<PAGE> 1
As filed with the Securities and Exchange Commission on April 2, 1998.
Registration No. 333-17789/811-7967
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-effective Amendment No.
Post-effective Amendment No. 1 /x/
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 2 /x/
Investment Services for Education Associations Trust
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(Exact name of Registrant as Specified in Charter)
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899-1347
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(Address of Principal Executive Office (ZIP Code))
Registrant's Telephone Number: (516) 467-0200
Michael P. Malloy
Drinker Biddle & Reath LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/x/ immediately upon filing pursuant to paragraph (b), or
/ / on (date) pursuant to paragraph (b), or
/ / 60 days after filing pursuant to paragraph (a)(i), or
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
Title of Securities Being Registered: Shares of beneficial interest.
<PAGE> 3
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
CROSS-REFERENCE SHEET
Between Items Enumerated in Part A
of Form N-1A and Prospectus
<TABLE>
<CAPTION>
ITEM NUMBER CAPTION
OF FORM N-1A IN PROSPECTUS
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<S> <C>
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Financial Highlights
Information
4. General Description The Trust; Eligible Shareholders;
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 *
</TABLE>
Between Items Enumerated in Part B
of Form N-1A and Statement of Additional Information
<TABLE>
<CAPTION>
ITEM NUMBER CAPTION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
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<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information *
and History
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
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 Plan
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 Financial Statements
</TABLE>
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* Omitted since answer is negative or inapplicable
<PAGE> 5
PART A - PROSPECTUS
<PAGE> 6
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PROSPECTUS APRIL 1, 1998
1998
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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.
Shareholders may invest or redeem shares without charge or penalty.
Unlimited checkwriting redemption privileges are available to Shareholders.
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 April 1, 1998, 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
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Page
<S> <C>
EXPENSE SUMMARY..................................................... 1
FINANCIAL HIGHLIGHTS................................................ 2
THE TRUST; ELIGIBLE SHAREHOLDERS.................................... 3
INVESTMENT OBJECTIVE AND POLICIES................................... 3
HOW TO INVEST IN THE FUND........................................... 6
REDEMPTIONS......................................................... 7
SHAREHOLDER SERVICES................................................ 8
MANAGEMENT OF THE FUND.............................................. 9
YIELD AND OTHER PERFORMANCE INFORMATION............................. 11
DISTRIBUTIONS AND TAXES............................................. 12
GENERAL INFORMATION................................................. 13
</TABLE>
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
<PAGE> 7
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. 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.
<PAGE> 8
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>
<CAPTION>
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Management Fees (After Fee Waiver)............................... .00%
12b-1 Fees (After Fee Waiver).................................... .00%
Other Expenses .................................................. .39%
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Total Fund Operating Expenses (After Fee Waiver and
Expense Reimbursement)(1)........................................ .39%
====
</TABLE>
(1) 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, Total Fund Operating Expenses
would be .76% of the Fund's average net assets (of which
.30% would consist of Management Fees, .07% would consist of
Rule 12b-1 fees, and .39% would consist of Other Expenses).
<TABLE>
<CAPTION>
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EXAMPLE: 1 YEAR 3 YEARS
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. $4 $12
</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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<PAGE> 9
FINANCIAL HIGHLIGHTS
The following unaudited "Financial Highlights" set forth certain
investment results for shares of the Fund, and should be read in conjunction
with the Fund's unaudited financial statements and related notes which are
incorporated by reference into the Statement of Additional Information. Further
information about the performance of the Fund is available in the Fund's
Semi-Annual Report to Shareholders. Both the Statement of Additional Information
and the Semi-Annual Report to Shareholders may be obtained, free of charge, by
calling the number listed under "General Information" in this Prospectus.
INVESTMENT SERVICES FOR EDUCATIONAL ASSOCIATIONS
MONEY MARKET FUND
(SELECTED PER SHARE DATA FOR A FUND SHARE OUTSTANDING THROUGHOUT
THE PERIOD INDICATED)
<TABLE>
<CAPTION>
Period Ended
December 31, 1997
(Unaudited)(1)
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Net Asset Value, Beginning of Period........... $1.00
-----
Income from Investment Operations:
Net investment income........................ 0.013
Less Dividends:
Dividends from net investment income......... (0.013)
Net Asset Value, End of Period................. $1.00
=====
Total Return................................... 1.33%*
Ratios/Supplemental Data:
Net Assets, End of Period...................... $8,572,007
Ratios of Net Operating Expenses to
Average Net Assets:
Before reimbursement/waiver.................. 0.70%**
After reimbursement/waiver................... 0.40%**
Ratios of Net Investment Income to
Average Net Assets:
Before reimbursement/waiver................. 4.95%**
After reimbursement/waiver.................. 5.25%**
</TABLE>
(1) The Fund commenced operations on October 1, 1997.
* Unannualized
** Annualized
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<PAGE> 10
THE TRUST; ELIGIBLE SHAREHOLDERS
The Trust is a Delaware business trust. The Fund is a diversified
investment portfolio of the Trust. Only education related entities 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, as amended, (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 includes generally, (a) securities that are either (i) rated (or
issued by an issuer, or in certain cases, guaranteed by a guarantor, which is
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 ("NRSROs") 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 IBCA, Inc. Their ratings are described in the Appendix to the Fund's
Statement of Additional Information.
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<PAGE> 11
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 of the Federal Home Loan Mortgage Corporation, 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 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
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<PAGE> 12
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 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 illiquid. 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.
In accordance with current Securities and Exchange Commission ("SEC")
regulations, the Fund intends, as a non-fundamental policy, to limit investments
in the securities of any single issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements fully collateralized by such securities) to not more than
5% of the value of its total assets at the time of purchase, except that 25% of
the value of the Fund's total assets may be invested in any one issuer for a
period of up to three business days, and securities subject to certain
guarantees are subject to different diversification requirements as described in
the Statement of Additional Information. In addition, the Fund will limit its
investments in all securities that are not first tier securities (as defined by
the SEC), to 5% of its total assets, with investment
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<PAGE> 13
in any one such issuer being limited to no more than 1% of its total assets or
$1 million, whichever is greater, measured at the time of purchase.
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 may not (i) 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. The Fund's compliance with the
diversification provision described above under the heading "Portfolio
Securities" will be deemed to be compliance with the foregoing fundamental
diversification limitation.
HOW TO INVEST IN THE FUND
ELIGIBILITY FOR PARTICIPATION. Only education related entities 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. An investor
is required to certify in its registration form that it is an education related
entity. 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
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
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<PAGE> 14
Financial by 4:00 p.m. New York Time on a Business Day and Federal Funds are
received the close of the Federal Reserve wire that 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 4:00 p.m. New York Time on a Business Day or
Federal Funds are received after the close of the Federal Reserve wire that 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 Fund's
toll-free number 1-800-221-4524, Ext. 2.
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 4:00 p.m. 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. Shareholders 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 Shareholder's account, in
accordance with the redemption request. Amounts under $10,000 generally 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. Shareholders may use the Fund's free and
unlimited checkwriting services by completing a checkwriting authorization form
and signing the two custodian bank signature cards. Shareholders may issue
checks in any dollar amount. Checks will be honored only if they are properly
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.
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<PAGE> 15
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 4:00 p.m. New York
Time. The redemption proceeds will be wired to the Shareholder's bank account,
so long as the amount is $10,000 or more. If less, a check will generally 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, including requesting certain personal or account
information to confirm the identity of the shareholder.
