USA Today, Morningstar, Mutual Fund Monitor, and American
Banker.
ADDITIONAL INFORMATION ABOUT TAXES
The following is only a summary of certain additional considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning. Investors
are advised to consult their tax advisers with specific reference to their own
tax situations.
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). By following this
policy, the Fund expects to eliminate or reduce to a nominal amount the federal
income taxes to which it may be subject. If for any taxable year the Fund does
not qualify for the special federal tax treatment afforded regulated investment
companies, all of the Fund's taxable income would be subject to tax at regular
corporate rates (without any deduction for distributions to shareholders). In
such event, the Fund's dividend distributions to shareholders would be taxable
as ordinary income to the extent of the current and accumulated earnings and
profits of the Fund and would be eligible for the dividends received deduction
in the case of corporate shareholders.
Qualification as a regulated investment company under the Code requires,
among other things, that the Fund distribute to its shareholders an amount equal
to at least the sum of 90% of its investment company taxable income and
tax-exempt income, if any, net of certain deductions for each taxable year. In
general, the Fund's investment company taxable income will be its taxable
income, subject to certain adjustments and excluding the excess of any net
long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year. The Fund will be taxed on its undistributed
investment company taxable income, if any.
-10-
<PAGE> 34
The Fund will not be treated as a regulated investment company under the
Code if 30% or more of the Fund's gross income for a taxable year is derived
from gains realized on the sale of other disposition of securities and certain
other investments held for less than three months (the "short-short test").
Interest (including original issue and market discount) received by the Fund
upon maturity or disposition of a security held for less than three months will
not be treated as gross income derived from the sale or other disposition of
such security within the meaning of this requirement. However, any other income
that is attributable to realized market appreciation will be treated as gross
income from the sale or other disposition of securities for this purpose.
Any distribution of the excess of net long-term capital gain over net
short-term capital loss is taxable to shareholders as long-term capital gains,
regardless of how long the shareholder has held the distributing Fund's share
and whether such gains are received in cash or additional Fund shares. The Fund
will designate such a distribution as a capital gain dividend in a written
notice mailed to shareholders after the close of the Fund's taxable year.
Ordinary income of individuals is taxable at a maximum marginal rate of
39.6%; however, because of limitations on itemized deductions otherwise
allowable and the phase-out of personal exemptions, the maximum effective
marginal rate of tax for some taxpayers may be higher. An individual's long-term
capital gains are taxable at a maximum nominal rate of 28%. For corporations,
long-term capital gains and ordinary income are both taxable at a maximum
nominal rate of 35%.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses) for each calendar year. The Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and any
capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
The Trust will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or gross sale proceeds realized
paid to shareholders who have failed to provide a correct tax identification
number in the Revenue Service for failure to properly include on their return
payments of taxable interest or dividends or who have failed to certify to the
Trust that they are not subject to backup withholding when required to do so or
that are "exempt recipients."
-11-
<PAGE> 35
Other Information
Depending upon the extent of activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located or in which it is otherwise deemed to be conducting business, the Fund
may be subject to the tax laws of such states or localities.
The foregoing discussion is based on tax laws and regulations which are in
effect on the date of this Statement of Additional Information. Such laws and
regulations may be changed by legislative or administrative action.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased directly from the issuer or
an underwriter or a market maker for the securities. Usually no brokerage
commissions are paid by the Fund for such purchases. Purchases from underwriters
of portfolio securities include a concession paid by the issuer to the
underwriter and the purchase price paid to market makers for the securities may
include the spread between the bid and asked price.
Cadre Financial shall attempt to obtain the best net price and execution
in connection with portfolio transactions. Subject to that primary
consideration, dealers may be selected for research, statistical or other
services to enable Cadre Financial to supplement its own research and analysis
with the views and information of other securities firms. Securities
transactions are not directed to securities firms in consideration of sales of
Fund shares or of shares of other funds advised by Cadre Financial.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by Cadre Financial in advising other funds
it advises and, conversely, research services furnished to Cadre Financial by
brokers in connection with other funds Cadre Financial advises may be used by
Cadre Financial in advising the Fund.
INFORMATION ABOUT THE FUND
The Fund is a portfolio of the Investment Services for Education
Associations Trust, which was organized as a Delaware business trust on December
4, 1996. The Amended and Restated Agreement of Trust (the "Trust Instrument")
permits the Board of Trustees to create additional series (portfolios), each of
which will issue a separate class of shares. At this time, the Fund is the only
portfolio that has been created.
-12-
<PAGE> 36
Under the Trust Instrument, the beneficial interest in the Trust may be
divided into an unlimited number of full and fractional transferable shares. The
Trust Instrument authorizes the Board of Trustees to classify or reclassify any
unissued shares of the Trust into one or more additional classes by setting or
changing in any one or more respects, their respective designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations, qualifications and terms and conditions of redemption. Pursuant to
such authority, the Board of Trustees has authorized the issuance of one class
of shares representing interests in the Fund. The Trustees may classify or
reclassify any particular class of shares into one or more series.
Each share of the Trust has a par value of $0.0001, represents an equal
proportionate interest in the Fund, and is entitled to such dividends and
distributions of the income earned on the Fund's assets as are declared at the
discretion of the Trustees. Shares of the Fund have no preemptive rights and
only such conversion or exchange rights as the Board of Trustees may grant in
its discretion. When issued for payment as described in the Prospectus, the
Fund's shares will be fully paid and non-assessable by the Trust. In the event
of the termination of the Trust or the Fund, shareholders of the Fund would be
entitled to receive the assets available for distribution belonging to the Fund,
and a proportionate distribution of any general assets not belonging to any
particular portfolio which are available for distribution. Shareholders of the
Fund are entitled to participate in the net distributable assets of the Fund on
liquidation, based on the number of shares of the Fund that are held by each of
them.
There will normally be no meetings of shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders meeting for the election of
Trustees. Shares of the Trust have noncumulative voting rights and, accordingly,
the holders of more than 50% of the Trust's outstanding shares (irrespective of
class) may elect all of the Trustees. Except as set forth above and in the
Prospectus, the Trustees will continue to hold office and may appoint successor
Trustees.
The Trust Instrument authorizes the Board of Trustees, without shareholder
approval, to issue shares to a party or parties and for such amount and type of
consideration and on such terms, subject to applicable law, as the Trustees may
deem appropriate. The Board of Trustees may issue fractional shares and shares
held in the treasury. The Board of Trustees has full power and authority, in
their sole discretion, and without obtaining shareholder approval, to divide or
combine the shares or any class or series thereof into a greater or lesser
number,
-13-
<PAGE> 37
to classify or reclassify any issued shares or any class or series thereof into
one or more classes or series of shares, and to take such other action with
respect to the Trust's shares as the Board of Trustees may deem desirable.
The Trust Instrument provides that the Trustees and officers, when acting
in their capacity as such, will not be personally liable to any person other
than the Trust or a beneficial owner for any act, omission or obligation of the
Trust, or any Trustee or any officer of the Trust. Neither Trustee nor an
officer of the Trust shall be liable for any act or omission in his capacity as
Trustee or as an officer of the Trust, or for any act or omission of any officer
(or other officer) or employee of the Trust or of any other person or party,
provided that the Trust Instrument does not protect any Trustee or officer
against any liability to the Trust or to shareholders of record to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or the duties of such officer.
CUSTODIAN, COUNSEL AND INDEPENDENT AUDITORS
Bank One Columbus, NA, 100 East Broad Street, Columbus, OH 43271 is the
Fund's custodian.
Drinker Biddle & Reath, 1345 Chestnut Street, Suite 1100, Philadelphia,
Pennsylvania 19107, serves as counsel to the Company.
Price Waterhouse LLP, 100 Jericho Quadrangle, Jericho, New York 11753, has
been selected at the Fund's independent auditors.
MISCELLANEOUS
As used in this Statement of Additional Information and the Prospectus, a
"majority of the outstanding shares" of the Fund, with respect to the approval
of an investment advisory agreement, the Board of Trustees calling a meeting of
shareholders of the Trust requested by Trust shareholders or a change in a
fundamental investment policy, means the lesser of (1) 67% of the shares of the
Fund represented at a meeting at which the holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy, or (2) more
than 50% of the outstanding shares of such Fund.
-14-
<PAGE> 38
APPENDIX
Description of Moody's Investors Service, Inc.'s commercial paper ratings:
PRIME-1 (or related supporting institutions) have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics:
- Leading market positions in well established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
- Broad margins in earning coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2 (or related supporting institutions) have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged". Interest payments are protected by a large or an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be
-15-
<PAGE> 39
other elements present which make the long-term risks appear somewhat larger
than in "Aaa" securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
DESCRIPTION OF STANDARDS & POOR'S CORPORATION'S COMMERCIAL PAPER RATINGS:
A-1 - This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics will be denoted with a plus (+) sign designation.
A-2 - Capacity for timely payment is satisfactory. However, the relative
degree of safety is not as high as for issues designated A-1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity to pay interest
and repay principal.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although such issues are somewhat more
-16-
<PAGE> 40
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS:
FITCH-1 - (Highest Grade) Commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely payment.
FITCH-2 - (Very Good Grade) Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issues.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC. CORPORATE BOND RATINGS:
AAA - Bonds of this rating are regarded as strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions, and
liable to but slight market fluctuation other than through changes in the money
rate. The factor last named is of importance, varying with the length of
maturity. Such bonds are mainly senior issues of strong companies, and are most
numerous in the railway and public utility fields, though some industrial
obligations have this rating. The prime feature of an AAA bond is of showing of
earnings several times or many times interest requirements with such stability
of applicable earnings that safety is beyond reasonable question whatever
changes occur in conditions. Other features may enter, such as a wide margin of
protection through collateral security or direct lien on specific property as in
the case of high-class equipment certificates or bonds that are first mortgages
on valuable real estate. Sinking funds or voluntary reduction of the debt, by
call or purchase are often factors, while guarantee or assumption by parties
other than the original debtor may influence the rating.
AA - Bonds in this group are of safety virtually beyond question, and as a
class are readily salable while many are highly active. Their merits are not
greatly unlike those of the "AAA" class, but a bond so rated may be of junior
though strong lien - in many cases directly following an AAA bond - or the
margin of safety is strikingly broad. The issue may be the obligation of a small
company, strongly secured but influenced as
-17-
<PAGE> 41
to rating by the lesser financial power of the enterprise and more local type of
market.
DESCRIPTION OF DUFF & PHELPS INC. COMMERCIAL PAPER RATINGS:
DUFF 1 - Very high certainty of timely payment. Liquidity factors are
excellent and supported by strong fundamental protection factors. Risk factors
are minor.
DUFF 2 - Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
DESCRIPTION OF DUFF & PHELPS INC. CORPORATE BOND RATINGS:
DUFF 1 - Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S.
Treasury debt.
DUFF 2, 3, 4 - High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
-18-
<PAGE> 42
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements - Not Applicable
(b) Exhibits
(1) Amended and Restated Agreement of Trust (the "Trust
Instrument") dated December 11, 1996
(2) By-laws
(5) Form of Investment Advisory Agreement
(6) Form of Distribution Agreement
(7) None
(8) Form of Custody Agreement(2)
(9) (a) Form of Administration Agreement
(b) Form of Consulting Agreement
(10) Opinion of Drinker Biddle and Reath(1)
(11) (a) Consent of Price Waterhouse, independent
auditors(2)
(b) Consent of Drinker Biddle and Reath
(13) Form of investment letter from initial shareholders(2)
(14) None
(15) None
(16) None
(17) None
(18) None
-------------------
1 To be filed with Registrants Rule 24f-2 notice.
2 To be filed by Amendment.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registration is controlled by its Board of Trustees. As of the
effective date of this registration statement, all of the
outstanding shares of the Registrant will be held by Cadre
Securities, Inc., the Registrant's Distributor. As of the date of
this Registration Statement, no person is controlled by or under
common control with the Registrant.
C-1
<PAGE> 43
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of December 11, 1996
- -------------- -----------------------
<S> <C>
Investment Services for Education 0
Associations Money Market Fund
</TABLE>
ITEM 27. INDEMNIFICATION
The provisions of Sections 8.2 through 8.4 of Article VIII of the
Trust Instrument filed herewith as Exhibit (1) are incorporated by
reference.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by trustees, officers or
controlling persons of Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustees, officers
or controlling persons in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Cadre Financial Services, Inc. ("Cadre Financial") and its
affiliates provide financial services to a number of local
governmental, municipal and other entities such as school districts,
municipalities and park districts. The financial services include
investment management and advisory services to liquid asset funds
formed by those entities. One of those funds is an "investment
company" under the Investment Company Act of 1940. Cadre Financial
also provides cash flow
C-2
<PAGE> 44
management services and assists advisory clients in implementing
fixed-rate, fixed-term investment programs by investing in
certificates of deposit, government securities, commercial paper and
similar fixed-rate, fixed-term investments.
The Officers and directors of Cadre Financial and their business, vocation or
employment of a substantial nature in the past two fiscal years are as follows:
<TABLE>
<CAPTION>
Other Substantial
Position Business, Vocation
Name with Cadre or employment
- ---- ---------- ------------------
<S> <C> <C>
William T. Sullivan, Jr. Director and Director and Chairman of the
Chairman of the Board of Cadre Securities, Inc.
Board, Chief since 1986
Executive Officer
Francis X. Sullivan Director, Director of Cadre Securities, Inc.
President and since 1986
Chief Operating
Officer
Joan M. Restivo Director, Director of Cadre Securities, Inc.
Executive Vice since 1986
President and
Treasurer
Dr. Richard I. Bauer Director, Senior Director and President of
Vice President Cadre Securities, Inc. since
1986 and 1994, respectively
John F. Elberfeld Director Director of Cadre Securities, Inc.
since 1986
Linford F. Moyer Director Director of Cadre Securities, Inc.
Since 1986
Raymond D. Peets Director Director of Cadre Securities, Inc.
since 1986
George J. Dittenhoefer Vice President None
Beth A. Sullivan Vice President Director and Senior Vice President
of Cadre Securities, Inc. since 1995
and 1993, respectively.
Eileen M. McElroy Assistant Vice None
President
William M. Sullivan General Counsel Vice President of Cadre Securities, Inc.
since 1986.
Timothy P. Sullivan Vice President None
D. Joon Yoo Managing Director Vice President of Cadre Financial
Services, Inc. since 1994; previously,
Portfolio Manager for Aetna Life and Casualty
from 1981 to 1994.
</TABLE>
C-3
<PAGE> 45
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Cadre Securities, Inc., the Fund's principal underwriter, acts as a
principal underwriter and adviser to one other investment company
registered under the Investment Company Act of 1940, the California
Hospital and Health Facilities Liquid Asset Fund. It also acts as
distributor for certain collective short-term investment programs
operated for local governmental, municipal and other entities.
(b) Information with respect to director and officers of Cadre
Securities, Inc. is set forth in the following table:
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
------------------ ------------- -------------
William T. Sullivan, Jr. Director and Trustee
905 Marconi Ave. Chairman of the
Ronkonkoma, NY 11779 Board
Francis X. Sullivan Director and None
905 Marconi Ave. Vice Chairman
Ronkonkoma, NY 11779 of the Board
William M. Sullivan, Esq. Vice President None
905 Marconi Ave.
Ronkonkoma, NY 11779
Timothy P. Sullivan Vice President None
905 Marconi Ave.
Ronkonkoma, NY 11779
Joan M. Restivo Director and None
905 Marconi Ave. Secretary-
Ronkonkoma, NY 11779 Treasurer
Dr. Richard I. Bauer Director Trustee
568 High Street President
Pottstown, PA 19464
(c) Not Applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The names and addresses of the persons maintaining principal
possession of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules are as follows:
C-4
<PAGE> 46
Cadre Financial Services, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
(records relating to its function as investment adviser,
administrator and transfer agent; such records will include but not
be limited to, minutes books, charter and by-laws)
Cadre Securities, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
(records relating to its function as distributor)
Bank One Columbus, NA
100 E. Broad Street
Columbus, OH 43271
Pittsburgh, PA 15259-0001
(records relating to its function as custodian)
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes:
(a) Not applicable.
(b) (1) to file a post-effective amendment, using financial
statements which need not be certified, within four to
six months from the effective date of this Registration
Statement.
(2) to call a meeting of shareholders for the purpose of
voting upon the question of removal of a trustee or
trustees when requested in writing to do so by the
holders of at least 10% of the Registrant's outstanding
shares of stock entitled to vote and in connection with
such meeting to comply with the provisions of Section
16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
C-5
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York as of the 12th day of
December, 1996.
INVESTMENT SERVICES FOR EDUCATION
ASSOCIATIONS TRUST
By /s/ William T. Sullivan, Jr.
----------------------------
William T. Sullivan, Jr.
President
C-6
<PAGE> 48
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following person in the capacities
and as of the date indicated.
Signature Title Date
- --------- ----- ----
/s/ William T. Sullivan, Jr. Trustee, President and December 12, 1996
- ---------------------------- Treasurer (Principal
William T. Sullivan, Jr. Executive Officer,
Principal Financial
Officer and Principal
Accounting Officer)
C-7
<PAGE> 49
EXHIBIT INDEX
Exhibit
Number Exhibit Page
- ------- ------- ----
(1) Amended and Restated Agreement of Trust
(2) By-laws
(5) Form of Investment Advisory Agreement
(6) Form of Distribution Agreement
(9)(a) Form of Administration Agreement
(9)(b) Form of Consulting Agreement
(11)(b) Consent of Drinker Biddle & Reath
C-8
<PAGE> 1
Exhibit 1
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
AMENDED AND RESTATED AGREEMENT OF TRUST
AMENDED AND RESTATED AS OF
December 11, 1996
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I - NAME AND DEFINITIONS..................................... 1
Section 1.1 Name.............................................. 1
Section 1.2 Definitions....................................... 1
ARTICLE II - BENEFICIAL INTEREST..................................... 3
Section 2.1 Shares of Beneficial Interest..................... 3
Section 2.2 Issuance of Shares................................ 3
Section 2.3 Register of Shares and Share Certificates......... 3
Section 2.4 Transfer of Shares................................ 4
Section 2.5 Treasury Shares................................... 4
Section 2.6 Establishment of Series and Classes............... 4
Section 2.7 Investment in the Trust........................... 5
Section 2.8 Assets and Liabilities Belonging to
Series............................................ 5
Section 2.9 No Preemptive Rights.............................. 7
Section 2.10 Conversion Rights................................. 7
Section 2.11 Legal Proceedings................................. 7
Section 2.12 Status of Shares.................................. 7
ARTICLE III - THE TRUSTEES........................................... 8
Section 3.1 Management of the Trust........................... 8
Section 3.2 Term of Office of Trustees........................ 8
Section 3.3 Vacancies and Appointment of Trustees............. 9
Section 3.4 Temporary Absence of Trustee...................... 9
Section 3.5 Number of Trustees................................ 9
Section 3.6 Effect of Death, Resignation, Etc. of a
Trustee........................................... 9
Section 3.7 Ownership of Assets of the Trust.................. 10
Section 3.8 No Accounting..................................... 10
ARTICLE IV - POWERS OF THE TRUSTEES.................................. 10
Section 4.1 Powers............................................ 10
Section 4.2 Issuance and Repurchase of Shares................. 14
Section 4.3 Trustees and Officers as Shareholders............. 15
Section 4.4 Action by the Trustees and Committees............. 15
Section 4.5 Chairman of the Trustees.......................... 15
Section 4.6 Principal Transactions............................ 16
ARTICLE V - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR, TRANSFER AGENT, CUSTODIAN AND OTHER
CONTRACTORS............................................. 16
Section 5.1 Certain Contracts................................. 16
ARTICLE VI - SHAREHOLDER VOTING POWERS AND MEETINGS................. 18
Section 6.1 Voting............................................ 18
Section 6.2 Meetings.......................................... 19
Section 6.3 Quorum and Required Vote.......................... 20
-i-
<PAGE> 3
Section 6.4 Action by Written Consent......................... 20
ARTICLE VII - DISTRIBUTIONS AND REDEMPTIONS.......................... 20
Section 7.1 Distributions..................................... 20
Section 7.2 Redemption by Shareholder......................... 21
Section 7.3 Redemption by Trust............................... 21
Section 7.4 Net Asset Value................................... 22
ARTICLE VIII - LIMITATION OF LIABILITY AND INDEMNIFICATION........... 23
Section 8.1 Limitation of Liability........................... 23
Section 8.2 Indemnification................................... 23
Section 8.3 Indemnification Determinations.................... 24
Section 8.4 Indemnification Not Exclusive..................... 24
Section 8.5 Shareholders...................................... 24
ARTICLE IX - MISCELLANEOUS........................................... 25
Section 9.1 Trust Not a Partnership........................... 25
Section 9.2 Trustees' Good Faith Action, Expert
Advice, No Bond or Surety......................... 25
Section 9.3 Establishment of Record Dates..................... 26
Section 9.4 Termination of Trust or Series.................... 26
Section 9.5 Merger, Consolidation, Incorporation.............. 27
Section 9.6 Filing of Copies, References, Headings............ 28
Section 9.7 Applicable Law.................................... 28
Section 9.8 Amendments........................................ 29
Section 9.9 Fiscal Year....................................... 29
Section 9.10 Provisions in Conflict with Law................... 29
Section 9.11 Allocation of Certain Expenses.................... 30
-ii-
<PAGE> 4
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
AMENDED AND RESTATED AGREEMENT OF TRUST of Investment Services For
Education Associations Trust, a Delaware statutory business trust, made as of
December 11, 1996, by William T. Sullivan, as Trustee.
WHEREAS, the Trust was organized pursuant to an Agreement of Trust dated
December 4, 1996 (the "Original Agreement") and the filing of a Certificate of
Trust in the Office of the Secretary of State of the State of Delaware on
December 4, 1996; and
WHEREAS, the Trust desires to amend and restate the Original Agreement in
its entirety in accordance with the terms hereof and to continue the Trust under
the Act for the investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustee declares that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Amended and Restated Agreement of Trust ("Trust Instrument") as herein set forth
below.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. The name of the trust continued hereby is the
"Investment Services for Education Associations Trust."
Section 1.2 Definitions. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) "Act" means the Delaware Business Trust Act, 12 Del. C. SS 3801
et seq., as from time to time amended;
(b) "By-laws" means the by-laws referred to in Section 4.1(e)
hereof, as from time to time amended;
(c) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person" and "Principal Underwriter" shall have the meanings given
them in the 1940 Act. "Majority Shareholder Vote" shall have the same meaning as
the term "vote of a majority of the outstanding voting securities" is given in
the 1940 Act;
(d) "Class" means any division of Shares within a Series, which
Class is or has been established in accordance with the provisions of Article
II.
-1-
<PAGE> 5
(e) "Net Asset Value" means the net asset value of each Series of
the Trust determined in the manner provided in Section 7.4 hereof;
(f) "Outstanding Shares" means those Shares recorded from time to
time in the books of the Trust or its transfer agent as then issued and
outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of the
Trust;
(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Section 2.6 hereof;
(h) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or Class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(j) "Trust" refers to Investment Services for Education Associations
Trust and reference to the Trust, when applicable to one or more Series of the
Trust, shall refer to any such Series;
(k) "Trustee" or "Trustees" means the person or persons who has or
have signed this Trust Instrument, so long as such person or persons shall
continue in office in accordance with the terms hereof, and all other persons
who may from time to time be duly qualified and serving as Trustees in
accordance with the provisions of Article III hereof and reference herein to a
Trustee or to the Trustees shall refer to the individual Trustees in their
capacity as Trustees hereunder;
(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
(m) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as may be amended from time to time.
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ARTICLE II
BENEFICIAL INTEREST
Section 2.1 Shares of Beneficial Interest. The beneficial interest in the
Trust shall be divided into such transferable Shares of one or more separate and
distinct Series or Classes as the Trustees shall from time to time create and
establish. The number of Shares of each Series and Class authorized hereunder is
unlimited. Each Share shall have a par value of $.0001 per Share, unless
otherwise determined by the Trustees in connection with the creation and
establishment of a Series or Class. All Shares issued hereunder, including
without limitation or Class Shares issued in connection with a dividend in
Shares or a split or reverse split of Shares, shall be fully paid and
nonassessable.
Section 2.2 Issuance of Shares. The Trustees in their discretion may, from
time to time, without vote of the Shareholders, issue Shares of each Series and
Class to such party or parties and for such amount and type of consideration (or
for no consideration if pursuant to a Share dividend or split-up), subject to
applicable law, including cash or securities (including Shares of a different
Series or Class), at such time or times and on such terms as the Trustees may
deem appropriate, and may in such manner acquire other assets (including the
acquisitions of assets subject to, and in connection with, the assumption of
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares and Shares held in the treasury. The
Trustees may from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial interests in
the Trust. The Trustees may classify or reclassify any unissued Shares or any
Shares previously issued and reacquired of any Series or Class into one or more
Series or Classes that may be established and designated from time to time.
Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested, may acquire, own, hold and
dispose of Shares of any Series or Class of the Trust to the same extent as if
such person were not a Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and sold and may purchase Shares
of any Series or Class from any such person or any such organization subject
only to the general limitations, restrictions or other provisions applicable to
the sale or purchase of Shares of such Series or Class generally.
Section 2.3 Register of Shares and Share Certificates. A register shall be
kept at the principal office of the Trust or an office of the Trust's transfer
agent which shall contain the names and addresses of the Shareholders of each
Series and Class,
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the number of Shares of that Series and Class thereof held by them respectively
and a record of all transfers thereof. As to Shares for which no certificate has
been issued, such register shall be conclusive as to who are the holders of the
Shares and who shall be entitled to receive dividends or other distributions or
otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall
be entitled to receive payment of any dividend or other distribution, nor to
have notice given to him as herein or in the By-laws provided, until he has
given his address to the transfer agent or such other officer or agent of the
Trust as shall keep the said register for entry thereon. The Trustees, in their
discretion, may authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use. In the event that one or more
certificates are issued, whether in the name of a Shareholder or a nominee, such
certificate or certificates shall constitute evidence of ownership of Shares for
all purposes, including transfer, assignment or sale of such Shares, subject to
such limitations as the Trustees may, in their discretion, prescribe.
Section 2.4 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer, together with a Share certificate, if one is
outstanding, and such evidence of the genuineness of each such execution and
authorization and of such other matters as may be required by the Trustees. Upon
such delivery the transfer shall be recorded on the register of the Trust. Until
such record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes hereunder and neither the Trustees nor the
Trust, nor any transfer agent or registrar nor any officer, employee or agent of
the Trust shall be affected by any notice of the proposed transfer.
Section 2.5 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 2.2 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 2.6 Establishment of Series and Classes. The Trust continued
hereby shall consist of one or more Series and Classes and separate and distinct
records shall be maintained by the Trust for each Series and Class. The Trustees
shall have full power and authority, in their sole discretion, and without
obtaining any prior authorization or vote of the Shareholders of any Series or
Class of the Trust, to establish and designate and to change in any manner any
initial or additional Series or Classes and to fix such preferences, voting
powers, rights and privileges of such Series or Classes as the Trustees may from
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time to time determine, to divide or combine the Shares or any Series or Classes
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or Classes into one or more Series or Classes of Shares, and to take
such other action with respect to the Shares as the Trustees may deem desirable.
Unless another time is specified by the Trustees, the establishment and
designation of any Series or Class shall be effective upon the adoption of a
resolution by the Trustees setting forth such establishment and designation and
the preferences, powers, rights and privileges of the Shares of such Series or
Class. The Trust may issue any number of Shares of each Series or Class and need
not issue Shares.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series or Classes as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series and
Class of the Trust except as the context otherwise requires.
All Shares of each Class of a particular Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to the
liabilities belonging to that Class), and each Share of any Class of a
particular Series shall be equal to each other Share of that Class; but the
provisions of this sentence shall not restrict any distinctions permissible
under this Section 2.6.
Section 2.7 Investment in the Trust. The Trustees shall accept investments
in any Series of the Trust from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which the
affected Series is authorized to invest, valued as provided in Section 7.4
hereof. Unless the Trustees otherwise determine, investments in a Series shall
be credited to each Shareholder's account in the form of full Shares at the Net
Asset Value per Share next determined after the investment is received. Without
limiting the generality of the foregoing, the Trustees may, in their sole
discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose sales or other charges upon investments in the Trust or
(c) issue fractional Shares.
Section 2.8 Assets and Liabilities Belonging to Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held and accounted for separately from the other assets of
the Trust and
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of every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with
the liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series. Any general liabilities, expenses, costs, charges
or reserves of the Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees between or
among any one or more of the Series in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Series for all purposes. The liabilities,
expenses, costs, charges and reserves allocated and so charged to a Series are
herein referred to as "liabilities belonging to" that Series. Except as provided
in the next sentence or otherwise required or permitted by applicable law or any
rule or order of the Commission, each Class of a Series shall bear a pro rata
portion of the "liabilities belonging to" such Series. To the extent permitted
by rule or order of the Commission the Trustees may allocate all or a portion of
any liabilities, expenses, costs, charges and reserves belonging to a Series to
a particular Class or Classes (collectively, "Class Expenses") as the Trustees
may from time to time determine is appropriate.
Without limitation of the foregoing provisions of this Section 2.8, but
subject to the right of the Trustees in their discretion to allocate general
liabilities, expenses, costs, charges or reserves as herein provided, the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular Series shall be enforceable against the
assets belonging to such Series only, and not against the assets of the Trust
generally. Notice of this contractual limitation on inter-Series liabilities
shall be set forth in the certificate of trust of the Trust (whether originally
or by amendment) as filed or to be filed in the Office of the Secretary of State
of the State of Delaware pursuant to the Act, and upon
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the giving of such notice in the certificate of trust, the statutory provisions
of Section 3804 of the Act relating to limitations on inter-Series liabilities
(and the statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against any
Series may satisfy or enforce any debt, liability, obligation or expense
incurred, contracted for or otherwise existing with respect to that Series from
the assets of that Series only. No Shareholder or former Shareholder of any
Series shall have a claim on or any right to any assets allocated or belonging
to any other Series.
Section 2.9 No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or the Trustees, whether of the same or another Series or Class.
Section 2.10 Conversion Rights. The Trustees shall have the authority to
provide from time to time that the holders of Shares of any Series or Class
shall have the right to convert or exchange said Shares for or into Shares of
one or more other Series or Classes in accordance with such requirements and
procedures as may be established from time to time by the Trustees.
Section 2.11 Legal Proceedings. No person, other than a Trustee, who is
not a Shareholder of a particular Series or Class shall be entitled to bring any
derivative action, suit or other proceeding on behalf of or with respect to such
Series or Class. No Shareholder of a Series or a Class may maintain a derivative
action with respect to such Series or Class unless holders of a least ten
percent (10%) of the outstanding Shares of such Series or Class join in the
bringing of such action. Except as otherwise provided in Section 3816 of the Act
and the foregoing provisions of this Section 2.11, all matters relating to the
bringing of derivative actions in the right of the Trust shall be governed by
the General Corporation Law of the State of Delaware relating to derivative
actions, and judicial interpretations thereunder, as if the Trust were a
Delaware Corporation and the Shareholders were shareholders of a Delaware
corporation.
Section 2.12 Status of Shares. Shares shall be deemed to be personal
property giving only the rights provided in this instrument. Every Shareholder
by virtue of having become a Shareholder shall be held to have expressly
assented and agreed to the terms hereof. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the Trust nor entitle
the representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
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the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners.
ARTICLE III
THE TRUSTEES
Section 3.1 Management of the Trust. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall not
be construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.