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 shareholder may call the Fund's toll-free
number 1-800-221-4524, Ext. 2, by 4:00 pm New York Time, and request an ACH
withdrawal. Such withdrawal will become effective the same Business Day and will
be in the Shareholder's designated bank account in "collected funds." There is
no minimum redemption payments required for redemption payments by ACH.
SHAREHOLDER SERVICES
Shareholders may open as many accounts with the Fund as they desire.
Each account may utilize the Fund's checkwriting services.
Shareholders may call the Fund's toll-free number 1-800-221-4524, Ext.
2, prior to 4:00 p.m. New York Time any Business Day to make an internal
transfer between their different Fund accounts the same day.
Shareholders 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 shareholder, 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.
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<PAGE> 16
Shareholders currently receive the Fund's unaudited financial
statements after the end of each calendar quarter. Once a year, shareholders
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. ("Cadre Financial"),
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 were payable through the period ended January 1, 1998.
Cadre Financial serves as investment adviser to collective, short-term
investment funds established for a number of local governmental municipal and
health care entities. Two of those funds are registered under the 1940 Act. As
of December 31, 1997, Cadre Financial and its affiliates managed or administered
approximately $6.0 billion in assets. Cadre Financial is a wholly-owned
subsidiary of AMBAC Capital Corporation which, in turn, is a wholly-owned
subsidiary of Ambac Financial Group, Inc. ("Ambac"). Ambac is a holding company
that provides through its affiliates financial guarantee insurance and financial
services to clients.
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 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 were payable through the period ended January 1,
1998.
During the period ended January 1, 1998, and thereafter subject to
revision or termination upon 90 days' notice to the Fund, Cadre Financial has
agreed to waive fees and
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<PAGE> 17
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. This has the effect of lowering the overall expense
ratio of the Fund and increasing the yield to the shareholders at the time such
amounts are reimbursed. The Fund will not pay Cadre Financial at a later time
for any fees waived or operating expenses reimbursed, except for organizational
expenses. 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"),
located at 905 Marconi Avenue, Ronkonkoma, New York, 11779-7255, is the Fund's
distributor. Cadre Securities, an affiliate of Cadre Financial, is also a
wholly-owned subsidiary of Ambac Capital Corporation, which, in turn, is a
wholly-owned subsidiary of Ambac.
CUSTODIAN. Bank One Columbus, NA, 100 East Broad Street, Columbus, OH
43271 is the Fund's custodian.
OTHER. The Fund has adopted a Plan in conformance with Rule 12b-1 under
the 1940 Act under which the Fund may pay royalties to or may otherwise
compensate an organization ("Organization") for certain functions, including
without limitation for: (a) license of its name and logos in informational
materials prepared regarding the Fund; (b) conferring with, advising and
providing the Fund and Cadre Financial, Cadre Securities and their affiliates
(collectively, the "Service Providers"), information about the members of or
persons associated with the Organization and others who are eligible to invest
in the Fund in order to assist Cadre Financial, Cadre Securities, and their
affiliates in providing services to the Fund and its shareholders; (c)
scheduling and announcing through its publications, informational meetings and
seminars at which representatives of Cadre Securities will discuss the Fund and
related matters; (d) conferring with Service Providers as to local facilities to
be used in connection with the administration and operation of the Fund; (e)
assisting in the preparation and/or dissemination of information with respect to
the existence of the Fund; (f) allowing the use of its publications to give
information on how to obtain material concerning the Fund; (g) conferring with
the Service Providers regarding coordination of efforts and the resolution of
operational difficulties that may arise between the Fund and persons that are or
may become shareholders in the Fund; (h) providing Cadre Securities with mailing
lists of potential investors in the Fund; and (i) retaining industry
associations and others to assist the Organization in fulfilling its obligations
under the Agreement with the Trust. Payments by the Fund under the Plan will be
calculated daily and paid monthly at a rate of up to: .02% of the average daily
net asset value of Shares of the Fund; and up to .05% of the average daily net
asset value of Shares owned of record or beneficially by members of persons
associated with an Organization. Such fee may be allocated among the specific
functions described in (a)-(i) above. An organization may provide one or more of
those functions, and an Organization's provision of any function is not
dependent upon it providing any other functions.
-10-
<PAGE> 18
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 paid by the Fund
or amounts are assumed by service contractors, and decreasing yield when such
fees or amounts are reimbursed or paid by the Fund.
Cadre Financial has agreed to pay all of the Fund's organizational
expenses, which were approximately $76,379. The Fund will begin reimbursing
Cadre Financial for those expenses ratably during the 60 month period after the
Fund reaches $25,000,000 in total assets for a period of 30 consecutive days.
YIELD AND OTHER PERFORMANCE INFORMATION
From time to time, yield, effective yield and total return of the Fund
may be quoted in advertisements, sales literature or reports to shareholders.
Performance is based on historical earnings and is not intended to indicate
future performance. It can be expected that performance will fluctuate. 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 performance 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 performance 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 computing performance.
Performance is generally a function of the kind and quality of the instruments
held in a portfolio, portfolio maturity, operating expenses and market
conditions.
The performance 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 performance may be compared to Donoghue's Money Fund Averages, which
are averages compiled by Donoghue's Money Fund Report. Performance data as
reported in national financial publications, including
-11-
<PAGE> 19
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 performance 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 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 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.
-12-
<PAGE> 20
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 a shareholder 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 Shareholders.
OTHER TAX INFORMATION. In addition to federal taxes, shareholders may
be subject to state or local taxes on their investment. Shareholders should
consult their tax advisers to determine whether the Fund is suitable to their
particular tax situation.
When shareholders 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 a shareholder does not comply with IRS regulations, the
IRS can require the Fund to withhold 31% of of the amount distributable to the
shareholder.
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.
-13-
<PAGE> 21
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 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.
-14-
<PAGE> 22
PART B - STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 23
-----------------------------------------------------------------
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 April
1, 1998, 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
<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES............................... 1
MANAGEMENT OF THE FUND..................................................... 3
INVESTMENT ADVISORY AGREEMENT.............................................. 4
ADMINISTRATION AGREEMENT................................................... 5
THE PLAN................................................................... 6
DISTRIBUTION AGREEMENT..................................................... 7
DETERMINATION OF NET ASSET VALUE........................................... 8
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................. 9
FUND PERFORMANCE........................................................... 9
ADDITIONAL INFORMATION ABOUT TAXES......................................... 12
PORTFOLIO TRANSACTIONS..................................................... 14
INFORMATION ABOUT THE FUND................................................. 14
CUSTODIAN, COUNSEL AND INDEPENDENT AUDITORS................................ 16
MISCELLANEOUS.............................................................. 16
FINANCIAL STATEMENTS....................................................... FS-1
APPENDIX................................................................... A-1
</TABLE>
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
<PAGE> 24
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 Financial or by Cadre Securities in any jurisdiction
in which such offering may not lawfully be made.
April 1, 1998
-----------------------------------------------------------------
<PAGE> 25
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, as amended, (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.
(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).
-1-
<PAGE> 26
(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 a guarantee which satisfies certain
provisions under Rule 2a-7 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.