Except for the Trustees named herein or Trustees appointed to fill
vacancies pursuant to Section 3.3 hereof, the Trustees shall be elected by the
Shareholders owning of record a plurality of the Shares voting at a meeting of
Shareholders.
Section 3.2 Term of Office of Trustees. Each Trustee shall hold office
during the existence of this Trust, and until its termination as herein
provided; except: (a) that any Trustee may resign his trust by written
instrument signed by him and delivered to the Chairman, President, Secretary, or
other Trustee of the Trust, which shall take effect upon such delivery or upon
such later date as is specified therein; (b) that any Trustee may be removed at
any time by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be retired or
who has
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died, become physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of Shareholders owning at least two-thirds
of the outstanding Shares of all Series.
Section 3.3 Vacancies and Appointment of Trustees. In case of the
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of disease or otherwise of a Trustee, or a Trustee
is otherwise unable to serve, or an increase in the number of Trustees, a
vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy shall be
conclusive. In the case of an existing vacancy, the remaining Trustee or
Trustees shall fill such vacancy by appointing such other person as such Trustee
or Trustees in their discretion shall see fit consistent with the limitations
under the 1940 Act, unless such Trustee or Trustees determine, in accordance
with Section 3.5, to decrease the size of the Board to the number of remaining
Trustees.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees.
An appointment of a Trustee shall be effective upon the acceptance of the
person so appointed to serve as trustee, except that any such appointment in
anticipation of a vacancy shall become effective at or after the date such
vacancy occurs.
Section 3.4 Temporary Absence of Trustee. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided or unless there is only one or two Trustees.
Section 3.5 Number of Trustees. The number of Trustees shall be one, or
such other number as shall be fixed from time to time by the Trustees.
Section 3.6 Effect of Death, Resignation, Etc. of a Trustee. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to
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revoke any existing agency created pursuant to the terms of this Trust
Instrument.
Section 3.7 Ownership of Assets of the Trust. Legal title in and
beneficial ownership of all of the assets of the Trust shall at all times be
considered as vested in the Trust, except that the Trustees may cause legal
title in and beneficial ownership of any Trust Property to be held by, or in the
name of one or more of the Trustees acting for and on behalf of the Trust, or in
the name of any person as nominee acting for and on behalf of the Trust. No
Shareholder shall be deemed to have a severable ownership interest in any
individual asset of the Trust or of any Series or Class, or any right of
partition or possession thereof, but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
each Series the Shares of which are owned by such Shareholders. The Shares shall
be personal property giving only the rights specifically set forth in this Trust
Instrument. The Trust, or at the determination of the Trustees, one or more of
the Trustees or a nominee acting for and on behalf of the Trust, shall be deemed
to hold legal title and beneficial ownership of any income earned on securities
of the Trust issued by any business entities formed, organized, or existing
under the laws of any jurisdiction, including the laws of any foreign country.
Section 3.8 No Accounting. Except to the extent required by the 1940 Act
or, if determined to be necessary or appropriate by the other Trustees under
circumstances which would justify his or her removal for cause, no person
ceasing to be a Trustee for reasons including, but not limited to, death,
resignation, retirement, removal or incapacity (nor the estate of any such
person) shall be required to make an accounting to the Shareholders or remaining
Trustees upon such cessation.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1 Powers. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or appropriate in connection with the management of the Trust. The Trustees
shall have full authority and power to make any and all investments which they,
in their sole discretion, shall deem proper to accomplish the purpose of this
Trust. Subject to any applicable limitation in this Trust Instrument, the
Trustees shall have power and authority:
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(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested, and to sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(b) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the conduct of
such operators, including the power to invest all or any part of its assets in
the securities of another investment company;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation, liability or engagement of any
person and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a Principal Underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders,
which By-laws shall be deemed a part of this Trust Instrument and are
incorporated herein by reference;
(f) To elect and remove such officers and appoint and terminate such
agents and contractors as they consider appropriate, any of whom may be a
Trustee, and may provide for the compensation of all of the foregoing;
(g) To employ one or more banks, trust companies or companies that
are members of a national securities exchange or such other entities as
custodians of any assets of the Trust, subject to the 1940 Act and to any
conditions set forth in this Trust Instrument;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the
By-laws;
(j) To delegate such authority (which delegation may include the
power to subdelegate) as they consider desirable to any officers of the Trust
and to any investment adviser, manager, administrator, custodian, underwriter or
other agent or independent contractor;
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(k) To join with other holders of any securities or debt instruments
in acting through a committee, depository, voting trustee or otherwise, and in
that connection to deposit any security or debt instrument with, or transfer any
security or debt instrument to, any such committee, depository or trustee, and
to delegate to them such power and authority with relation to any security or
debt instrument (whether or not so deposited or transferred) as the Trustees
shall deem proper and to agree to pay, and to pay, such portion of the expenses
and compensation of such committee, depository or trustee as the Trustees shall
deem proper;
(l) To enter into joint ventures, general or limited partnerships
and any other combinations or associations;
(m) To pay pensions for faithful service, as deemed appropriate by
the Trustees, and to adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
(n) To the extent permitted by law, indemnify any person with whom
the Trust or any Series or Class has dealings.
(o) To engage in and to prosecute, defend, compromise, abandon, or
adjust by arbitration, or otherwise, any actions, suits, proceedings, disputes,
claims and demands relating to the Trust, and out of the assets of the Trust or
any Series or Class thereof to pay or to satisfy any debts, claims or expenses
incurred in connection therewith, including those of litigation, and such power
shall include without limitation the power of the Trustees or any appropriate
committee thereof, in the exercise of their or its good faith business judgment,
to dismiss any action, suit, proceeding, dispute, claim or demand, derivative or
otherwise, brought by any person, including a Shareholder in its own name or the
name of the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.
(p) To purchase and pay for entirely out of Trust Property such
insurance as they may deem necessary or appropriate for the conduct of the
business of the Trust, including, without limitation, insurance policies
insuring the Trust Property and payment of distributions and principal on its
investments, and insurance policies insuring the Shareholders, Trustees,
officers, representatives, employees, agents, investment advisers, managers,
administrators, custodians, underwriters, or independent contractors of the
Trust individually against all
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claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person in such capacity, including any
action taken or omitted that may be determined to constitute negligence, whether
or not the Trust would have the power to indemnify such person against such
liability.
(q) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust, subject to the
provisions of Section 9.4(b) hereof;
(r) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities, debt instruments or property; and to
execute and deliver powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and discretion
with relation to securities, debt instruments or property as the Trustees shall
deem proper;
(s) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities or debt instruments;
(t) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form; or
either in the name of the Trustees or of the Trust or in the name of a
custodian, subcustodian or other depository or a nominee or nominees or
otherwise;
(u) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish Classes
thereof having relative rights, powers and duties as they may provide consistent
with applicable law;
(v) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation, issuer or concern, any security or
debt instrument of which is held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation, issuer or
concern, and to pay calls or subscriptions with respect to any security or debt
instrument held in the Trust;
(w) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(x) To make distributions of income and of capital gains to
Shareholders in the manner herein provided;
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(y) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or Classes, and to require
the redemption of the Shares of any Shareholders whose investment is less than
such minimum upon giving notice to such Shareholder;
(z) To establish one or more committees comprised of one or more of
the Trustees, and to delegate any of the powers of the Trustees to said
committees;
(aa) To interpret the investment policies, practices or limitations
of any Series or Class;
(bb) To establish a registered office and have a registered agent in
the State of Delaware;
(cc) To compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, custodians, other agents, consultants,
contractors and employees of the Trust or the Trustees on such terms as they
deem appropriate; and
(dd) In general, to carry on any other business in connection with
or incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any power herein set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by one or
more of the Trustees in their capacity as such hereunder shall be deemed an
action on behalf of the Trust or the applicable Series or Class, and not an
action in an individual capacity.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
Section 4.2 Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, exchange, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article VII, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series or Class of the Trust,
with respect to which such Shares are issued.
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Section 4.3 Trustees and Officers as Shareholders. Any Trustee, officer or
other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if such person were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any such person or any firm or company in which such person invested,
subject to the general limitations herein contained as to the sale and purchase
of such Shares.
Section 4.4 Action by the Trustees and Committees. The Trustees (and any
committee thereof) may act at a meeting held in person or in whole or in part by
conference telecommunications equipment. One-third, but not less than two, of
the Trustees shall constitute a quorum at any meeting unless there is only one
Trustee. Except as the Trustees may otherwise determine, one-third of the
members of any committee shall constitute a quorum at any meeting. The vote of a
majority of the Trustees (or committee members) present at a meeting at which a
quorum is present shall be the act of the Trustees (or any committee thereof).
The Trustees (and any committee thereof) may also act by written consent signed
by a majority of the Trustees (or committee members). Regular meetings of the
Trustees may be held at such places and at such times as the Trustees may from
time to time determine. Special meetings of the Trustees (and meetings of any
committee thereof) may be called orally or in writing by the Chairman of the
Board of Trustees (or the chairman of any committee thereof) or by any two other
Trustees. Notice of the time, date and place of all meetings of the Trustees (or
any committee thereof) shall be given by the party calling the meeting to each
Trustee (or committee member) by telephone, telefax, or telegram sent to the
person's home or business address at least twenty-four hours in advance of the
meeting or by written notice mailed to the person's home or business address at
least seventy-two hours in advance of the meeting. Notice of all proposed
written consents of Trustees (or committees thereof) shall be given to each
Trustee (or committee member) by telephone, telefax, telegram, or first class
mail sent to the person's home or business address. Notice need not be given to
any person who attends a meeting without objecting to the lack of notice or who
executes a written consent or a written waiver of notice with respect to a
meeting. Written consents or waivers may be executed in one or more
counterparts. Execution of a written consent or waiver and delivery thereof may
be accomplished by telefax or other electronic means approved by the Trustees.
Section 4.5 Chairman of the Trustees. The Trustees may appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall preside
at all meetings of the Trustees at which he is present and may be (but is not
required to be) the chief executive officer of the Trust.
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Section 4.6 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any Affiliated Person
of the Trust, investment adviser, distributor or transfer agent for the Trust or
with any Interested Person of such Affiliated Person or other person; and the
Trust may employ any such Affiliated Person or other person, or firm or company
in which such Affiliated Person or other person is an Interested Person, as
broker, legal counsel, registrar, investment adviser, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR, TRANSFER AGENT, CUSTODIAN AND OTHER CONTRACTORS
Section 5.1 Certain Contracts. Subject to compliance with the provisions
of the 1940 Act, but notwithstanding any limitations of present and future law
or custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other type of organizations, or individuals to provide for
the performance and assumption of some or all of the following services, duties
and responsibilities to, for or of the Trust and/or the Trustees, and to provide
for the performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees may
determine to be appropriate:
(a) Investment Adviser. The Trustees may in their discretion, from
time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Series whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trust with
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions, as the Trustees may in their discretion determine.
Notwithstanding any other provision of this Trust Instrument, the Trustees may
authorize any investment adviser (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect purchases,
sales or exchanges of portfolio securities, other investment instruments of the
Trust, or other Trust Property on behalf of the Trustees, or may authorize any
officer, agent, or Trustee to
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effect such purchases, sales or exchanges pursuant to recommendations of the
investment adviser (and all without further action by the Trustees). Any such
purchases, sales and exchanges shall be deemed to have been authorized by the
Trustees.
The Trustees may authorize, subject to applicable requirements of the 1940
Act, the investment adviser to employ, from time to time, one or more
sub-advisers to perform such of the acts and services of the investment adviser,
and upon such terms and conditions, as may be agreed upon between the investment
adviser and sub-adviser. Any reference in this Trust Instrument to the
investment adviser shall be deemed to include such sub-advisers, unless the
context otherwise requires.
(b) Principal Underwriter. The Trustees may in their discretion from
time to time enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale of Shares, whereby the Trust may either agree
to sell Shares to the other party to the contract or appoint such other party
its sales agent for such Shares. In either case, the contract may also provide
for the repurchase or sale of Shares by such other party as principal or as
agent of the Trust.
(c) Administrator. The Trustees may in their discretion from time to
time enter into one or more contracts whereby the other party or parties shall
undertake to furnish the Trust with administrative services. The contract or
contracts shall be on such terms and conditions as the Trustees may in their
discretion determine.
(d) Transfer Agent. The Trustees may in their discretion from time
to time enter into one or more transfer agency and Shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and Shareholder services. The contract or contracts shall be on
such terms and conditions as the Trustees may in their discretion determine.
(e) Service and Distribution Plans. The Trustees may, on such terms
and conditions as they may in their discretion determine, adopt one or more
plans pursuant to which compensation may be paid directly or indirectly by the
Trust for Shareholder servicing, administration and/or distribution services
with respect to one or more Series or Classes including without limitation,
plans subject to Rule 12b-1 under the 1940 Act, and the Trustees may enter into
agreements pursuant to such plans.
(f) Fund Accounting. The Trustees may in their discretion from time
to time enter into one or more contracts whereby the other party or parties
undertakes to handle all or
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any part of the Trust's accounting responsibilities, whether with respect to the
Trust's properties, Shareholders or otherwise.
(g) Custodian and Depository. The Trustees may in their discretion
from time to time enter into one or more contracts whereby the other party or
parties undertakes to act as depository for and to maintain custody of the
property of the Trust or any Series or Class and accounting records in
connection therewith.
(h) Parties to Contract. Any contract described in this Article V
hereof may be entered into with any corporation, firm, partnership, trust or
association, although one or more of the Trustees or officers of the Trust may
be an officer, director, trustee, shareholder, or member of such other party to
the contract, and no such contract shall be invalidated or rendered void or
voidable by reason of the existence of any relationship, nor shall any person
holding such relationship be disqualified from voting on or executing the same
in his capacity as Shareholder and/or Trustee, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of said contract or accountable for any
profit realized directly or indirectly therefrom, provided that the contract
when entered into was not inconsistent with the provisions of this Article V.
The same person (including a firm, corporation, partnership, trust, or
association) may be the other party to contracts entered into pursuant to this
Article V, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 5.1.
ARTICLE VI
SHAREHOLDER VOTING POWERS AND MEETINGS
Section 6.1 Voting. The Shareholders shall have power to vote only: (a)
for the election of one or more Trustees in order to comply with the provisions
of the 1940 Act (including Section 16(a) thereof); (b) with respect to any
contract entered into pursuant to Article V to the extent required by the 1940
Act; (c) with respect to termination of the Trust or a Series or Class thereof
to the extent required by applicable law; (d) with respect to any plan adopted
pursuant to Rule 12b-1 (or any successor rule) under the 1940 Act, and related
matters, to the extent required under the 1940 Act; and (e) with respect to such
additional matters relating to the Trust as may be required by this Trust
Instrument, the By-laws or any registration of the Trust or Series as an
investment company under the 1940 Act with the Commission (or any successor
agency) or as the Trustees may consider necessary or desirable.
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On each matter submitted to a vote of Shareholders, unless the Trustees
determine otherwise, all Shares of all Series and Classes shall vote as a single
class; provided, however, that: (a) as to any matter with respect to which a
separate vote of any Series or Class is required by the 1940 Act or other
applicable law or is required by attributes applicable to any Series or Class,
such requirements as to a separate vote by that Series or Class shall apply; (b)
unless the Trustees determine that this clause (b) shall not apply in a
particular case, to the extent that a matter referred to in clause (a) above
affects more than one Series or Class and the interests of each such Series or
Class in the matter are identical, then the Shares of all such affected Series
or Classes shall vote as a single class; and (c) as to any matter which does not
affect the interests of a particular Series or Class, only the holders of Shares
of the one or more affected Series or Classes shall be entitled to vote. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote, and each fractional Share shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy or in any manner provided
for in the By-laws. A proxy may be given in writing, by telefax, or in any other
manner provided for in the By-laws. Anything in this Trust Instrument to the
contrary notwithstanding, in the event a proposal by anyone other than the
officers or Trustees of the Trust is submitted to a vote of the Shareholders of
the Trust or one or more Series or Classes thereof, or in the event of any proxy
contest or proxy solicitation or proposal in opposition to any proposal by the
officers or Trustees of the Trust, Shares may be voted only in person or by
written proxy. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required or permitted by law, this Trust
Instrument or any of the By-laws of the Trust to be taken by Shareholders.