As stated in the Prospectus, the Fund intends, as a non-fundamental
policy, to diversify its investments in accordance with current Securities and
Exchange Commission ("SEC") regulations. A security that has a guarantee which
satisfies certain provisions under Rule 2a-7 under the Investment Company Act of
1940 (a "Guarantee") (other than certain types of Guarantees provided by the
issuer of the underlying security and Guarantees which are U.S. Government
securities) is subject to the following diversification requirements:
immediately after the acquisition of the security, the Fund may not have
invested more than 10% of its total assets in securities issued by or subject to
Guarantees from the same person, except that the Fund may invest up to 25% of
its total assets in securities subject to Guarantees that are first tier
securities (as defined by the SEC) and that are provided by a person that,
directly or indirectly, does not control, and is not controlled by or under
common control with, the issuer of the security
-2-
<PAGE> 27
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.
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST AGE DURING PAST FIVE YEARS
- ---------------- --------- --- ----------------------
<S> <C> <C> <C>
Richard I. Bauer* Trustee 58 President, Cadre
568 High Street Securities, Inc. since
Pottstown, Pennsylvania 19464 1994; Director, Cadre
Securities, Inc.;
Director and Senior Vice
President, Cadre
Financial Services,
Inc.; Director, Keystone
Federal Credit Union;
and Executive Vice
President, Cadre
Financial Services, Inc.
(1990-1994).
Ronald E. Everett Trustee 56 Professor, Northern
Illinois Association of Illinois University; and
School Business Officials Executive Director,
244 Graham Hall Illinois Association of
Northern Illinois University School Business Officials.
DeKalb, Illinois 60115
Dale G. Jensen Trustee 56 Executive Director,
Minnesota Association of Minnesota Association of
School Administrators School Administrators.
1884 Como Avenue
St. Paul, Minnesota 55108
Gerard E. Keidel Trustee 57 Executive Director,
Michigan Association of Michigan Association of
School Administrators School Administrators;
421 W. Kalamazoo Director, Michigan Liquid
Lansing, Michigan 48933 Asset Fund; Director, SET,
Inc. (Insurance Pools);
Director, SEG, Inc.
(Insurance Pools);
Superintendent of Schools,
Mona Shore Schools (1976-
1991);
Susan P. Merry Trustee 51 Associate Executive
1680 Duke Street Director, National School
Alexandria, VA 22314 Boards Association
William T. Sullivan, Jr.* Trustee 51 Chairman, Chief Executive
905 Marconi Avenue Officer and Director,
Ronkonkoma, New York 11779 Cadre Financial Services,
Inc.; Chairman and
Director, Cadre
Securities, Inc.; and
Trustee, Cadre Network
Health Financial
Services Trust.
</TABLE>
-3-
<PAGE> 28
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST AGE DURING PAST FIVE YEARS
- ---------------- --------- --- ----------------------
<S> <C> <C> <C>
Don I. Tharpe* Chairman of the 46 Executive Director,
Association of School Board, President and Association of School
Business Officials Treasurer Business Officials
International International.
11401 North Shore Drive
Reston, Virginia 22090
Carter D. Ward Vice Chairman 51 Executive Director,
2100 I-70 Drive S.W. Missouri School Boards
Columbia, Missouri 65203 Association; and Director,
Missouri Securities
Investment Program.
Ted C. Witt Trustee 41 Executive Director and
California Association of Chief Executive Officer,
School Business Officials California Association of
1531 I Street School Business Officials;
#310 Director of Community and
Sacramento, California 95814 Government Relations, San
Juan Unified School
District (1986 to 1992).
William M. Sullivan** Secretary 30 General Counsel, Cadre
905 Marconi Avenue Financial Services, Inc.;
Ronkonkoma, New York 11779 and Vice President of
Cadre Securities, Inc.
</TABLE>
- ----------
* Messrs. Bauer, Sullivan and Tharpe are "interested" persons of the
Trust as defined in the 1940 Act.
** William M. Sullivan, Secretary of the Trust, is the son of William T.
Sullivan, a trustee of the Trust.
No Trustee or officer 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.
As of March 30, 1998, the Trustees and officers of the Trust, as a
group, own less than 1% of the Fund's Shares.
INVESTMENT ADVISORY AGREEMENT
The Fund employs Cadre Financial to furnish investment advisory
services. Under Cadre Financial's Investment Advisory Agreement with the Fund
dated July 1, 1997, 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
-4-
<PAGE> 29
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 were payable through the period ended January 1, 1998.
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 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 June 30, 1999 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 Cadre Securities are each wholly-owned
subsidiaries of Ambac Capital Corporation, which in turn is a wholly-owned
subsidiary of Ambac Financial Group, Inc.
ADMINISTRATION AGREEMENT
Cadre Financial, 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
-5-
<PAGE> 30
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 were payable through the period ended January
1, 1998.
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 June 30,
1999 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).
THE PLAN
The Plan has been adopted under Rule 12b-1 (the "Rule") under the 1940
Act. In accordance with the Rule, the Plan provides that a written report of the
amounts expended under the Plan, and the purposes for which such expenditures
were incurred, will be made to the Board of Trustees for its review at least
quarterly. In addition, the Plan provides that it may not be amended to increase
materially the costs which shares of the Fund may bear for distribution under to
the Plan without approval of the Fund's shareholders, and that other material
amendments of the Plan must be approved by a majority of the Board of Trustees,
and by a majority of the trustees who are neither "interested persons" (as
defined in the 1940 Act) of the Trust nor have any direct or indirect financial
interest in the operation of the Plan, or in any agreements entered into in
connection with the Plan, by vote cast in person at a meeting called for the
purpose of considering such amendments (the "Non-Interested Plan Trustees"). The
selection and nomination of the trustees of the Trust who are not "interested
persons" of the Trust have been committed to the discretion of the
Non-Interested Plan Trustees.
-6-
<PAGE> 31
The Trust's Board of Trustees has concluded that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders. The Plan is
subject to annual reapproval by a majority of the Trust's Board of Trustees,
including a majority of the Non-Interested Plan Trustees and is terminable
without penalty at any time with respect to the Fund by a vote of a majority of
the Non-Interested Plan Trustees or by vote of the holders of a majority of the
outstanding shares of the Fund. Any agreement entered into pursuant to the Plan
with an Organization is terminable with respect to the Fund without penalty, at
any time, by vote of a majority of the Non-Interested Plan Trustees, by vote of
the holders of a majority of the outstanding shares of the Fund, or by the
Organization. Each agreement will also terminate automatically in the event of
its assignment.
The Fund has entered into Agreements under the Plan with the
Association of School Business Officials International ("ASBO") and the National
School Boards Association ("NSBA"). ASBO will be paid an aggregate fee at an
annual rate of .02% of the Fund's average daily net asset value of Shares and
.05% of the average daily net assets of Shares owned of record or beneficially
by Fund members of ASBO. NSBA will be paid an aggregate fee at an annual rate of
.05% of the average daily net assets of Shares owned of record or beneficially
by Fund members of that Organization. Pursuant to the Plan, the Fund may enter
into additional Agreements with other Organizations.
DISTRIBUTION AGREEMENT
The Fund has entered into a Distribution Agreement with Cadre
Securities, Inc., dated July 1, 1997. 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 number 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 June 30, 1999 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
-7-
<PAGE> 32
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).
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.
-8-
<PAGE> 33
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 shareholder would incur transaction costs in
selling the securities or other property. The Trust has committed that it will
pay all redemption requests by a shareholder of record in cash, limited in
amount with respect to each shareholder 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
-9-
<PAGE> 34
return (calculated as above), raising the sum to a power equal to 365 divided by
7, and subtracting 1 from the result. Yields quoted in advertising may be based
on historical seven-day periods.