Section 6.2 Meetings. Meetings of Shareholders (including meetings
involving only the holders of Shares of one or more but less than all Series or
Classes) may be called by the Trustees from time to time to be held at such
place within or without the State of Delaware, and on such date as may be
designated in the call thereof for the purpose of taking action upon any matter
as to which the vote or authority of the Shareholders is required or permitted
as provided in Section 6.1. Special meetings of the Shareholders of any Series
may be called by the Trustees and shall be called by the Trustees upon the
written request of Shareholders owning at least a majority of the Outstanding
Shares entitled to vote, except to the extent that a lesser percentage is
prescribed by the 1940 Act. Notice shall be sent, postage prepaid, by mail or
such other means determined by the Trustees, at least 7 days prior to any such
meeting.
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Section 6.3 Quorum and Required Vote. Unless a larger percentage is
required by law, by any provision of this Trust Instrument or by the Trustees,
one-third of the Shares entitled to vote in person or by proxy on a particular
matter shall be a quorum for the transaction of business at a Shareholders'
meeting with respect to that matter. Any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held without the
necessity of further notice. Except when a larger vote is required by law, by
any provision of this Trust Instrument or by the Trustees, a majority of the
Shares voted in person or by proxy on a particular matter at a meeting at which
a quorum is present shall decide any questions with respect to that matter and a
plurality shall elect a Trustee.
Section 6.4 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of the Shares entitled to vote on the matter (or
such larger proportion thereof as shall be required by law, by any provision of
this Trust Instrument or by the Trustees) consent to the action in writing. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1 Distributions.
(a) The Trustees may from time to time declare and pay dividends or
other distributions with respect to any Series or Class. The amount of such
dividends or distributions and the payment of them and whether they are in cash
or any other Trust Property shall be wholly in the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. All dividends and other distributions on Shares of a particular Class
shall be distributed pro rata to the Shareholders of that Class in proportion to
the number of Shares of that Class they held on the record date established for
such payment, except that in connection with any dividend or distribution
program or procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order and/or
payment in the prescribed form has not been received by the time or times
established by the Trustees under such program
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or procedure. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute a stock
dividend pro rata among the Shareholders of a particular Series, or Class
thereof, as of the record date of that Series or Class fixed as provided in
Section (b) hereof. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
Section 7.2 Redemption by Shareholder. (a) Unless the Trustees otherwise
determine with respect to a particular Series or Class at the time of
establishing and designating the same, each holder of Shares of a particular
Series or Class thereof shall have the right at such times as may be permitted
by the Trust, but no less frequently than once each week, to require the Trust
to redeem (out of the assets belonging to the applicable Series) all or any part
of his Shares at a redemption price equal to the Net Asset Value per Share of
that Series or Class next determined in accordance with Section 7.4 after the
Shares are properly tendered for redemption, less such redemption fee or other
charge, if any, as may be fixed by the Trustees. Except as otherwise provided in
this Trust Instrument, payment of the redemption price shall be in cash;
provided, however, that to the extent permitted by applicable law, the Trustees
may authorize the Trust to make payment wholly or partly in securities or other
assets belonging to the applicable Series at the value of such securities or
assets used in such determination of Net Asset Value.
(b) Notwithstanding the foregoing, the Trust may postpone payment of
the redemption price and may suspend the right of the holders of Shares of any
Series or Class to require the Trust to redeem Shares of that Series or Class
during any period or at any time when and to the extent permissible under the
1940 Act.
(c) In the event that a Shareholder shall submit a request for the
redemption of a greater number of Shares than are then allocated to such
Shareholder, such request shall not be honored.
Section 7.3 Redemption by Trust. Unless the Trustees otherwise determine
with respect to a particular Series or Class at the time of establishing and
designating the same, each Share of each Series or Class thereof that has been
established and designated is subject to redemption (out of the assets belonging
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to the applicable Series) by the Trust at the redemption price which would be
applicable if such Share was then being redeemed by the Shareholder pursuant to
Section 7.2 at any time if the Trustees determine in their sole discretion that
failure to so redeem may have materially adverse consequences to the holders of
the Shares, or any Series or Class of the Trust, and upon such redemption the
holders of the Shares so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption price. In addition, the
Trustees, in their sole discretion, may cause the Trust to redeem (out of the
assets belonging to the applicable Series) all of the Shares of one or more
Series or Classes held by (a) any Shareholder if the value of such Shares held
by such Shareholder is less than the minimum amount established from time to
time by the Trustees, (b) all Shareholders of one or more Series or Classes if
the value of such Shares held by all Shareholders is less than the minimum
amount established from time to time by the Trustees or (c) any Shareholder to
reimburse the Trust for any loss or expense it has sustained or incurred by
reason of the failure of such Shareholder to make full payment for Shares
purchased by such Shareholder, or by reason of any defective redemption request,
or by reason of indebtedness incurred because of such Shareholder as described
in Section 9.11 or to collect any charge relating to a transaction effected for
the benefit of such Shareholder or as provided in the prospectus relating to
such Shares.
Section 7.4 Net Asset Value. The Net Asset Value per Share of any Series
or Class thereof shall be the quotient obtained by dividing the value of the net
assets of that Series or Class (being the value of the assets belonging to that
Series or Class less the liabilities belonging to that Series or Class) by the
total number of Shares of that Series or Class outstanding, all determined in
accordance with the methods and procedures, including without limitation those
with respect to rounding, established by the Trustees from time to time.
The Trustees may determine to maintain the Net Asset Value per Share
of any Series at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Series or Class thereof as dividends
payable in additional Shares of that Series or Class thereof at the designated
constant dollar amount and for the handling of any losses attributable to that
Series or Class thereof. Such procedures may, among other things, provide that
in the event of any loss each Shareholder of a Series or Class thereof shall be
deemed to have contributed to the capital of the Trust attributable to that
Series or Class thereof his pro rata portion of the total number of Shares
required to be cancelled in order to permit the Net Asset Value per Share of
that Series or Class thereof to be maintained, after reflecting such loss, at
the designated constant dollar amount. Each Shareholder of the Trust
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shall be deemed to have agreed, by his investment in the Trust, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1 Limitation of Liability. Neither a Trustee nor an officer of
the Trust, when acting in such capacity, shall be personally liable to any
person other than the Trust or a beneficial owner for any act, omission or
obligation of the Trust, any Trustee or any officer of the Trust. Neither a
Trustee nor an officer of the Trust shall be liable for any act or omission in
his capacity as Trustee or as an officer of the Trust, or for any act or
omission of any officer (or other officer) or employee of the Trust or of any
other person or party, provided that nothing contained herein or in the Act
shall protect any Trustee or officer against any liability to the Trust or to
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee or the duties of such officer
hereunder.
Section 8.2 Indemnification. The Trust shall indemnify each of its
Trustees and officers and persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has any interest
as a shareholder, creditor, or otherwise ("Covered Person") against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties, and expenses including reasonable
accountants' and counsel fees) reasonably incurred in connection with the
defense or disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, in which he
may be involved or with which he may be threatened, while as a Covered Person or
thereafter, by reason of being or having been such a Covered Person, except that
no Covered Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties involved in the conduct of such Covered Person's office (such willful
misfeasance, bad faith, gross negligence or reckless disregard being referred to
herein as "Disabling Conduct"). Expenses, including accountants' and counsel
fees so incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties), may be paid
from time to time by the Trust in advance of the final disposition of any such
action, suit or proceeding upon receipt of (a) an undertaking by or on behalf of
such Covered Person to
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repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VIII and
either (b) such Covered Person provides security for such undertaking,(c) the
Trust is insured against losses arising by reason of such payment, or (d) a
majority of a quorum of disinterested, non-party Trustees, or independent legal
counsel in a written opinion, determines, based on a review of readily available
facts, that there is reason to believe that such Covered Person ultimately will
be found entitled to indemnification.
Section 8.3 Indemnification Determinations. Indemnification of a Covered
Person pursuant to Section 8.2 shall be made if (a) the court or body before
whom the proceeding is brought determines, in a final decision on the merits,
that such Covered Person was not liable by reason of Disabling Conduct or (b) in
the absence of such a determination, a majority of a quorum of disinterested,
non-party Trustees or independent legal counsel in a written opinion make a
reasonable determination, based upon a review of the facts, that such Covered
Person was not liable by reason of Disabling Conduct.
Section 8.4 Indemnification Not Exclusive. The right of indemnification
provided by this Article VIII shall not be exclusive of or affect any other
rights to which any such Covered Person may be entitled. As used in this Article
VIII, "Covered Person" shall include such person's heirs, executors and
administrators, and a "disinterested, non-party Trustee" is a Trustee who is
neither an Interested Person of the Trust nor a party to the proceeding in
question.
Section 8.5 Shareholders. Each Shareholder of the Trust and of each Series
shall not be personally liable for the debts, liabilities, obligations and
expenses incurred by, contracted for, or otherwise existing with respect to, the
Trust or by or on behalf of any Series. The Trustees shall have no power to bind
any Shareholder personally or to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay by way of subscription for any Shares or
otherwise.
In case any Shareholder or former Shareholder of any Series shall be held
to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
on behalf of the affected Series, shall, upon request by
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the Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series. The indemnification and reimbursement required by the
preceding sentence shall be made only out of assets of the one or more Series
whose Shares were held by said Shareholder at the time the act or event occurred
which gave rise to the claim against or liability of said Shareholder. The
rights accruing to a Shareholder under this Section shall not impair any other
right to which such Shareholder may be lawfully entitled, nor shall anything
herein contained restrict the right of the Trust or any Series thereof to
indemnify or reimburse a Shareholder in any appropriate situation even though
not specifically provided herein.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Trust Not a Partnership. It is hereby expressly declared that
a trust and not a partnership is created hereby. All persons extending credit
to, contracting with or having any claim against any Series of the Trust shall
look only to the assets of such Series for payment under such credit, contract
or claim; and neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every note, bond, contract or other undertaking
issued by or on behalf of the Trust or the Trustees relating to the Trust or to
a Series shall include a recitation limiting the obligations represented thereby
to the Trust or to one or more Series and its or their assets (but the omission
of such a recitation shall not operate to bind any Shareholder, Trustee,
officer, employee or agent of the Trust).
Section 9.2 Trustees' Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. Subject to the provisions of Article VIII: (a)
the Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, consultant, adviser, administrator,
distributor or principal underwriter, custodian or transfer, dividend
disbursing, Shareholder servicing or accounting agent of the Trust, nor shall
any Trustee be responsible for the act or omission of any other Trustee; (b) the
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Trust Instrument and their duties as Trustees, and shall
be under no liability for any act or omission in accordance with such advice or
for failing to follow such advice; and (c) in discharging their duties, the
Trustees, when acting in good faith, shall be entitled to rely
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upon the books of account of the Trust and upon written reports made to the
Trustees by any officer appointed by them, any independent public accountant,
and (with respect to the subject matter of the contract involved) any officer,
partner or responsible employee of a contracting party appointed by the
Trustees. The Trustees as such shall not be required to give any bond or surety
or any other security for the performance of their duties.
Section 9.3 Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust for a period not exceeding one hundred twenty
(120) days preceding the date of any meeting of Shareholders, or the date for
the payment of any dividends or other distributions, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding one hundred
twenty (120) days preceding the date of any meeting of Shareholders, or the date
for payment of any dividend or other distribution, or the date for the allotment
of rights, or the date when any change or conversion or exchange of Shares shall
go into effect, as a record date for the determination of the Shareholders
entitled to notice of, and to vote at, any such meeting, or entitled to receive
payment of any such dividend or other distribution, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of Shares, and in such case such Shareholders and only such
Shareholders as shall be Shareholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, such meeting, or to receive payment
of such dividend or other distribution, or to receive such allotment or rights,
or to exercise such rights, as the case may be, notwithstanding any transfer of
any Shares on the books of the Trust after any such record date fixed as
aforesaid.
Section 9.4 Termination of Trust or Series.
(a) This Trust shall continue without limitation of time but subject
to the provisions of sub-sections (b) and (c) of this Section 9.4.
(b) The Trustees may
(i) sell and convey all or substantially all of the assets of
the Trust or any Series or Class to another trust, partnership,
limited liability company, association or corporation, or to a
separate Series or Class of shares thereof, organized under the laws
of any state or jurisdiction, for adequate consideration which may
include the assumption of all outstanding obligations, taxes and
other liabilities, accrued or contingent, of the Trust or any Series
or Class, and
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which may include shares of beneficial interest, stock or other
ownership interests of such trust, partnership, limited liability
company, association or corporation or of a series thereof; or
(ii) at any time sell and convert into money all of the assets
of the Trust or any Series or Class.
Upon reasonable provision, in the determination of the Trustees, for the
payment of all such liabilities in either (i) or (ii), by such assumption or
otherwise, the Shareholders of each Class of a Series involved in such sale or
conversion shall be entitled to receive, as a Class, when and as declared by the
Trustees, the excess of the assets belonging to that Series that are allocated
to such Class over the liabilities belonging to that Series that are allocated
to such Class. The assets so distributable to the Shareholders of any particular
Class of a Series shall be distributed among such Shareholders in proportion to
the number of Shares of that Class held by them and recorded on the books of the
Trust. In the event a series is not divided into Classes, the foregoing
provisions shall be applied on a Series by Series basis.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in subsection (b), the Trust (in the case of a
sale or conversion with respect to the Trust as a whole or the last remaining
Series) or any affected Series or Class shall terminate and the Trustees and the
Trust shall be discharged of any and all further liabilities and duties
hereunder and the right, title and interest of all parties with respect to the
Trust or such affected Series or Class shall be cancelled and discharged.
Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Act, which certificate
of cancellation may be signed by any one Trustee.
Section 9.5 Merger, Consolidation, Incorporation. Anything in this Trust
Instrument to the contrary notwithstanding, the Trustees, in order to change the
form of organization and/or domicile of the Trust, may, without prior
Shareholder approval, (i) cause the Trust to merge or consolidate with or into
one or more trusts, partnerships, limited liability companies, associations or
corporations which is formed, organized or existing under the laws of a state,
commonwealth possession or colony of the United States, or (ii) cause the Trust
to incorporate under the laws of Delaware. Any agreement of merger or
consolidation or certificate of merger may be signed by a majority of the
Trustees. Pursuant to and in accordance with the provisions of Section 3815(f)
of the Act, and notwithstanding
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anything to the contrary contained in this Trust Instrument, an agreement of any
merger or consolidation approved in accordance with this Section 9.5 may effect
any amendment to the Trust Instrument or effect the adoption of a new trust
instrument of the Trust if it is the surviving or resulting trust in the merger
or consolidation. Any merger or consolidation of the Trust other than as
described in the foregoing provisions of this Section 9.5 shall, in addition to
the approval of the Trustees, require a Majority Shareholder Vote. Nothing in
this Section 9.5 shall require, however, Shareholder approval of any transaction
whereby the Trust or any Series thereof acquires or assumes all or any part of
the assets and liabilities of any other entity.
Section 9.6 Filing of Copies, References, Headings. The original or a copy
of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his", "he" and "him", shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
Section 9.7 Applicable Law. The trust set forth in this instrument is made
in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Act and the laws of
said State; provided, however, that there shall not be applicable to the Trust,
the Trustees or this Trust Instrument (a) the provisions of Section 3540 of
Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Act) pertaining to trusts which
relate to or regulate: (i) the filing with any court or governmental body or
agency of trustee accounts or schedules of trustee fees and charges, (ii)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental
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approval concerning the acquisition, holding or disposition of real or personal
property, (iv) fees or other sums payable to trustees, officers, agents or
employees of a trust, (v) the allocation of receipts and expenditures to income
or principal, (vi) restrictions or limitations on the permissible nature, amount
or concentration of trust investments or requirements relating to the titling,
storage or other manner of holding of trust assets, or (vii) the establishment
of fiduciary or other standards or responsibilities or limitations on the acts
or powers of trustees, which are inconsistent with the limitations or
liabilities or authorities and powers of the Trustees set forth or referenced in
this Trust Instrument. The Trust shall be of the type commonly called a
"business trust", and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
Section 9.8 Amendments. Except as specifically provided herein, the
Trustees may, without Shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to
vote: (i) on any amendment which would affect their right to vote granted in
Section 6.1, (ii) on any amendment to this Section 9.8, (iii) on any amendment
for which such vote is required by law and (iv) on any amendment submitted to
them by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series or Classes shall be authorized by vote of the Shareholders of
each Series or Class affected and no vote of shareholders of a Series or Class
not affected shall be required. Anything in this Trust Instrument to the
contrary notwithstanding, any amendment to Article VIII hereof shall not limit
the rights to indemnification or insurance provided therein with respect to
action or omission of any persons protected thereby prior to such amendment.
Section 9.9 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as determined from time to time by the Trustees.
Section 9.10 Provisions in Conflict with Law. The provisions of this Trust
Instrument are severable, and if the Trustees shall determine, with the advice
of counsel, that any of such provisions is in conflict with the 1940 Act, the
regulated investment company provisions of the Internal Revenue Code or
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with other applicable laws and regulations, the conflicting provision shall be
deemed never to have constituted a part of this Trust Instrument; provided,
however, that such determination shall not affect any of the remaining
provisions of this Trust Instrument or render invalid or improper any action
taken or omitted prior to such determination. If any provision of this Trust
Instrument shall be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Trust Instrument in any
jurisdiction.
Section 9.11 Allocation of Certain Expenses. Each Shareholder will, at the
discretion of the Trustees, indemnify the Trust against all expenses and losses
resulting from indebtedness incurred in connection with facilitating (i)
requests pending receipt of the collected funds from investments sold on the
date of such Shareholder's redemption request; (ii) redemption requests from
such Shareholder who has also notified the Trust of its intention to deposit
funds in its accounts on the date of said redemption request; or (iii) the
purchase of investments pending receipt of collected funds from such Shareholder
who has notified the Trust of its intention to deposit funds in its accounts on
the date of the purchase of the investments.
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IN WITNESS WHEREOF, the undersigned, being the Trustee of the Trust, has
executed this Amended and Restated Agreement of Trust as of the 11th day of
December, 1996.
/s/ William T. Sullivan, Jr.
---------------------------------
William T. Sullivan, Jr.
Trustee
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<PAGE> 1
Exhibit 2
Investment Services for Education Associations Trust
BY-LAWS
These By-laws (the "By-laws") of Investment Services for
Education Associations Trust (the "Trust"), a Delaware business trust, are
subject to the Amended and Restated Agreement of Trust of the Trust dated as of
December 11, 1996, as from time to time amended, supplemented or restated (the
"Trust Instrument"). Capitalized terms used herein which are defined in the
Trust Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in such
location as the Trustees may from time to time determine. The Trust may
establish and maintain such other offices and places of business as the Trustees
may from time to time determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
Section 2.1 Officers. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers as the Trustees may
from time to time elect. It shall not be necessary for any Trustee or other
officer to be a holder of Shares in the Trust.
Section 2.2 Election of Officers. Two or more offices may be
held by a single person. Subject to the provisions of Section 2.3 hereof, the
officers shall hold office until their successors are chosen and qualified and
serve at the pleasure of the Trustees.
Section 2.3 Resignations. Any officer of the Trust may resign
by filing a written resignation with the President, the Secretary or the
Trustees, which resignation shall take effect on being so filed or at such later
time as may be therein specified.
<PAGE> 2
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
Section 3.1 Chief Executive Officer. Unless the Trustees have
designated the Chairman as the chief executive officer of the Trust, the
President shall be the chief executive officer of the Trust and shall preside at
all meetings of the Shareholders.
Section 3.2 Treasurer. The Treasurer shall be the principal
financial and accounting officer of the Trust. He shall deliver all funds and
securities of the Trust which may come into his hands to such company as the
Trustees shall employ as Custodian in accordance with the Trust Instrument and
applicable provisions of law. He shall make annual reports regarding the
business and condition of the Trust, which reports shall be preserved in Trust
records, and he shall furnish such other reports regarding the business and
condition of the Trust as the Trustees may from time to time require. The
Treasurer shall perform such additional duties as the Trustees or the chief
executive officer may from time to time designate.
Section 3.3 Secretary. The Secretary shall record in books
kept for the purpose all votes and proceedings of the Trustees and the
Shareholders at their respective meetings. He shall have the custody of the seal
of the Trust. The Secretary shall perform such additional duties as the Trustees
or the chief executive officer may from time to time designate.
Section 3.4 Vice President. Any Vice President of the Trust
shall perform such duties as the Trustees or the chief executive officer may
from time to time designate. At the request or in the absence or disability of
the President, the most senior Vice President present and able to act may
perform all the duties of the President and, when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
Section 3.5 Assistant Treasurer. Any Assistant Treasurer of
the Trust shall perform such duties as the Trustees or the Treasurer may from
time to time designate, and, in the absence of the Treasurer, the most senior
Assistant Treasurer present and able to act may perform all the duties of the
Treasurer.
Section 3.6 Assistant Secretary. Any Assistant Secretary of
the Trust shall perform such duties as the Trustees or the Secretary may from
time to time designate, and, in the absence of the Secretary, the most senior
Assistant Secretary
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<PAGE> 3
present and able to act may perform all the duties of the Secretary.
Section 3.7 Additional Officers. The Trustees from time to
time may appoint such other officers or agents as they may deem advisable, each
of whom shall have such title, hold office for such period, have such authority
and perform such duties as the Trustees may determine.
Section 3.8 Surety Bonds. The Trustees may require any officer
or agent of the Trust to execute a bond (including, without limitation, any bond
required by the Investment Company Act of 1940 (the "1940 Act") in such sum and
with such surety or sureties as the Trustees may determine, conditioned upon the
faithful performance of his duties to the Trust including responsibility for
negligence and for the accounting of any of the Trust's property, funds or
securities that may come into his hands.
Section 3.9 Removal. Any officer may be removed from
office at any time by the Trustees.
Section 3.10 Remuneration. The salaries or other compensation,
if any, of the officers of the Trust shall be fixed from time to time by
resolution of the Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 4.1 Notices. Notices of any meeting of the
Shareholders shall be given by the Secretary by delivering or mailing, postage
prepaid, to each Shareholder entitled to vote at said meeting, written or
printed notification of such meeting at least seven days before the meeting, to
such address as may be registered with the Trust by the Shareholder. Notice of
any Shareholder meeting need not be given to any Shareholder if a written waiver
of notice, executed before or after such meeting, is filed with the record of
such meeting, or to any Shareholder who shall attend such meeting in person or
by proxy. Notice of adjournment of a Shareholders' meeting to another time or
place need not be given, if such time and place are announced at the meeting or
reasonable notice is given to persons present at the meeting.
Section 4.2 Voting-Proxies. Subject to the provisions of the
Trust Instrument, Shareholders entitled to vote may vote either in person or by
proxy, provided that either (i) an instrument authorizing such proxy to act is
executed by the Shareholder in writing and dated not more than eleven months
before the meeting, unless the instrument specifically provides for a longer
period or (ii) the Trustees adopt by resolution an
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<PAGE> 4
electronic, telephonic, computerized or other alternative to execution of a
written instrument authorizing the proxy to act, which authorization is received
not more than eleven months before the meeting. Proxies shall be delivered to
the Secretary of the Trust or other person responsible for recording the
proceedings before being voted. A proxy with respect to Shares held in the name
of two or more persons shall be valid if executed by one of them unless at or
prior to exercise of such proxy the Trust receives a specific written notice to
the contrary from any one of them. Unless otherwise specifically limited by
their terms, proxies shall entitle the holder thereof to vote at any adjournment
of a meeting. A proxy purporting to be exercised by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger. At all
meetings of the Shareholders, unless the voting is conducted by inspectors, all
questions relating to the qualifications of voters, the validity of proxies, and
the acceptance or rejection of votes shall be decided by the Chairman of the
meeting. Except as otherwise provided herein or in the Trust Instrument, all
matters relating to the giving, voting or validity of proxies shall be governed
by the General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware corporation
and the Shareholders were shareholders of a Delaware corporation.
Section 4.3 Place of Meeting. All meetings of the
Shareholders shall be held at such places as the Trustees may
designate.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1 Share Certificate. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
authorize. The Trustees may issue certificates to a Shareholder of any Series or
Class thereof for any purpose and the issuance of a certificate to one or more
Shareholders shall not require the issuance of certificates generally. In the
event that the Trustees authorize the issuance of Share certificates, such
certificate shall be in the form prescribed from time to time by the Trustees
and shall be signed by the President or a Vice President and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary. Such signatures may be
facsimiles if the certificate is signed by a transfer or shareholder services
agent or by a registrar, other than a Trustee, officer or employee of the Trust.
In case any officer who has signed or whose facsimile signature has been placed
on such certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Trust
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with the same effect as if he or she were such officer at the time of its issue.
Section 5.2 Loss of Certificate. In case of the alleged loss
or destruction or the mutilation of a Share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
Section 5.3. Discontinuance of Issuance of Certificates. The
Trustees may at any time discontinue the issuance of Share certificates and may,
by written notice to each Shareholder, require the surrender of Share
certificates to the Trust for cancellation. Such surrender and cancellation
shall not affect the ownership of Shares in the Trust.
ARTICLE VI
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to
what extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be open to
the inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees.
ARTICLE VII
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"Investment Services for Education Associations Trust -- 1996
THE STATE OF DELAWARE"
The form of the seal shall be subject to alteration by the
Trustees and the seal may be used by causing it or a facsimile to be impressed
or affixed or printed or otherwise reproduced.
Any officer or Trustee of the Trust shall have authority to
affix the seal of the Trust to any document, instrument or other paper executed
and delivered by or on behalf of the Trust; however, unless otherwise required
by the Trustees, the seal shall not be necessary to be placed on and its absence
shall not impair the validity of any document, instrument, or other paper
executed by or on behalf of the Trust.
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<PAGE> 6
ARTICLE VIII
AMENDMENTS
These By-laws may be amended from time to time by the
Trustees.
ARTICLE IX
HEADINGS
Headings are placed in these By-laws for convenience of
reference only and, in case of any conflict, the text of these By-laws rather
than the headings shall control.
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<PAGE> 1
Exhibit 5
================================================================================
INVESTMENT ADVISORY AGREEMENT
BETWEEN
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
AND
CADRE FINANCIAL SERVICES, INC.
DATED AS OF __________, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Recitals....................................................................1
ARTICLE I
DELIVERY OF DOCUMENTS
Section 1.01 Documents Delivered...........................................1
ARTICLE II
APPOINTMENT, DUTIES AND
COMPENSATION AS ADVISER
Section 2.01 Appointment as Adviser....................................2
Section 2.02 Services and Duties as Adviser............................3
Section 2.03 Compensation as Adviser...................................3
ARTICLE III
LIMITATIONS OF LIABILITY
Section 3.01 Adviser's Liability Limitation............................4
Section 3.02 Fund's Liability Limitation...............................4
ARTICLE IV
DURATION AND TERMINATION
Section 4.01 Term of Agreement.........................................4
ARTICLE V
CONSULTATION AND RELIANCE
Section 5.01 Consultation with Counsel.................................6
Section 5.02 Reliance on Certificates..................................6
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE VI
MISCELLANEOUS
<S> <C>
Section 6.01 Certain Relationships.......................................6
Section 6.02 Certain Restrictions........................................7
Section 6.03 Third Parties...............................................7
Section 6.04 Amendments..................................................8
Section 6.05 Captions....................................................8
Section 6.06 Severability................................................8
Section 6.07 Binding Effect..............................................8
Section 6.08 Notices.....................................................9
Section 6.09 Entire Agreement............................................9
Section 6.10 Applicable Law..............................................9
Section 6.11 Enforcement and Waiver.....................................10
Section 6.12 Authorization..............................................10
Section 6.13 Counterparts...............................................10
Section 6.14 Books and Records .........................................10
Section 6.15 Effectiveness..............................................11
Execution....................................................................11
</TABLE>
<PAGE> 4
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
INVESTMENT ADVISORY AGREEMENT
This Agreement, made as of the __th day of _________, 1997, by and
between Investment Services for Education Associations Trust, a Delaware
business trust (the "Fund"), and Cadre Financial Services Inc., a New York
corporation ("Cadre" or the "Adviser").
WHEREAS, The Fund desires to avail itself of the experience, resources,
advice and assistance of Cadre and to have Cadre undertake the duties and
responsibilities as investment adviser hereinafter set forth, on behalf and
subject to the supervision of the Board of Trustees of the Fund, as provided
herein; and
WHEREAS, Cadre is willing to undertake to render such investment
advisory services, subject to the supervision of the Board of Trustees, on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants hereinafter set forth and other good and valuable
consideration, the receipt of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I. DELIVERY OF DOCUMENTS
Section 1.01. Documents Delivered. Except as herein otherwise provided,
the Fund has delivered, or will cause to be delivered, to Cadre properly
certified or authenticated
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<PAGE> 5
copies of each of the following documents and will deliver to it all future
amendments and supplements thereto, if any:
(a) Amended and Restated Agreement of Trust of the Fund dated
as of December 11, 1996, (such document, as presently in effect and as the same
may be amended from time to time, is herein called the "Declaration of Trust");
(b) By-laws of the Fund (such By-laws, as presently in effect
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Trustees of the Fund
authorizing the appointment of Cadre as the Investment Adviser of the Fund and
approving the form of this Agreement;
(d) Prospectus of the Fund (such Prospectus in its present
form and as the same may be amended or supplemented from time to time, is herein
called the "Prospectus");
(e) Certified copy of the Administration Agreement, dated as
of ___________, 1997, between the Fund and Cadre Financial Services, Inc.; and
(f) A certificate of the Secretary of the Fund setting forth
the names and specimen signatures of the individuals authorized at the time of
delivery of such certificate to act on behalf of the Fund in connection with
matters arising hereunder.
ARTICLE II. APPOINTMENT, DUTIES AND COMPENSATION AS ADVISER
Section 2.01. Appointment as Adviser. The Fund hereby appoints Cadre as
the Adviser of the Fund on the terms and for the period set forth in this
Agreement, and Cadre
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<PAGE> 6
hereby accepts such appointment and agrees to perform the services and duties
set forth in Section 2.02 hereof for the compensation provided in Section 2.03
hereof.
Section 2.02. Services and Duties as Adviser.
(a) The Adviser agrees, as more fully set forth herein, to act
as the investment adviser to the Fund with respect to the investment of its
assets. Subject to the direction and control of the Board of Trustees of the
Fund, the Adviser: (i) shall provide a continuous investment program for the
Fund, including investment research and management with respect to all
securities, investments, instruments and cash equivalents (collectively
"investment instruments") in the Fund; (ii) shall determine what investment
instruments shall be purchased, retained or sold by the Fund; and (iii) shall
arrange for the purchase and the sale of investment instruments held in the
portfolio of the Fund.
(b) In performing its duties hereunder, the Adviser shall act
in conformity with the Declaration of Trust, the By-Laws and the Prospectus of
the Fund and with the instructions, guidelines, procedures and directions of the
Board of Trustees and shall conform to, and comply with, all applicable federal
and state laws and regulations.
Section 2.03. Compensation as Adviser. For the services to be rendered
and the duties to be assumed by the Adviser pursuant to this Agreement, the Fund
will pay to the Adviser, and the Adviser agrees to accept, as full compensation
therefor, an annual investment advisory fee computed daily and payable monthly
and computed at annual rate of 15 basis points (0.15%) of the Fund's average
daily net assets.