Based on the foregoing, the 7-day yield and 7-day effective yield for
the Fund for the period ended December 31, 1997 was 5.35% and 5.49%,
respectively.
Performance 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 performance 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 performance will generally tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates the Fund's performance
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 performance 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 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.
-10-
<PAGE> 35
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 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 1-800-221-4524.
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 performance to that 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 performance to the Auction
-11-
<PAGE> 36
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 performance to the
Federal 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,
performance data as reported in the following publications may be used in
comparing the performances 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
-12-
<PAGE> 37
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.
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. Under the recently
enacted Taxpayer Relief Act of 1997, for capital gains on securities recognized
after July 28, 1997, the maximum tax rate for individuals is 20% if the property
was held for more than 18 months; for property held for more than 12 months but
no longer than 18 months, the maximum rate continues to be 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."
-13-
<PAGE> 38
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). At this
time, the Fund is the only portfolio that has been created.
-14-
<PAGE> 39
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
-15-
<PAGE> 40
or any class or series thereof into a greater or lesser number, 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 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 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 LLP, 1345 Chestnut Street, Suite 1100,
Philadelphia, Pennsylvania 19107, serves as counsel to the Company.
Price Waterhouse LLP, ("Price Waterhouse"), 201 North Service Road,
Melville, New York 11747, has been selected as 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 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.
At March 30, 1998, the name, address and percentage of ownership of the
entities which held as record owners more than 5% of the outstanding Shares of
the Fund were as follows:
<TABLE>
<CAPTION>
Name and Address % of Ownership
- ---------------- --------------
<S> <C>
Association of School Business 5.96%
Officials International
11401 North Shore Drive
Reston, VA 22090
Michigan Association of School 13.89%
Administrators
421 W. Kalamazoo
Lansing, MI 48933
Michigan School Business Officials 8.71%
1001 Centennial Way
Suite 200
Lansing, MI 48917
Missouri School Boards Association 5.18%
2100 I-70 Drive SW
Columbia, MO 65203
National School Boards Association 6.26%
1680 Duke Street
Alexandria, VA 22314
Sublette County Library Foundation, Inc. 5.55%
40 South Fremont
Pinedale, WY 82941
Washington Association of School 8.06%
Administrators
825 5th Avenue SE
Olympia, WA 98501
Minnesota School Boards Association 5.04%
1900 West Jefferson Avenue
St. Peter, MN 56082
</TABLE>
-16-
<PAGE> 41
FINANCIAL STATEMENTS
The Fund's audited statement of assets and liabilities at June 23,
1997, related notes thereto and the report of the independent accountants
thereon, are included in this Statement of Additional Information. The audited
financial statements included in this Statement of Additional Information have
been included in reliance on the report of Price Waterhouse LLP, given on the
authority of said firm as experts in auditing and accounting.
The unaudited financial statements for the Money Market Fund and notes
thereto in the Trust's Semi-Annual Report to Shareholders for the period October
1, 1997 (commencement of operations) through December 31, 1997 are incorporated
into this Statement of Additional Information by reference. Additional copies of
the Semi-Annual Report may be obtained, free of charge, by telephoning the Fund
at 1-800-221-4524, Ext. 215.
FS-1
<PAGE> 42
Report of Independent Accountants
To the Shareholder and Board of Directors
of Investment Services for Education Associations Trust
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Investment Services
for Education Associations Trust (the "Fund") at June 23, 1997, in conformity
with generally accepted accounting principles. This financial statement is the
responsibility of the Fund's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
201 North Service Road
Melville, New York 11747
June 23, 1997
FS-2
<PAGE> 43
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
STATEMENT OF ASSETS AND LIABILITIES AT JUNE 23,1997
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Cash........................................................................................... $150,000
Deferred organizational expenses (Note 1)...................................................... 42,670
--------
Total Assets............................................................................... 192,670
LIABILITIES:
Organizational expenses payable (Note 1)....................................................... 42,670
Commitments (Notes 1 and 2)....................................................................
--------
Net Assets................................................................................. $150,000
========
NET ASSET VALUE PER SHARE: (150,000 shares of beneficial
interest outstanding; unlimited authorized shares of
beneficial interest of $.0001 par value)....................................................... $1.00
-----
</TABLE>
NOTE 1 - Investment Services for Education Associations Trust (the
"Fund") was organized as a Delaware business trust on December 4, 1996. To date,
the Fund has had no transactions other than those relating to organizational
matters and the sale of 150,000 shares of beneficial interest for $150,000 to
the Association of School Business Officials International ("ASBO
International"). The Fund is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end, diversified management investment
company. Organizational expenses of the Fund incurred prior to the offering of
the Fund's shares will be paid by Cadre Financial Services, Inc. (the
"Administrator"). It is currently estimated that the Administrator will incur
and be reimbursed by the Fund for approximately $42,670 in organizational
expenses. These expenses will be deferred and amortized by the Fund on the
straight-line method over a period not to exceed five years from the date of
commencement of the Fund's operations. The Fund will begin reimbursing the
Administrator for these expenses when Fund assets reach or exceed $25,000,000
for a period of at least 30 days. In the event that at any time during the five
year period beginning with the date of the commencement of operations the
initial shares acquired by ASBO International prior to such date are redeemed,
by any holder thereof, the redemptions proceeds payable in respect of such
shares will be reduced by the pro rata share (based on the proportionate share
of the initial shares redeemed to the total number of original shares
outstanding at the time of redemption) of the then unamortized deferred
organizational expenses as of the date of such redemption. In the event that the
Fund liquidates before the deferred organizational expenses are fully amortized,
ASBO International shall bear such unamortized deferred organizational expenses.
NOTE 2 - The Fund has entered into a management agreement with the
Administrator. Certain officers and/or trustees of the Fund are officers and/or
directors of the Administrator. The Fund has retained the Administrator to
manage the Fund's business
FS-3
<PAGE> 44
affairs, supervise the overall day-to-day operations of the Fund (other than
rendering investment advice) and provide all administrative services to the
Fund. Under the terms of an administration agreement (the "Administration
Agreement"), the Administrator maintains certain of the Fund's books and records
and furnishes, at its own expense, such office space, facilities, equipment,
supplies, clerical help and bookkeeping and certain legal services as the Fund
may reasonably require in the conduct of its business, including the preparation
of prospectuses, statements of additional information, proxy statements and
reports required to be filed with federal and state securities commissions
(except insofar as the participation or assistance of independent accountants
and attorneys is, in the opinion of the Administrator, necessary or desirable).
In addition, the Administrator pays the salaries of all personnel, including
officers of the Fund, who are employees of the Administrator. The Administrator
also bears the cost of the Fund's telephone service, heat, light, power and
other utilities.
As full compensation for the services and facilities furnished to the
Fund and expenses of the Fund assumed by the Administrator, the Fund will pay
the Administrator monthly compensation calculated daily by applying the annual
rate of 0.15% of the daily net assets of the Fund determined as of the close of
each business day.
Pursuant to an investment advisory agreement (the "Advisory Agreement")
with Cadre Financial Services, Inc. (the "Adviser"), the Fund has retained the
Adviser to invest the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Adviser obtains and evaluates
such information and advice relating to the economy, securities markets, and
specific securities as it considers necessary or useful to continuously manage
the assets of the Fund in a manner consistent with its investment objectives. In
addition, the Adviser pays the salaries of all personnel, including officers of
the Fund, who are employees of the Adviser.