ARTICLE III. LIMITATIONS OF LIABILITY
3
<PAGE> 7
Section 3.01 Adviser's Liability Limitation. The Adviser shall not be
liable for any error in judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates, except
a loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties under
this Agreement or for its reckless disregard of its obligations and duties under
this Agreement or for its willful or negligent failure to take reasonable
measures to restrict investments of the fund property to those permitted by the
Fund investment policy, provided, however, that this Section 3.01 shall not
limit the Adviser's liability to the Fund with respect to any breaches by it of
this Agreement.
Section 3.02. Fund's Liability Limitation. Reference is hereby made to
the Declaration of Trust which contains certain provisions limiting the
liability of the Board of Trustees, Shareholders, officers, employees and agents
of the Trust. The obligations of the Fund created hereunder are not personally
binding upon, nor shall resort be had to the property of, any of the Board of
Trustees, Shareholders, officers, employees or agents of the Fund, and only that
portion of the Fund property necessary to satisfy the obligations of the Fund
arising hereunder shall be bound or affected by the operation of this Agreement.
ARTICLE IV. DURATION AND TERMINATION
Section 4.01. Term of Agreement. Unless sooner terminated as provided
herein, this Agreement wil continue in effect until ___________, 1999.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods, provided such
4
<PAGE> 8
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Trustees who are not interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Fund's Board of Trustees
or by vote of a majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated at any time,
without the payment of any penalty, by the Fund (by vote of the Fund's Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund), or by the Adviser, on 60 days' written notice. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment"" will have the same meaning as the meaning
of such terms in the Investment Company Act of 1940).
5
<PAGE> 9
ARTICLE V. CONSULTATION AND RELIANCE
Section 5.01. Consultation with Counsel. The Adviser may consult with
reputable and experienced legal counsel (who may be counsel to the Fund)
concerning any question that may arise with reference to its duties under this
Agreement, and the opinion of such counsel shall be full and complete protection
in respect of any action taken or omitted by the Adviser in good faith and in
accordance with such opinion provided such action meets the standards in Section
3.01.
Section 5.02. Reliance on Certificates. The Adviser shall not be liable
and subject to Section 3.01 shall be fully protected in relying upon any notice,
instrument, direction or other communication that the Adviser reasonably
believes (based on the most recent certificate of the Secretary of the Fund that
has been received by the Adviser pursuant to paragraph (f) of Section 1.01
hereof) to have been given by an individual who is authorized to act on behalf
of the Fund. The Fund agrees that it will supply the Adviser with certificates
of the type described in paragraph (f) of Section 1.01 hereof from time to time
as necessary to keep the information contained therein current, unless an
employee or an affiliate of the Adviser is a trustee or an officer of the Fund
in which case such certificates shall not be required by this Agreement.
ARTICLE VI. MISCELLANEOUS
Section 6.01. Certain Relationships. Nothing in this Agreement shall
prevent the Adviser or any officer, director or employee thereof from acting as
investment adviser or manager for any other person, firm, corporation or entity
and shall not in any way limit or
6
<PAGE> 10
restrict the Adviser or any of its directors, officers, partners or employees or
any of its affiliates' directors, officers, partners or employees from buying,
selling or trading any investment instruments for its or their own accounts or
the accounts of others (including without limitation other Funds) for whom it or
they may be acting; provided, however, that the Adviser expressly represents
that it will undertake no activities which in its judgment, will materially
adversely affect the performance of its obligations to the Fund under this
Agreement. Directors, officers, partners, employees and agents of the Advisor or
of affiliated persons of the Adviser may serve as officers, employees or agents
of the Fund.
Section 6.02. Certain Restrictions.
(a) Anything in this Agreement to the contrary notwithstanding,
the Adviser shall refrain from any action which would violate any law, rule or
regulation of any governmental body or agency having jurisdiction over the Fund
or its Shareholders or which would not be permitted by the Fund's Prospectus,
Declaration of Trust or By-Laws or by guidelines, procedures, or other
directions of the Fund's Board of Trustees.
(b) Without limiting the generality of the foregoing paragraph,
the Adviser shall not recommend, or arrange for, the purchase by the Fund of any
investment instrument which is not a permitted purchase or the purchase or
acquisition of which would constitute a violation of the investment restrictions
applicable to the Fund set forth in the Prospectus.
Section 6.03. Third Parties. When dealing with third parties on behalf
of the Fund in connection with the execution of investment transactions and
other matters, the Adviser shall include such recitals in written documents as
may be reasonably requested by the Fund pursuant to the provisions of the
Prospectus and Declaration of Trust regarding the limitation
7
<PAGE> 11
of liability of the Board of Trustees, Shareholders, officers, employees and
agents of the Fund to third parties.
Section 6.04. Amendments. This Agreement shall not be modified or
amended without the consent of each party hereto, which consent must be
evidenced by an instrument in writing executed by each party hereto, or by their
respective successors or permitted assigns.
Section 6.05. Captions. The captions in this Agreement are included for
convenience of reference only and shall in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
Section 6.06. Severability. If any provision of this Agreement shall be
held invalid under any applicable statute or regulation or by a decision of a
court of competent jurisdiction, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
Section 6.07. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and, subject to Section 4.01,
their respective successors and permitted assigns.
8
<PAGE> 12
Section 6.08. Notices. Notices or consents of any kind required or
permitted under this Agreement shall be in writing and shall be deemed duly
delivered if delivered in person or if mailed by certified mail, return receipt
requested or telegraph, postage prepaid to the appropriate party as follows:
A. If to the Fund:
_________________________
_________________________
_________________________
with a copy to;
Michael P. Malloy, Esquire
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
B. If to the Adviser:
William M. Sullivan, Esq.
Cadre Financial Services, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
or at such other address or to the attention of such other individual as shall
be specified by the respective parties hereto by written notice hereunder.
Section 6.09. Entire Agreement. This Agreement, and the documents
delivered pursuant hereto, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof.
Section 6.10. Applicable Law. This Agreement shall be deemed to have
been executed in the State of Delaware and the substantive laws of the State of
Delaware shall
9
<PAGE> 13
govern the construction of this Agreement and the rights and remedies of the
respective parties hereto.
Section 6.11. Enforcement and Waiver. Each party hereto shall have the
right at all times to enforce the provisions of this Agreement in strict
accordance with the terms hereof, notwithstanding any conduct or custom on the
part of such party in refraining from so doing at any time or times. The failure
of a party hereto at any time or times to enforce its rights under such
provisions, strictly in accordance with the same, shall not be construed as
having created a custom in any way or manner contrary to specific provisions of
this Agreement or as having in any way or manner modified or waived the same.
All rights and remedies of the respective parties hereto are cumulative and
concurrent and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.
Section 6.12. Authorization. This Agreement has been duly authorized,
executed and delivered by the parties hereto and constitutes a legal, valid and
binding obligation of such parties, enforceable in accordance with its terms.
Each individual signatory hereto represents and warrants that he is duly
authorized to execute this Agreement on behalf of his organization.
Section 6.13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument.
Section 6.14. Books and Records. In compliance with the requirements of
Rule 31a-3 of the Rules under the Investment Company Act of 1940, the Adviser
hereby agrees that all records which it maintains for the Fund are the property
of the Fund and further agrees to
10
<PAGE> 14
surrender promptly to the Fund any of such records upon the Fund's request. The
Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 the
records required to be maintained by Rule 31a-1 of the Rules.
Section 6.15. Effectiveness. This Agreement shall take effect as of the
date first above written.
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Advisory Agreement to be executed by their officers designated below as of the
day and year first above written and confirmed the day and year written below.
Investment Services for Education Associations Trust
by:____________________________
Cadre Financial Services, Inc.
by:___________________________
11
<PAGE> 1
Exhibit 6
================================================================================
DISTRIBUTION AGREEMENT
BETWEEN
INVESTMENT SERVICES FOR EDUCATION
ASSOCIATIONS TRUST
AND
CADRE SECURITIES, INC.
DATED AS OF _____, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Recitals...................................................................1
ARTICLE I
DELIVERY OF DOCUMENTS
Section 1.01 Documents Delivered..........................................2
ARTICLE II
APPOINTMENT, DUTIES AND
COMPENSATION AS DISTRIBUTION AGENT
Section 2.01 Appointment as Distribution Agent........................3
Section 2.02 Services and Duties as Distribution Agent................3
Section 2.03 Compensation as Distribution Agent.......................4
ARTICLE III
EXPENSES
Section 3.01 Expenses Paid by the Distribution Agent..................4
ARTICLE IV
LIMITATIONS OF LIABILITY
Section 4.01 Distribution Agent's Liability Limitation................4
Section 4.02 Fund's Liability Limitation..............................4
ARTICLE V
DURATION AND TERMINATION
Section 5.01 Term of Agreement........................................5
ARTICLE VI
CONSULTATION AND RELIANCE
Section 6.01 Consultation with Counsel................................6
Section 6.02 Reliance on Certificates.................................6
</TABLE>
i
<PAGE> 3
ARTICLE VII
MISCELLANEOUS
<TABLE>
<S> <C>
Section 7.01 Certain Relationships........................................6
Section 7.02 Certain Restrictions.........................................7
Section 7.03 Third Parties................................................7
Section 7.04 Amendments...................................................7
Section 7.05 Captions.....................................................8
Section 7.06 Severability.................................................8
Section 7.07 Binding Effect...............................................8
Section 7.08 Notices......................................................8
Section 7.09 Entire Agreement.............................................9
Section 7.10 Applicable Law...............................................9
Section 7.11 Enforcement and Waiver.......................................9
Section 7.12 Authorization................................................9
Section 7.13 Counterparts................................................10
Section 7.14 Books and Records...........................................10
Section 7.15 Effectiveness...............................................10
Execution.....................................................................11
</TABLE>
ii
<PAGE> 4
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
DISTRIBUTION AGREEMENT
This Agreement, made as of the ____ day of ________ 1997, by and
between the Investment Services for Education Associations Trust, a Delaware
business trust (the "Fund"), and Cadre Securities Inc., a New York corporation
("Cadre" or the "Distribution Agent").
WHEREAS, the Fund desires to avail itself of the experience, resources,
advice and assistance of Cadre Securities, Inc. and to have Cadre Securities,
Inc. undertake the duties and responsibilities hereinafter set forth, on behalf
and subject to the supervision of the Board of Trustees of the Fund, as provided
herein; and
WHEREAS, Cadre is willing to undertake to render such services, subject
to the supervision of the Board of Trustees, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants hereinafter set forth and other good and valuable
consideration, the receipt of which is hereby acknowledged, and intending to be
legally bound hereby the parties hereto agree as follows:
1
<PAGE> 5
ARTICLE I. DELIVERY OF DOCUMENTS
Section 1.01. Documents Delivered. Except as herein otherwise provided,
the Fund has delivered, or will cause to be delivered, to Cadre properly
certified or authenticated copies of each of the following documents and will
deliver to it all future amendments and supplements thereto, if any:
(a) Amended and Restated Agreement of Trust of the Fund, dated
as of December 11, 1996, (such document, as presently in effect and as the same
may be amended from time to time, is herein called the "Declaration of Trust");
(b) By-laws of the Fund (such By-laws, as presently in effect
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Trustees of the Fund
authorizing the appointment of Cadre as the Distribution Agent of the Fund and
approving the form of this Agreement;
(d) Prospectus of the Fund (such Prospectus, in its present form
and as the same may be amended or supplemented from time to time, is herein
called the "Prospectus");
(e) Certified copy of the Investment Advisory Agreement;
(f) Certified copy of the Administration Agreement; and
(g) A certificate of the Secretary of the Fund setting forth the
names and specimen signatures of the individuals authorized at the time of
delivery of such certificate to act on behalf of the Fund in connection with
matters arising hereunder.
2
<PAGE> 6
ARTICLE II. APPOINTMENT, DUTIES AND
COMPENSATION AS DISTRIBUTION AGENT
Section 2.01. Appointment as Distribution Agent. The Fund, hereby
appoints Cadre as the Distribution Agent of the Fund on the terms and for the
period set forth in this Agreement, and Cadre hereby accepts such appointment
and agrees to perform the services and duties of the Distribution Agent set
forth in Section 2.02 hereof for the compensation provided in Section 2.03
hereof.
Section 2.02 Services and Duties as Distribution Agent. Subject to the
supervision of the Board of Trustees of the Fund, the Distribution Agent:
(a) shall furnish the Fund, at the sole expense of the
Distribution Agent, with the services of such persons as may be necessary from
time to time, as requested by the Board of Trustees, competent to engage in
marketing and sales efforts to encourage investors and Shareholders to invest in
the Fund, and shall perform such marketing and sales functions as may be
requested from time to time by the Board of Trustees;
(b) shall advise the Board of Trustees from time to time, as
requested by the Board of Trustees, regarding methods of seeking and obtaining
additional Shareholders in the Fund;
(c) shall assist Shareholders and potential shareholders in
completing and submitting registration forms for the Fund; and
(d) shall assist in the preparation and dissemination of
information with respect to the existence and operation of the Fund.
In connection with the performance of its duties hereunder, the
Distribution Agent hereby represents and warrants to the Board of Trustees of
the Fund that it is authorized by, and has received all approvals and licenses
under, all applicable state and federal laws necessary to
3
<PAGE> 7
lawfully perform its duties hereunder.
Section 2.03. Compensation as Distribution Agent. For the services to
be rendered and the duties to be assumed by the Distribution Agent pursuant to
Section 2.02 of this Agreement, the Distribution Agent shall not be paid any
fee.
ARTICLE III. EXPENSES
Section 3.01. Expenses Paid by the Distribution Agent. The Distribution
Agent shall pay the expenses of activities that are primarily intended to result
in the sale of Shares in the Fund, including but not limited to, advertising,
compensation of underwriters, dealers and sales personnel, the printing and
mailing of prospectuses to other than current shareholders, and the printing and
mailing of sales literature.
ARTICLE IV. LIMITATIONS OF LIABILITY
Section 4.01. Distribution Agent's Liability Limitation. The
Distribution Agent shall not be liable for any error in judgement or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement,
provided, however, that this Section 4.01 shall not limit the Distribution
Agent's liability to the Fund with respect to any breaches by it of this
Agreement.
Section 4.02. Fund's Liability Limitation. Reference is hereby made to
the Declaration of Trust which contains certain provisions limiting the
liability of the Board of Trustees,
4
<PAGE> 8
Shareholder, officers, employees and agents of the Fund. The obligations of the
Fund created hereunder are not personally binding upon, nor shall resort be had
to the property of, any of the Board of Trustees, Shareholder, officers,
employees or agents of the Fund, and only that portion of the Fund property
necessary to satisfy the obligations of the Fund arising hereunder shall be
bound or affected by the operation of this Agreement.
ARTICLE V. DURATION AND TERMINATION
Section 5.01. Term of Agreement. Unless sooner terminated as provided
herein, this Agreement will continue in effect until ___________, 1999.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated at any time, without the payment of any penalty, by
the Fund (by vote of the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund), or by the Distribution Agent, on
60 days' written notice. This Agreement will immediately terminate in the event
of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment"" will have
the same meaning as the meaning of such terms in the Investment Company Act of
1940).
5
<PAGE> 9
ARTICLE VI. CONSULTATION AND RELIANCE
Section 6.01. Consultation with Counsel. The Distribution Agent may
consult with reputable and experienced legal counsel (who may be counsel to the
Fund) concerning any question that may arise with reference to its duties under
this Agreement, and the opinion of such counsel shall be full and complete
protection in respect of any action taken or omitted by the Distribution Agent
in good faith and in accordance with such opinion provided such action meets the
standards in Section 4.01.
Section 6.02. Reliance on Certificates. The Distribution Agent shall
not be liable, subject to Section 4.01, and shall be fully protected in relying
upon any notice, instrument, direction or other communication that the
Distribution Agent reasonably believes (based on the most recent certificate of
the Secretary of the Fund that has been received by the Distribution Agent
pursuant to paragraph (g) of Section 1.01. hereof) to have been given by an
individual who is authorized to act on behalf of the Fund. The Fund agrees that
it will supply the Distribution Agent with certificates of the type described in
paragraph (g) of Section 1.01 hereof from time to time as necessary to keep the
information contained therein current, unless an employee or an affiliate of the
Administrator is a trustee or an officer of the Fund in which case such
certificates shall not be required by this Agreement.
ARTICLE VII. MISCELLANEOUS
Section 7.01. Certain Relationships. Nothing in this Agreement shall
prevent the Distribution Agent or any officer, director or employee thereof from
acting as investment adviser or manager or Distribution Agent for any other
person, firm, corporation or entity and shall not
6
<PAGE> 10
in any way limit or restrict the Distribution Agent or any of its director,
officers, partners or employees or any of its affiliates' directors, officers,
partners or employees from buying, selling or trading any investment instrument
for its or their own accounts or the accounts of others (including without
limitation other Funds) for whom it or they may be acting; provided, however,
that the Distribution Agent expressly represents that it will undertake no
activities which, in its judgment, will materially adversely affect the
performance of its obligations to the Fund under this Agreement. Directors,
officers, partners, employees and agents of the Distribution Agent or of
affiliated persons of the Distribution Agent may serve as officers, employees or
agents of the Fund.
Section 7.02 Certain Restrictions. Anything in this Agreement to the
contrary notwithstanding, the Distribution Agent shall refrain from any action
which would violate any law, rule or regulation of any governmental body or
agency having jurisdiction over the Fund or its Shareholder or which would not
be permitted by the Fund's Prospectus, Declaration of Trust or By-Laws or by
guidelines, procedures or other directions of the Fund's Board of Trustees.
Section 7.03. Third Parties. When dealing with third parties on behalf
of the Fund in connection with the matters to which this Agreement relates, the
Distribution Agent shall include such recitals in written documents as may be
reasonably requested by the Fund pursuant to the provisions of the Prospectus
and Declaration of Trust regarding the limitation of liability of the Board of
Trustees, Shareholders, officers, employees and agents of the Fund to third
parties.
Section 7.04. Amendments. This Agreement shall not be modified or
amended without the consent of each party hereto, which consent must be
evidenced by an instrument in writing
7
<PAGE> 11
executed by each party hereto, or by their respective successors or permitted
assigns.
Section 7.05. Captions. The captions in this Agreement are included for
convenience of reference only and shall in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
Section 7.06. Severability. If any provision of this Agreement shall be
held invalid under any applicable statute or regulation or by a decision of a
court of competent jurisdiction, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
Section 7.07. Binding Effect. This Agreement shall be binding upon and
shall insure the benefit of the parties hereto and, subject to Section 5.01,
their respective successors and permitted assigns.
Section 7.08. Notices. Notices or consents of any kind required or
permitted under this Agreement shall be in writing and shall be deemed duly
delivered if delivered in person or if mailed by certified mail, return receipt
requested, or telegraph, postage prepaid to the appropriate party as follows:
A. If to the Fund:
__________________________
__________________________
__________________________
with a copy to:
Michael P. Malloy, Esquire
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
8
<PAGE> 12
B. If to the Distribution Agent:
William M. Sullivan, Esq.
Cadre Securities, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
or at such other address or to the attention of such other individual as shall
be specified by the respective parties hereto by written notice hereunder.
Section 7.09. Entire Agreement. This Agreement, and the documents
delivered pursuant hereto, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof.
Section 7.10. Applicable Law. this Agreement shall be deemed to have
been executed in the State of Delaware and the substantive laws of the State of
Delaware shall govern the construction of this Agreement and the rights and
remedies of the respective parties hereto.
Section 7.11. Enforcement and Waiver. Each party hereto shall have the
right at all times to enforce the provisions of this Agreement in strict
accordance with the terms hereof, notwithstanding any conduct or custom on the
part of such party in refraining from so doing at any time or times. The failure
of a party hereto at any time or times to enforce its rights under such
provisions, strictly in accordance with the same, shall not be construed as
having created a custom in any way or manner contrary to specific provisions of
this Agreement or as having in any way or manner modified or waived the same.
All rights and remedies of the respective parties hereto are cumulative and
concurrent and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.
Section 7.12. Authorization. This Agreement has been duly authorized,
executed and
9
<PAGE> 13
delivered by the parties hereto and constitutes a legal, valid and binding
obligation of such parties, enforceable in accordance with its terms. Each
individual signatory hereto represents and warrants that he is duly authorized
to execute this Agreement on behalf of his organization.
Section 7.13. Counterparts. This Agreement is intended to take effect
as an instrument under seal.
Section 7.14. Books and Records. In compliance with the requirements of
Rule 31a-3 of the Rules under the Investment Company Act of 1940, the
Distribution Agent hereby agrees that all records which it maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to
the Fund any records upon the Fund's request. The Distribution Agent further
agrees to preserve for the periods prescribed by Rule 31a-2 the records required
to be maintained by Rule 31a-1 of the Rules.
Section 7.15. Effectiveness. This Agreement shall take effect as of the
date first above written.
[INTENTIONALLY LEFT BLANK]
10
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Distribution
Agreement to be executed by their officers designated below as of the day and
year first above written and confirmed the day and year written below.
Investment Services for Education Associations Trust
by:_____________________________
Cadre Securities, Inc.
by:_____________________________
11
<PAGE> 1
Exhibit (9)(a)
================================================================================
ADMINISTRATION AGREEMENT
BETWEEN
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS
AND
CADRE FINANCIAL SERVICES, INC.
DATED AS OF ________, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Recitals.....................................................................1
ARTICLE I
DELIVERY OF DOCUMENTS
Section 1.01 Documents Delivered............................................1
ARTICLE II
APPOINTMENT, DUTIES AND
COMPENSATION AS ADMINISTRATOR
Section 2.01 Appointment as Administrator...................................2
Section 2.02 Services and Duties as Administrator...........................3
Section 2.03 Compensation as Administrator..................................5
Section 2.04 Organization and Establishment Costs of Account................6
ARTICLE III
EXPENSES
Section 3.01 Expenses Paid by the Administrator.............................6
Section 3.02 Expenses Paid by the Fund......................................6
ARTICLE IV
LIMITATIONS OF LIABILITY
Section 4.01 Administrator's Liability Limitation...........................7
Section 4.02 Fund's Liability Limitation....................................8
ARTICLE V
DURATION AND TERMINATION
Section 5.01 Term of Agreement..............................................8
ARTICLE VI
CONSULTATION AND RELIANCE
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 6.01 Consultation with Counsel...................................9
Section 6.02 Reliance on Certificates....................................9
ARTICLE VII
MISCELLANEOUS
Section 7.01 Certain Relationships......................................10
Section 7.02 Certain Restrictions.......................................10
Section 7.03 Third Parties..............................................10
Section 7.04 Amendments.................................................11
Section 7.05 Captions...................................................11
Section 7.06 Severability...............................................11
Section 7.07 Binding Effect.............................................11
Section 7.08 Notices....................................................11
Section 7.09 Entire Agreement...........................................12
Section 7.10 Applicable Law.............................................12
Section 7.11 Enforcement and Waiver.....................................12
Section 7.12 Authorization..............................................13
Section 7.13 Counterparts...............................................13
Section 7.14 Books and Records..........................................13
Section 7.15 Effectiveness..............................................13
Execution....................................................................14
</TABLE>
<PAGE> 4
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS
ADMINISTRATION AGREEMENT
This Agreement, made as of the __ day of _____, 1997, by and between
the Investment Services for Education Associations Trust, a Delaware business
trust (the "Fund"), and Cadre Financial Services Inc., a New York corporation
("Cadre" or the "Administrator").
WHEREAS, the Fund desires to avail itself of the experience, resources,
advice and assistance of Cadre and to have Cadre undertake the duties and
responsibilities hereinafter set forth, on behalf and subject to the supervision
of the Board of Trustees of the Fund, as provided herein; and
WHEREAS, Cadre is willing to undertake to render such services, subject
to the supervision of the Board of Trustees, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants hereinafter set forth, and other good and valuable
consideration, the receipt of which is hereby acknowledged and intending to be
legally bound hereby the parties hereto agree as follows:
ARTICLE I. DELIVERY OF DOCUMENTS
Section 1.01. Documents Delivered. Except as herein otherwise provided,
the Fund has delivered, or will cause to be delivered, to Cadre properly
certified or authenticated copies of each of the following documents and will
deliver to it all future amendments and supplements thereto, if any:
1
<PAGE> 5
(a) Amended and Restated Agreement of Trust of the Fund, dated
as of December 11, 1996, (such document, as presently in effect and as the same
may be amended from time to time, is herein called the "Declaration of Trust");
(b) By-laws of the Fund (such By-laws, as presently in effect
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Trustees of the Fund
authorizing the appointment of Cadre as the Administrator of the Fund and
approving the form of this Agreement;
(d) Prospectus of the Fund (such Prospectus in its present form
and as the same may be amended or supplemented from time to time, is herein
called the "Prospectus"); and
(e) A certificate of the Secretary of the Fund setting forth the
names and specimen signatures of the individuals authorized at the time of
delivery of such certificate to act on behalf of the Fund in connection with
matters arising hereunder.
ARTICLE II. APPOINTMENT, DUTIES AND
COMPENSATION AS ADMINISTRATOR
Section 2.01. Appointment as Administrator. The Fund, hereby appoints
Cadre as the Administrator of the Fund on the terms and for the period set forth
in this Agreement, and Cadre hereby accepts such appointment and agrees to
perform the services and duties of the Administrator set forth in Section 2.02
hereof for the compensation provided in Section 2.03 hereof.
2
<PAGE> 6
Section 2.02 Services and Duties as Administrator. Subject to the
supervision of the Board of Trustees of the Fund, the Administrator:
(a) shall assist in supervising all aspects of the Fund's
operations, other than (i) its investment operations which are to be managed by
the Fund's adviser pursuant to the investment advisory agreement, (ii) the
marketing of Shares of the Fund, which is to be performed by the Fund's
distributor pursuant to the distribution agreement, and (iii) those operations
which are to be managed by the Fund's custodian pursuant to the custodian
agreement (as each of such Agreements are now in effect and as the same may
hereafter be amended from time to time);
(b) shall act, in performing is duties as Administrator, in
conformity with the Declaration of Trust, the By-Laws and the Prospectus of the
Fund and with the instructions, guidelines, procedures and directions of the
Board of Trustees of the Fund and shall conform to, and comply with, all
applicable federal and state laws and regulations;
(c) shall furnish the Fund, at the sole expenses of the
Administrator, with the services of such persons competent to perform such
administrative and clerical functions as may be necessary from time to time in
order to provide effective administration of the Fund and maintain or provide
for the maintenance of such accounts, books and records as are requested by the
Board of Trustees of the Fund;
(d) shall arrange for the preparation on behalf of the Fund of any
and all required tax returns of the Fund and reports to the Fund's Shareholders
and the periodic updating of the Prospectus;
3
<PAGE> 7
(e) shall furnish the Fund, at the sole expense of the Administrator,
with adequate office space and utilities and all necessary office equipment and
related services;
(f) shall determine the per Share net asset value of each
Shareholder's account in the Fund on a daily basis;
(g) shall provide written confirmation of each investment and
withdrawal by a Shareholders (except to the extent confirmation of a withdrawal
is given by delivery to the Shareholders of a cancelled check relating thereto);
(h) shall hold itself available to receive and process, on behalf of
the Fund, applications and registrations from investors desiring to become
Shareholders of the Fund;
(i) shall service all Shareholders accounts in the Fund by, inter
alia, answering inquiries during normal business hours from Shareholders
concerning the status of their respective accounts in the Fund;
(j) shall advise the Board of Trustees from time to time, as
requested by the Board of Trustees, regarding methods of seeking and obtaining
additional Shareholders in the Fund;
(k) shall, at least once each quarter, provide the Board of Trustees
with a detailed evaluation of the performance of the Fund based upon such
factors as the Administrator shall deem appropriate in light of its knowledge
and experience;
(l) shall furnish each Shareholder with monthly statement(s) of its
account(s) in the Fund;
(m) shall, each fiscal quarter, furnish each Shareholder with a copy
of the Fund's financial statements for the fiscal quarter most recently ended;
4
<PAGE> 8
(n) shall keep and maintain all financial accounts and records
(other than those required to be maintained by the Fund's Custodian);
(o) shall compile data for, and other than the Fund's Registration
Statement on Form N-1A, prepare for execution and file other reports or other
documents required by Federal, state and other applicable laws and regulations
(other than those required to be filed by the Fund's Custodian);
(p) shall develop compliance procedures and monitor compliance for the
Fund, including without limitation, compliance with applicable law and
regulations, and the Fund's investment objectives, policies and restrictions;
(q) shall provide the Fund with transfer agency services;
(r) determine, together with the Fund's Board of Trustees, the
jurisdictions in which the Fund's shares shall be registered or qualified for
sale or where notices are available and, in connection therewith, the
Administrator shall be responsible for the maintenance of the registration or
qualification of shares for sale or such notices under the securities laws of
any state. Payment of share registration fees and any fees for qualifying or
continuing the qualification of the Fund as a dealer or broker, if applicable,
shall be made by the Fund; and
(s) assist to the extent requested by the Fund and its outside counsel
with the preparation of the Fund's Registration Statement on Form N-1A or any
replacement therefor.
Section 2.03 Compensation as Administrator. For the services to be
rendered and the duties to be assumed by the Administrator pursuant to Section
2.02 of this Agreement, the Fund will pay to the Administrator, and the
Administrator agrees to accept, as full
5
<PAGE> 9
compensation therefor a fee equal to an annual rate of 15 basis points (1.5% of
the Fund's average daily net assets).
Section 2.04. Organization and Establishment Costs of Account. The Fund
agrees to reimburse the Administrator for those costs of organizing and
establishing the Fund once the Fund balance exceeds twenty five million
($25,000,000) for thirty consecutive days. In the event of termination pursuant
to Article V of this Agreement, the Fund shall still be liable to the
Administrator for any remaining organization and establishment costs of the
Fund.
ARTICLE III. EXPENSES
Section 3.01. Expenses Paid by the Administrator. The Administrator
shall pay the administrative costs of the Fund such as postage, telephone
charges and computer time, in addition to the expenses to be paid by it pursuant
to paragraphs (c), (e) and (f) of Section 2.02 hereof.
Section 3.02. Expenses Paid by the Fund. All expenses of the Fund not
allocated to the Administrator pursuant to Section 3.01 hereof shall be paid by
the Fund; including, but not limited to the following:
(a) interest and taxes, if any;
(b) brokerage commissions;
(c) expenses of its Board of Trustees;
(d) legal, audit and accounting expenses;
6
<PAGE> 10
(e) fees and expenses of the Custodian, and the Adviser, as
provided in the Custodian Agreement and the Investment Advisory Agreement
respectively;
(f) the costs of appropriate insurance written by reputable
insurers for the Board of Trustees and the Fund and its interests;
(g) expenses of preparing reports, notices and meeting material
to existing Shareholders of the Fund which is not primarily intended to result
in sale of Fund shares, the preparation and printing of any supplement or
amendment to any registration statement or prospectus necessary for the
continued effective registration of the shares under the Securities Act of 1933,
as amended, or any state securities law, and the printing and distribution of
the Prospectus to existing Shareholders of the Fund;
(h) all other expenses incidental to holding meetings of the
Fund's Participants; and
(i) such nonrecurring expenses as may arise, including
litigation affecting the Fund and the legal obligations which the Fund may have
to indemnify its officers and Directors with respect thereto.
ARTICLE IV LIMITATIONS OF LIABILITY
Section 4.01. Administrator's Liability Limitation. The Administrator
shall not be liable for any error in judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties
7
<PAGE> 11
or from reckless disregard by it of its obligations and duties under this
Agreement, provided, however, that this Section 4.01 shall not limit the
Administrator's liability to the Fund with respect to any breaches by it of this
Agreement.