As full compensation for the services furnished to the Fund and
expenses of the Fund, assumed by the Adviser, the Fund pays the Adviser monthly
compensation calculated daily by applying the annual rate of 0.15% of the daily
net assets of the Fund determined as of the close of each business day.
Shares of the Fund will be distributed by Cadre Securities, Inc., (the
"Distributor"), an affiliate of the Administrator, during the initial and
continuous offering of the Fund's shares. The Distributor will bear the expense
of all promotional and distribution related activities on behalf of the Fund,
including the payment of commissions and incentive compensation for sales of the
Fund shares, if any, to account executives and others who engage in or support
distribution of shares or who service the shareholder accounts including
overhead and telephone expense; the distribution of prospectuses and reports
used in connection
FS-4
<PAGE> 45
with the offering of Fund shares to the public; and the preparation, printing
and distribution of sales literature and other advertising materials. The
Distributor may utilize other broker/dealers to support the distribution of
shares of the Fund.
The Fund has adopted a Plan pursuant to Rule 12b-1 under the Act (the
"Plan"). The Plan provides that the Fund may compensate organizations
("Organizations") for certain functions regarding the effective development and
distribution of interests in the Fund. The Fund has entered into Agreements
under the Plan with the following Organizations: the Association of School
Business Officials International, the American Association of School
Administrators and the National School Boards Association. The Organizations pay
the salaries of their personnel, including officers of the Fund who are
employees of the Organizations.
Payments by the Fund under the Plan will be calculated daily and paid
monthly at a rate of up to : .02% of the average daily net asset value of shares
of the Fund; and .05% of the average daily net asset value of shares owned of
record or beneficially by members of or persons associated with the
Organization. Such fee will be allocated based upon specific functions
performed.
The Administrator is also the transfer agent of the Fund's shares,
dividend disbursing agent for payment of dividends and distributions on Fund
shares and agent for shareholders under various investment plans.
Cadre Financial Services, Inc. has undertaken to assume all Fund
expenses (in excess of .85%), and to waive the compensation provided for in its
Investment Advisory Agreement and Administration Agreement until January 1,
1998.
FS-5
<PAGE> 46
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
A-1
<PAGE> 47
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
A-2
<PAGE> 48
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 IBCA, 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 IBCA, 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 to rating by the lesser
financial power of the enterprise and more local type of market.
A-3
<PAGE> 49
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.
A-4
<PAGE> 50
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(1) Included in Part A of the Registration Statement:
- Investment Services for Education Associations
Money Market Fund
- Financial Highlights for the period ended December
31, 1997 (unaudited).
(2) Included in Part B of the Registration Statement:
Report of Independent Accountants
Statement of Assets and Liabilities
Notes to Financial Statements
The unaudited financial statements and related notes
thereto for the Investment Services for Education
Associations Money Market Fund for the period October
1, 1997 (commencement of operations) through December
31, 1997 are incorporated herein by reference to the
Trust's Semi-Annual Report to Shareholders as filed
with the Securities and Exchange Commission on
February 27, 1998 pursuant to Rule 30b 2-1 of the
Investment Company Act of 1940 (Nos. 333-
17789/811-7967).
(b) Exhibits
(1) Amended and Restated Agreement of Trust (the
"Trust Instrument") dated December 11, 19961
(2) By-laws(1)
(5) Investment Advisory Agreement
(6) Distribution Agreement
(7) None
(8) Custody Agreement
(9) Administration Agreement
(10) Opinion of Drinker Biddle and Reath LLP
(11) (a) Consent of Price Waterhouse LLP
(b) Consent of Drinker Biddle and Reath LLP
(13) Form of Purchase Agreement(2)
(14) None
(15) Plan and Form of Agreement(2)
(16) None
(17) Financial Data Schedule
C-1
<PAGE> 51
(18) None
-------------------
(1) Incorporated by reference to the Registrant's
Registration Statement on Form N-1A, File No. 333-
17789/811-7967 filed with the Securities and Exchange
Commission on December 13, 1996.
(2) Incorporated by reference to Pre-Effective Amendment
No. 1 to the Registrant's Registration Statement on
Form N-1A, File No. 333-17789/811- 7967 filed with
the Securities and Exchange Commission on July 14,
1997.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registration is controlled by its Board of Trustees.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD HOLDERS
TITLE OF CLASS AS OF MARCH 30, 1998
- -------------- -----------------------
<S> <C> 39
Investment Services for Education _________
Associations Money Market Fund
</TABLE>
ITEM 27. INDEMNIFICATION
The provisions of Sections 8.2 through 8.4 of Article VIII of
the Trust Instrument incorporated herein by reference 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
C-2
<PAGE> 52
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
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 list required by this Item 28 of the officers and
directors of Cadre Financial, together with information as to
any business profession, vocation or employment of substantial
nature engaged in by such officers and directors during the
past two years, is incorporated herein by reference to
Schedules A and D of Form ADV filed by Cadre Financial
pursuant to the Investment Advisers Act of 1940 (SEC File No.
8015048).
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Cadre Securities, Inc., the Fund's principal
underwriter, acts as a principal underwriter and
adviser to two other investment companies registered
under the Investment Company Act of 1940: Cadre Network
Health Financial Services Trust and Cadre Institutional
Investors Trust. It also acts as distributor for
certain collective short-term investment programs
operated for local governmental, municipal and other
entities.
C-3
<PAGE> 53
(b) For information as to the business, profession, vocation or
employment of a substantial nature of each of the principal
underwriter, its officers and directors, reference is made to
Cadre Securities, Inc.'s Form BD File No. 42025.
(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:
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:
Registrant hereby undertakes to provide its Semi-Annual Report
upon request without charge to any recipient of a Prospectus
for the Investment Services for Education Associations Money
Market Fund.
C-4
<PAGE> 54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post- Effective Amendment No. 1 to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Reston, and State of Virginia as of the 27 day of March, 1998.
INVESTMENT SERVICES FOR EDUCATION
ASSOCIATIONS TRUST
/s/ Don I. Tharpe
___________________________________________
Don I. Tharpe
President
(Signature and Title)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Don I. Tharpe Chairman of the Board, March 27, 1998
- ---------------------------- President and Treasurer
Don I. Tharpe (Chief Executive Officer,
Chief Accounting Officer
and Chief Financial Officer)
/s/ Richard I. Bauer
- ---------------------------- Trustee March 31, 1998
Richard I. Bauer
/s/ Ronald E. Everett
- ---------------------------- Trustee March 26, 1998
Ronald E. Everett
/s/ Dale G. Jensen
- ---------------------------- Trustee March 31, 1998
Dale G. Jensen
- ---------------------------- Trustee March _, 1998
Gerard E. Keidel
</TABLE>
<PAGE> 55
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ William T. Sullivan, Jr.
- ---------------------------- Trustee March 31, 1998
William T. Sullivan, Jr.
/s/ Carter D. Ward
- ---------------------------- Trustee March 31, 1998
Carter D. Ward
/s/ Ted C. Witt
- ---------------------------- Trustee March 26, 1998
Ted C. Witt
- ---------------------------- Trustee March _, 1998
Susan P. Merry
</TABLE>
<PAGE> 56
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT PAGE
- ------ ------- ----
<S> <C> <C>
(5) Investment Advisory Agreement
(6) Distribution Agreement
(8) Custody Agreement
(9) Administration Agreement
(10) Opinion of Drinker Biddle & Reath LLP
(11)(a) Consent of Price Waterhouse LLP
(11)(b) Consent of Drinker Biddle & Reath LLP
(27) Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit (5)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
AND
CADRE FINANCIAL SERVICES, INC.