Section 4.02. Fund's Liability Limitation. Reference is hereby made to
the Declaration of Trust which contains certain provisions limiting the
liability of the Board of Trustees, Shareholders officers, employees or agents
of the Fund, and only that portion of the Fund property necessary to satisfy the
obligations of the Fund arising hereunder shall be bound or affected by the
operation of this Agreement.
ARTICLE V. DURATION AND TERMINATION
Section 5.01 Term of Agreement. Unless sooner terminated as provided
herein, this Agreement wil continue in effect until ___________, 1999.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated at any time, without the payment of any penalty, by
the Fund (by vote of the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund), or by the Adviser, on 60 days'
written notice. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
8
<PAGE> 12
voting securities," "interested persons" and "assignment"" will have the same
meaning as the meaning of such terms in the Investment Company Act of 1940).
ARTICLE VI. CONSULTATION AND RELIANCE
Section 6.01. Consultation with Counsel. The Administrator may consult
with reputable and experienced legal counsel (who may be counsel to the Fund)
concerning any question that may arise with reference to its duties under this
Agreement, and the opinion of such counsel shall be full and complete protection
in respect of any action taken or omitted by the Administrator in good faith and
in accordance with such opinion provided such action meets the standards of
Section 4.01.
Section 6.02. Reliance on Certificates. The Administrator shall not be
liable and subject to Section 4.01 shall be fully protected in relying upon any
notice, instrument, direction or other communication that the Administrator
reasonably believes (based on the most recent certificate of the Secretary of
the Fund that has been received by the Administrator pursuant to paragraph (f)
of Section 1.01 hereof) to have been given by an individual who is authorized to
act on behalf of the Fund. The Fund agrees that it will supply the Administrator
with certificates of the type described in paragraph (f) of Section 1.01 hereof
from time to time as necessary to keep the information contained therein
current, unless an employee or an affiliate of the Administrator is a trustee or
an officer of the Fund in which case such certificates shall not be required by
this Agreement.
ARTICLE VII. MISCELLANEOUS
9
<PAGE> 13
Section 7.01. Certain Relationships. Nothing in this Agreement shall
prevent the Administrator or any officer, director or employee thereof from
acting as investment adviser or manager or administrator for any other person,
firm, corporation or entity and shall not in any way limit or restrict the
Administrator or any of its directors, officers, partners or employees or any of
its affiliates' directors, officers, partners or employees from buying, selling
or trading any investment instruments for its or their own accounts or the
accounts of others (including without limitation other Funds) for whom it or
they may be acting; provided, however, that the Administrator expressly
represents that it will undertake no activities which, in its judgment, will
materially adversely affect the performance of its obligations to the Fund under
this Agreement. Directors, officers, partners, employees and agents of the
Administrator or of affiliated persons of the Administrator may serve as
officers, employees or agents of the Fund.
Section 7.02. Certain Restrictions. Anything in this Agreement to the
contrary notwithstanding, the Administrator shall refrain from any action which
would violate any law, rule or regulation of any governmental body or agency
having jurisdiction over the Fund or its Shareholders or which would not be
permitted by the Fund's Prospectus, Declaration of Trust or By-Laws or by
guidelines, procedures or other directions of the Fund's Board of Trustees.
Section 7.03. Third Parties. When dealing with third parties on behalf
of the Fund in connection with the matters to which this Agreement relates, the
Administrator shall include such recitals in written documents as may be
reasonably requested by the Fund pursuant to the provisions of the Prospectus
and Declaration of Trust regarding the limitation of liability
10
<PAGE> 14
of the Board of Trustees, Shareholders, officers, employees and agents of the
Fund to third parties.
Section 7.04. Amendments. This Agreement shall not be modified or
amended without the consent of each party hereto, which consent must be
evidenced by an instrument in writing executed by each party hereto, or by their
respective successors or permitted assigns.
Section 7.05. Captions. The captions in this Agreement are included for
convenience of reference only and shall in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
Section 7.06. Severability. If any provision of this Agreement shall be
held invalid under any applicable statute or regulation or by a decision of a
court of competent jurisdiction, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
Section 7.07. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and, subject to Section 5.01,
their respective successors and permitted assigns.
Section 7.08. Notices. Notices or consents of any kind required or
permitted under this Agreement shall be in writing and shall be deemed duly
delivered if delivered in person or if mailed by certified mail, return receipt
requested, or telegraph, postage prepaid to the appropriate party as follows:
A. If to the Fund:
11
<PAGE> 15
_________________________
_________________________
_________________________
with a copy to;
Michael P. Malloy, Esquire
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
B. If to the Administrator:
William M. Sullivan, Esq.
Cadre Consulting Services, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
or at such other address or to the attention of such other individual as shall
be specified by the respective parties hereto by written notice hereunder.
Section 7.09. Entire Agreement. This Agreement, and the documents
delivered pursuant hereto, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof.
Section 7.10. Applicable Law. This Agreement shall be deemed to have
been executed in the State of Delaware and the substantive laws of the State of
Delaware shall govern the construction of this Agreement and the rights and
remedies of the respective parties hereto.
Section 7.11. Enforcement and Waiver. Each party hereto shall have the
right at all times to enforce the provisions of this Agreement in strict
accordance with the terms hereof, notwithstanding any conduct or custom on the
part of such party in refraining from so doing at any time or times. The failure
of a party hereto at any time or times to enforce its rights
12
<PAGE> 16
under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom in any way or manner contrary to specific
provisions of this Agreement or as having in any way or manner modified or
waived the same. All rights and remedies of the respective parties hereto are
cumulative and concurrent and the exercise of one right or remedy shall not be
deemed a waiver or release of any other right or remedy.
Section 7.12. Authorization. This Agreement has been duly
authorized, executed and delivered by the parties hereto and constitutes a
legal, valid and binding obligation of such parties, enforceable in accordance
with its terms. Each individual signatory hereto represents and warrants that he
is duly authorized to execute this Agreement on behalf of his organization.
Section 7.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument.
Section 7.14 Books and Records. In compliance with the requirements of
Rule 31a-3 of the Rules under the Investment Company Act of 1940, the
Administrator hereby agrees that all records which it maintains for the Fund are
the property of the Fund and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request. The Administrator further agrees to
preserve for the periods prescribed by Rule 31a-2 the records required to be
maintained by Rule 31a-1 of the Rules.
Section 7.15. Effectiveness. This Agreement shall take effect as of the
date first above written.
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<PAGE> 17
[INTENTIONALLY LEFT BANK]
14
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Administration
Agreement to be executed by their officers designated below as of the day and
year first above written and confirmed the day and year written below.
Investment Services for Education Associations
by:___________________________________
Cadre Financial Services, Inc.
by:___________________________________
15
<PAGE> 1
Exhibit (9)(b)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSULTING AGREEMENT
BETWEEN
ASSOCIATION OF SCHOOL BUSINESS
OFFICIALS INTERNATIONAL
AND
CADRE FINANCIAL SERVICES, INC.
_______, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CONSULTING AGREEMENT
This Agreement, executed on _______, 1997, is made by and between
ASSOCIATION OF SCHOOL BUSINESS OFFICIALS INTERNATIONAL ("ASBO"), and CADRE
FINANCIAL SERVICES, INC., a New York corporation ("Cadre"):
RECITALS
Investment Services for Education Associations Trust (the
"Trust") is registered with the Securities and Exchange Commission as
an open-end, diversified investment company under the Investment
Company Act of 1940 and the Fund's Shares are registered under the
Securities Act of 1933;
Cadre has entered into an Investment Advisory Agreement and an
Administration Agreement (collectively, the "Cadre Agreements") with
the Trust dated _______, 1997, to provide investment adviser to the
Fund, which will operate as a money market mutual fund; and
Cadre desires to avail itself of the experience, and
consulting assistance of ASBO in providing the services required under
the Cadre Agreements.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
APPOINTMENT, DUTIES AND
COMPENSATION OF CONSULTANT
1.1 APPOINTMENT AS CONSULTANT. Cadre hereby retains ASBO as a
consultant on the terms and for the period set forth in this Agreement, and ASBO
hereby accepts such appointment and agrees to provide consulting services for
the compensation set forth in this Agreement.
1.2 SERVICES AS CONSULTANT. ASBO shall:
(a) Consult with, advise and provide Cadre and its affiliate,
Cadre Securities, Inc. ("Cadre Securities'), information about the members of
ASBO Council of Northern and Central California and others who are eligible to
invest in the Fund in order to assist Cadre and its affiliate in providing
services to the Fund and its shareholders;
<PAGE> 3
(b) Schedule and announce through its publications,
informational meetings and seminars at which representatives of Cadre
Securities, who are licensed as securities salesmen, will discuss the Fund and
related matters;
(c) Consult with Cadre as to local facilities to be used in
connection with the administration and operation of the Fund;
(d) Assist in the preparation and dissemination of information
with respect to the existence of the Fund;
(e) Allow the use of its publications to give information on
how to obtain materials concerning the Fund;
(f) Consult with the Fund and Cadre regarding coordination of
efforts and the resolution of operational difficulties that may arise between
the Fund and persons that are or may become participants in the Fund;
(g) Provide Cadre Securities with mailing lists of potential
participants in the Fund;
(h) Permit the use of its logos in informational materials
prepared regarding the Fund; and
(i) Retain education industry associations and others to
assist ASBO in providing the consulting services required under this Agreement.
1.3 LIMITATIONS ON ACTIONS OF CONSULTANT. ASBO understands that neither
it nor any other person whom it may retain as provided in Section 1.2(i) shall
have any discretion to accept or reject the application of any person to become
a shareholder in the Fund. It will forward all requests for information
regarding the Fund received by it directly to Cadre for appropriate action. ASBO
further understands and agrees that neither it nor any person it retains as a
consultant as provided in Section 1.2(i) will:
(a) Accept application or registration forms from persons
seeking to become participants by buying Shares of the Fund;
(b) Accept any cash, checks, wire transfers, or other forms of
payment from any person that may be remitted for the purchase of Shares in the
Fund;
(c) Deliver any Prospectus, Statement of Additional
Information or other informational or advertising document prepared in
connection with the offering of Shares by the Fund to any person or potential
participant in the Fund;
3
<PAGE> 4
(d) Engage in the offer or sale of Shares of the Fund; or
(e) Permit its employees and agents, or the employees and
agents of any other person retained to provide consulting services pursuant to
Section 1.2(i), to engage in, and will take reasonable action to prevent such
employees and agents from engaging in, the activities described in this Section
1.3 or any other activity primarily intended to result in sales of Shares of the
Fund.
1.4 COMPENSATION AS CONSULTANT. Cadre Consulting agrees to pay to ASBO
for its services as consultant a fee, which shall be calculated daily, payable
monthly and computed at an annual percentage rate of the Fund's average daily
net assets, in an amount equal to .02% of the Fund's average daily net assets
and .05% of the average daily net assets of shareholders who are members of
ASBO.
Notwithstanding the foregoing, ASBO shall not be paid any fees during the ___
month period following the date on which the Fund commences operations following
the initial declaration by the Securities and Exchange Commission of the
effectiveness of the Fund's registration statement.
ASBO may, in its discretion, assign and pay, or direct Cadre to pay, to
any person retained as a consultant as permitted by Section 1.2(i) a portion of
the fees payable under this Section 1.4, and Cadre agrees that it will pay such
portion of the fees as may be directed in writing by ASBO.
ARTICLE 2
LIMITATION OF LIABILITY
ASBO shall not be liable for any error in judgement or mistake of law
or for any loss suffered by Cadre in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith,
gross negligence or negligence, on its part in the performance of its duties
under this Agreement; provided, the foregoing shall not limit ASBO's liability
with respect to any breaches by it of this Agreement. ASBO shall not be liable
for the payment of any of the administrative costs of the Fund.
ARTICLE 3
DURATION, TERMINATION AND AMENDMENT
3.1 DURATION OF AGREEMENT. This Agreement shall become effective
immediately upon approval by a majority of the outstanding shares of the Fund
and by a majority of the members of the Board of Trustees of the Trust who are
not parties to this Agreement or "interested persons" of any such party (as that
term is used in the Investment Company Act
4
<PAGE> 5
of 1940, as amended (the "1940 Act")), cast in person at a meeting of the Board
of Trustees called for the purpose of voting on the approval of this Agreement.
This Agreement shall remain in effect for two years from the date of its
execution and shall continue from year to year thereafter, but only so long as
such continuance is approved at least annually either by the vote of a majority
of the Board of Trustees consisting of members who are not parties to this
Agreement or "interested persons" of any such party (as that term is used in the
1940 Act) or by vote of a majority of the outstanding shares of the Fund.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Trustees or by vote of a majority of the Fund's
outstanding shares, on sixty (60) days' written notice to ASBO or by ASBO on
sixty (60) days' written notice to Cadre. The Agreement may not be terminated by
Cadre.
This Agreement shall automatically terminate either in the event of its
assignment within the meaning of Section 15(a) (4) of the 1940 Act or on the
date that the Investment Advisory Agreement or the Administration Agreement
described in the Recitals terminates.
If ASBO ceases to act as a consultant under this Agreement, Cadre
agrees that, at ASBO's request, it will take all necessary steps to discontinue
use of any logo of ASBO or other indication of ASBO's support of the Fund.
3.2 AMENDMENTS, ETC. No provision of this Agreement may be waived,
amended or terminated except by an instrument in writing signed by Cadre and
ASBO, and no amendment of Trustees in the manner required by Section 3.1 and, if
required by the 1940 Act, by vote of a majority of the outstanding shares of the
Fund.
ARTICLE 4
MISCELLANEOUS
4.1 AMENDMENTS. This Agreement shall not be modified or amended without
the consent of both parties hereto, which consent must be evidenced by an
instrument in writing executed by each party hereto.
4.2 CAPTIONS. The captions in this Agreement are included for
convenience of reference only and shall in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
4.3 SEVERABILITY. If any provision of this Agreement shall be held
invalid under any applicable statute or regulation or by a decision of a court
of competent jurisdiction, such
5
<PAGE> 6
invalidity shall not affect any other provision of this Agreement that can be
given effect without the invalid provision, and, to this end, the provisions
hereof are severable.
4.4 BINDING EFFECT. This Agreement shall be binding upon and shall
insure to the benefit of the parties hereto and their respective successors and
permitted assigns.
4.5 NOTICES. Notices or consent of any kind required or permitted under
this Agreement shall be in writing and shall be deemed duly delivered if
delivered in person or if mailed by certified mail, return receipt requested,
postage prepaid, to the appropriate party as follows:
a. If to Cadre:
_______________________________
_______________________________
_______________________________
with a copy to;
Michael P. Malloy, Esquire
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
b. If to ASBO:
_______________________________
_______________________________
_______________________________
or at such other address as shall be specified by either party by notice given
in the manner required by this Section 4.5.
4.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof.
6
<PAGE> 7
4.7 APPLICABLE LAW. This Agreement shall be deemed to have been
executed in the State of Delaware and the substantive laws of the State of
Delaware shall govern the construction of this Agreement and the rights and
remedies of the respective parties hereto.
4.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
ASSOCIATION OF SCHOOL BUSINESS
OFFICIALS INTERNATIONAL
By_____________________________________
Its______________________________
CADRE FINANCIAL SERVICES, INC.
By_____________________________________
Its______________________________
7
<PAGE> 1
Exhibit 11 (b)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to
the reference to our Firm under the caption "Custodian, Counsel and Independent
Auditors" in the Statement of Additional Information that is included in the
Registration Statement on Form N-1A under the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, of Investment Services for Education
Associations Trust. This consent does not constitute a consent under section 7
of the Securities Act of 1933, and in consenting to the use of our name and the
references to our Firm under such caption we have not certified any part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under said section 7 or the rules and
regulations of the Securities and Exchange Commission thereunder.
/s/ DRINKER BIDDLE & REATH
---------------------------
DRINKER BIDDLE & REATH
Philadelphia, Pennsylvania
December 13, 1996