DATED AS OF JULY 1, 1997
<PAGE> 2
TABLE OF CONTENTS
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
<PAGE> 3
ARTICLE VI
MISCELLANEOUS
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
Execution.................................................11
<PAGE> 4
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
INVESTMENT ADVISORY AGREEMENT
This Agreement, made as of the 1st day of July, 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 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 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 July 1, 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 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.
2
<PAGE> 6
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
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
3
<PAGE> 7
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 will continue in effect until June 30, 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
4
<PAGE> 8
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).
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
5
<PAGE> 9
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 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
6
<PAGE> 10
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 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
7
<PAGE> 11
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:
Dr. Don I. Tharpe
Association of School Business Officials International
11401 North Shore Drive,
Reston, VA 22090
with a copy to;
Michael P. Malloy, Esquire
Drinker Biddle & Reath LLP
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:/s/Don I. Tharpe
- -------------------
Cadre Financial Services, Inc.
by:/s/William T. Sullivan
- ------------------------
11
<PAGE> 1
Exhibit (6)
DISTRIBUTION AGREEMENT
BETWEEN
INVESTMENT SERVICES FOR EDUCATION
ASSOCIATIONS TRUST
AND
CADRE SECURITIES, INC.
DATED AS OF JULY 1, 1997
<PAGE> 2
TABLE OF CONTENTS
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
i
<PAGE> 3
ARTICLE VII
MISCELLANEOUS
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
ii
<PAGE> 4
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS TRUST
DISTRIBUTION AGREEMENT
This Agreement, made as of the 1st day of July 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 provided that the Distribution Agent shall not be
obligated to pay such expenses to the extent the Fund pays them under any plan
adopted by the Fund under Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "1940 Act").
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.
4
<PAGE> 8
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, 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 June 30, 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
5
<PAGE> 9
1940 Act).
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
6
<PAGE> 10
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 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.
7
<PAGE> 11
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 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:
William M. Sullivan, Esq.
Cadre Securities, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
with a copy to:
8
<PAGE> 12
Michael P. Malloy, Esquire
Drinker Biddle & Reath LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
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
9
<PAGE> 13
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 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.
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: /s/Don I. Tharpe
---------------------------
Cadre Securities, Inc.
by: /s/William T. Sullivan, Jr.
---------------------------
11
<PAGE> 1
Exhibit (8)
BANK ONE TRUST COMPANY, NA
CUSTODY AGREEMENT
<PAGE> 2
BANK ONE TRUST COMPANY, NA
CUSTODY AGREEMENT
EXECUTION FORM
Name of Principal: Investment Services for Education
Associations Trust (ISEA)
Address of Principal: c/o Cadre Consulting Services Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779
Execution Date:
Effective Date:
This Custody Agreement is entered into on the Execution Date set forth above,
effective on the Effective Date set forth above, by and between the above named
Principal ("Principal") and Bank One Trust Company, NA, ("Custodian"), with its
principal offices located at 100 East Broad Street, Columbus, Ohio 43271-0193.
In consideration of the mutual covenants and conditions of this agreement, the
Custodian and Principal hereby agree to the provisions of this agreement
attached hereto and the Schedules, if any, of this agreement attached hereto.
IN WITNESS WHEREOF, this agreement is executed by Custodian and the Principal on
the Execution Date.
CUSTODIAN PRINCIPAL
Bank One Trust Company, NA Investment Services for Education
Associations Trust (ISEA)
By:/s/W.J. Albach By:/s/William T. Sullivan, Jr.
- ----------------- ---------------------------------
Printed Name:W.J. Albach Printed Name: William T. Sullivan, Jr.
Title:A.V.P. & Client Title: Trustee
Service Officer
Dated:10/23/97 Dated:
By:
---------------------------------
Printed Name:
Title:
Dated:
-1-
<PAGE> 3
BANK ONE TRUST COMPANY, NA
CUSTODY AGREEMENT
Table of Contents for Provisions
Section 1 Appointment of Custodian
Section 2 Delivery of Securities, Cash and Other Property
Section 3 Accounts
Section 4 Proper Instructions
Section 5 Collection of Income
Section 6 Short-Term Investments
Section 7 Payment of Monies
Section 8 Duties of Custodian with Respect to Securities of
the Principal Held by Custodian
Section 9 Voting and Other Actions
Section 10 Responsibility of Custodian
Section 11 Records and Reports
Section 12 Effective Period, Termination and Interpretive and
Additional Provisions
Section 13 Successor Custodian
Section 14 Compensation of Custodian and Reimbursement of
Expenses
Section 15 Notices
Section 16 Overdrafts or Indebtedness
Section 17 Governing Law
Section 18 Severability
Section 19 Non-Waiver
Section 20 No Third Party Benefit
Section 21 Captions
Section 22 Dispute Resolution and Arbitration
Section 23 Confidentiality
Section 24 Entire Agreement
-2-
<PAGE> 4
BANK ONE TRUST COMPANY, NA
CUSTODY AGREEMENT
PROVISIONS
These Provisions are applicable to the Custody Agreement between the Custodian
and the Principal described in the foregoing Execution Form.
1. APPOINTMENT OF CUSTODIAN. Subject to the terms and conditions of
this agreement, the Principal hereby appoints and Custodian hereby accepts the
appointment by the Principal as custodian for certain cash, securities and other
property owned by the Principal and delivered to Custodian.
2. DELIVERY OF SECURITIES, CASH AND OTHER PROPERTY. The Principal shall
deliver to Custodian cash, securities and other property. Custodian shall accept
for deposit hereunder additional cash, securities and property upon receiving
written notice from Principal. Custodian shall only be responsible for custody
hereunder of cash, securities and property delivered to it and then only while
the cash, securities and property are held in and as a part of the custodial
account, unless the cash, securities and property are not held in and as part of
the custodial account as the result of Custodian's negligence or willful
misconduct. Such cash, securities (hereinafter "Securities") and other property
held in and as part of the custodial account shall hereinafter be referred to as
the "Assets."
3. ACCOUNTS. Custodian shall open and maintain a separate account or
accounts in the name of the Principal, subject only to draft or order by
Custodian pursuant to the terms of this agreement, and shall maintain in such
account or accounts all Assets received by it for the account of the Principal.
All separate accounts governed by this agreement are listed in Schedule B
attached hereto.
4. PROPER INSTRUCTIONS. For purposes of this agreement, "proper
instructions" shall mean (a) any oral authorizations, instructions or approvals
of any kind transmitted to Custodian in person or by telephone by a person
believed in good faith by Custodian to be a person authorized by a resolution of
the Board of Directors of the Principal; or (b) written authorizations,
instructions, or approvals of any kind transmitted to Custodian by mail,
personal delivery, facsimile, telegram or other written means by a person
believed in good faith by Custodian to be a person authorized by a resolution of
the Board of Directors of the Principal to give such authorizations,
instructions or approvals on behalf of the Principal. The Principal shall
confirm any oral authorization, instruction or approval described
-3-
<PAGE> 5
in (a), above, the same business day by transmittal to Custodian of a written
authorization, instruction or approval described in (b), above.
5. COLLECTION OF INCOME. Custodian shall collect all income and other
payments with respect to registered Securities held hereunder to which the
Principal shall be entitled by law or pursuant to custom in the securities
business, and shall collect all income and principal and other payments with
respect to bearer Securities if, on the date of payment by the issuer, such
Securities are held by Custodian or agent thereof, and shall deposit such income
and principal, as collected, into the Principal's account. Without limiting the
generality of the foregoing, Custodian shall detach and present for payment all
coupons and other income and principal items requiring presentation as and when
they become due, shall collect dividends and interest when due on Securities
held hereunder, and shall endorse and deposit for collection, in the name of the
Principal, checks, drafts, and other negotiable instruments on the same day as
received.
With respect to Securities of foreign issuers, while Custodian will
use its best efforts to collect any monies which may to its knowledge become
collectible arising from such Securities, including dividends, interest and
other income, it is understood that Custodian shall be under no responsibility
for any failure or delay in effecting such collections or giving such notices.
Custodian shall not be under any obligation or duty to take action
to effect collection of any amount, if the Securities (domestic or foreign) on
which such amount is payable are in default and payment is refused after due
demand or presentation. Custodian will, however, promptly notify the Principal
in writing of such default and refusal to pay.
6. SHORT-TERM INVESTMENTS. Principal has provided Custodian with a copy
of its Amortized Cost Procedures. It is contemplated that Principal will, from
time to time, provide Custodian with written guidelines setting forth specific
short term interest bearing and short term discount obligations which are
acceptable to Principal, and Custodian agrees to act within said guidelines.
In the absence of written guidelines from Principal, Custodian is
specifically authorized, empowered and directed to invest any short term monies
in the following provided such investment is not prohibited by Principal's
Amortized Cost Procedures:
(i) Securities of any open-end management money
market type investment company registered under
-4-
<PAGE> 6
the Investment Company Act of 1940, as amended (the
"1940 Act"), which would be regarded by prudent
businessmen as a safe investment. The fact that
Custodian, any affiliate of Custodian, or any
affiliate of BANC ONE CORPORATION is providing
services to and receiving remuneration from the
foregoing investment company or investment trust as
investment advisor, custodian, transfer agent,
registrar, or otherwise shall not preclude Custodian
from investing in the securities of such investment
company or investment trust;
(ii) Savings accounts, time deposit accounts,
certificates of deposit, money market funds or other
evidences of deposit issued by Bank One, Columbus,
N.A. and/or any other national bank, savings and loan
institution, state member bank, state non-member
bank, or other depository institution which now or in
the future is an affiliate or subsidiary of Custodian
or of BANC ONE CORPORATION.
7. PAYMENT OF MONIES. Custodian shall pay out monies from the custodian
account in the following cases only:
(a) Upon the purchase of Securities for the account of
the Principal but only (i) against the delivery of
such Securities to Custodian (or any bank, banking
firm or trust company doing business in the United
States or abroad which has been designated by
Custodian as its agent for this purpose)
registered in the name of the Principal or in the
name of a nominee of the Principal or in the name
of a nominee of Custodian or in proper form for
transfer; (ii) in the case of a purchase effected
through a Securities Depository, in accordance
with the conditions set forth in Section 8 below;
or (iii) in the case of repurchase agreements
entered into between the Principal and another
bank or broker-dealer, against delivery of
Securities either in certificate form or through
an entry crediting Custodian's account at the
Federal Reserve Bank with such securities.
(b) In connection with conversion, exchange or surrender
of Securities owned by the Principal as set forth in
Section 8 of this agreement;
(c) For any other purpose of the Principal, but only upon
receipt of proper instructions from the Principal
specifying the amount of such payment,
-5-
<PAGE> 7
setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom
such payment is to be made.
8. DUTIES OF CUSTODIAN WITH RESPECT TO SECURITIES OF THE
PRINCIPAL HELD BY CUSTODIAN.
(a) Deposit of Securities. Custodian may deposit the
Assets:
(i) in the bank vault of Custodian;
(ii) in such other banks or trust companies as
Custodian may deem appropriate provided such
other bank or trust companies meet the
requirements of the 1940 Act;
(iii) in its accounts with a clearing agency
registered with the Securities and Exchange
Commission (the "Commission") under Section
17A of the Securities Exchange Act of 1934
(the "Exchange Act"), which acts as a
securities depository (the "Securities
Depository"); or
(iv) in a book-entry account which is maintained
for the Custodian by a Federal Reserve Bank
(the "Book Entry Account").
(b) Securities Depository and Book Entry Accounts. So
long as Custodian maintains any account pursuant to
subparagraphs (a)(iii) or (a)(iv) above for the
Principal, Custodian shall:
(i) deposit the Securities in such an account
that includes only assets held for the
Principal;
(ii) with respect to Securities transferred
to the account of the Principal,
identify as belonging to the Principal a
quantity of such Securities in the
fungible bulk of Securities (A)
registered in the name of Custodian or
its nominee, or (B) shown on Custodian's
account on the books of the Securities
Depository, the Book-Entry Account, or
Custodian's agent;
-6-
<PAGE> 8
(iii) promptly send to the Principal reports
received from the appropriate Federal
Reserve Bank or Securities Depository on its
system of internal accounting control; and
(iv) send to the Principal such reports of the
systems of internal accounting control of
Custodian and its agents through which such
Securities are deposited as are available
and as the Principal may reasonably request
from time to time.
(c) Holding Securities. Custodian shall hold and
physically segregate for the account of the Principal
all Assets owned by the Principal other than
Securities held in a Securities Depository or Book
Entry Account, as provided in subparagraphs (a) and
(b) of this Section 8.
(d) Registration of Securities. Securities held by
Custodian (other than bearer Securities) shall be
registered in the name of the Principal or in the
name of any nominee of the Principal or of any
nominee of Custodian. All Securities accepted by
Custodian on behalf of the Principal under the
terms of this agreement shall be in "street name"
or other good delivery form.
(e) Delivery of Securities. Custodian shall release
and deliver Securities owned by the Principal held
by Custodian or in a Securities Depository or Book
Entry Account for Custodian only upon receipt of
proper instructions, which may be continuing
instructions when Principal and Custodian
specifically agree in writing, and only in the
following cases:
(i) Upon the sale of such Securities for the
account of the Principal and the receipt of
payment therefor;
(ii) Upon the receipt of payment in connection
with any repurchase agreement related to
such Securities entered into by the
Principal;
(iii) In the case of a sale effected through a
Securities Depository or Book Entry Account,
in accordance with the
-7-
<PAGE> 9
provisions of subparagraphs (a) and (b)
of this section 8;
(iv) In connection with tender or other similar
offers for Securities owned by the
Principal, provided that, in any such case,
the cash or other consideration is to be
delivered to Custodian;
(v) To the issuer thereof or its agent when such
Securities are called, redeemed, retired, or
otherwise become payable, provided that, in
any such case, the cash or other
consideration is to be delivered to
Custodian;
(vi) To the issuer thereof, or its agent, for
transfer into the name of the Principal, or
into the name of any nominee or nominees of
Custodian, or for exchange for a different
number of bonds, certificates or other
evidence representing the same aggregate
face amount or number of units, or for
exchange of interim receipts or temporary
securities for definitive securities,
provided that, in any such case, the new
Securities are to be delivered to Custodian;
(vii) To the broker selling the same for
examination in accordance with "street
delivery" custom provided that Custodian may
adopt such procedures to ensure their prompt
return to Custodian by the broker in the
event the broker elects not to accept them;
(viii) For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization, or
readjustment of the Securities of the issuer
of such Securities, or pursuant to
provisions for conversion contained in such
Securities, provided that, in any such case,
the new Securities and cash, if any, are to
be delivered to Custodian.
(ix) In the case of warrants, rights or similar
Securities, the surrender
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thereof upon the exercise of such warrants,
rights or similar Securities or the
surrender of interim receipts or temporary
Securities for definitive Securities,
provided that, in any such case, the new
Securities and cash, if any, are to be
delivered to Custodian;
(x) For delivery in connection with any loans of
Securities made by the Principal, but only
against receipt of adequate collateral as
specified from time to time by proper
instructions of the Principal;
(xi) For delivery as security in connection with
any borrowings by the Principal requiring a
pledge of assets by the Principal but only
against receipt of amounts borrowed;
(xii) For delivery in accordance with the
provisions of any agreement among the
Principal, Custodian and a broker-dealer
registered under the Exchange Act and a
member of the National Association of
Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options
Clearing Corporation (the "O.C.C.") and of
any registered national securities exchange
or any similar organization, regarding
escrow or other arrangements in connection
with transactions of the Principal; and
(xiii) For any other purpose of the Principal, but
only upon receipt of proper instructions
from the Principal specifying the Securities
to be delivered, setting forth the purpose
for which such delivery is to be made,
declaring such purpose to be a proper
purpose, and naming the person or persons to
whom delivery of such Securities shall be
made.
(f) Security Holdings Disclosure. Custodian is not
authorized and shall not disclose the name, address
or security positions of the Principal in response to
requests concerning shareholder communications under
Section 14 of the Exchange Act, the rules and
regulations thereunder, and any
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similar statute, regulation, or rule in effect
from time to time.
9. VOTING AND OTHER ACTIONS. Custodian shall promptly deliver or mail
to the Principal all forms of proxies and all notices of meetings affecting or
relating to Securities held for the account of the Principal. Upon receipt of
proper instructions, Custodian shall execute and deliver such proxies or other
authorizations as may be required. Neither Custodian nor its nominee shall vote
any Securities or execute any proxy to vote the same or give any consent to take
any other action with respect thereto.
Custodian shall release and deliver such Securities and take any
other action as directed by the Principal, with respect to dividends, splits,
distributions, spin-offs, puts, calls, conversions, redemptions, tenders,
exchanges, mergers, reorganizations, rights, warrants or any other similar
activity relating to the Securities. Custodian shall request direction of
Principal upon receipt of actual notice where Principal has an option as to any
such activity. For purposes of this paragraph, Custodian shall be deemed to have
actual notice if any such activity is published in one or more of the following
publications: J.J. Kenny's Munibase System, Financial Card Service, Xitek, Inc.,
Standard & Poors' Called Bond Listing, Depository Trust Reorganization Notices,
and The Wall Street Journal. If Custodian does not have actual notice of such
activity, any such activity will be handled by Custodian on a "best efforts"
basis.
10. RESPONSIBILITY OF CUSTODIAN. Custodian shall not be liable for any
loss or damage resulting from its action or omission to act hereunder, except
for any such loss or damage arising out of its negligence or willful misconduct.
Subject to the foregoing, as long as and to the extent that it exercises
reasonable care, Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this agreement and Custodian shall be held harmless
in acting upon proper instructions and shall be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by it
hereunder, a certificate by the President, Treasurer, or Secretary or Assistant
Secretary of the Principal. Custodian may receive and accept a certified
resolution of the Board of Directors of the Principal as conclusive evidence of
the authority of any person to act in accordance with such vote.
Custodian shall be entitled to rely upon and may act upon advice of
counsel (who may or may not be counsel for the Principal) on all matters, and
shall be without liability for any action reasonably taken or omitted in good
faith and without negligence pursuant to such advice.
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<PAGE> 12
If the Principal requires Custodian to take any action with respect
to Securities, which action involves the payment of monies or which action may,
in the opinion of Custodian, result in Custodian's or its nominee's being liable
for the payment of money or incurring liability of some other form, the
Principal, as a prerequisite to requiring Custodian to take such action, shall
provide indemnity to Custodian in an amount and form satisfactory to Custodian.
Principal hereby agrees to indemnify Custodian and hold Custodian
harmless from and against any and all costs, expenses, damages, liabilities and
claims (including reasonable attorneys' fees and accountants' fees) sustained or
incurred by or asserted against Custodian by reason or as a result of any action
or inaction, or arising out of Custodian's performance hereunder; provided, that
Principal shall not indemnify Custodian for those costs, expenses, damages,
liabilities or claims arising out of Custodian's negligence or willful
misconduct. This indemnity shall be a continuing obligation of Principal, its
successors and assigns, notwithstanding the termination of this agreement.
Custodian shall not be responsible or liable for any failure or
delay in the performance of its obligations under this agreement arising out of
or caused directly or indirectly, by circumstances beyond its reasonable
control, including without limitation: acts of God; earthquakes; fires; floods;
wars; civil or military disturbance; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities, communications service; accidents; labor
disputes; acts of civil or military authority; governmental action; or inability
to obtain labor, material, equipment or transportation.
Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
agreement.
Custodian shall provide Principal with any report obtained by
Custodian on the system of internal accounting control of the Book-Entry
Accounts used hereunder and the Securities Depositories used hereunder, and with
such reports on its own systems of internal accounting control as Principal may
reasonably request from time to time.
11. RECORDS AND REPORTS. Principal hereby acknowledges that it may have
the right to receive broker confirmations within the time period prescribed by
12 C.F.R. Section 12.5 at no additional cost. In lieu of receiving such
confirmations within such time period, Custodian and Principal agree to the
alternative procedures set forth in this Section 11. Custodian shall create and
maintain records relating to its activities and obligations under this agreement
as Custodian and the Principal shall agree to and in such manner as will meet
the obligations of
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<PAGE> 13
the Principal, if any, under Federal and State tax laws and any other law or
administrative rules or procedures which may be applicable to the Principal,
including without limitation the 1940 Act. All such records shall remain the
property of the Principal, and shall be open to the inspection and audit at
reasonable times by duly authorized officers, employees or agents of the
Principal. Custodian shall, at the Principal's request, supply the Principal
with a tabulation of Securities owned by the Principal and held by Custodian and
shall supply to the Principal a report from time to time as the parties shall
agree of all monies received or paid on behalf of the Principal and of the
resultant cash balance, and such other reports as the Principal may reasonably
request. Upon the reasonable request of Principal, copies of any such books and
records shall be provided by Custodian to Principal or the Principal's
authorized representative, and the Principal shall reimburse Custodian its
expenses of providing such copies. Upon reasonable request of Principal,
Custodian shall provide in hard copy or on micro-film, whichever Custodian
elects, any records included in any such delivery which are maintained by
Custodian on a computer disk, or are similarly maintained, and Principal shall
reimburse the Custodian for its expenses of providing such hard copy or
micro-film.
12. EFFECTIVE PERIOD, TERMINATION AND INTERPRETIVE AND ADDITIONAL
PROVISIONS. This agreement shall become effective as of the date first set forth
on the Execution Form of this agreement and may be terminated by either party by
90 days advance notice. Upon termination hereof, the Principal shall pay to
Custodian such compensation as may be due as of the date of such termination,
and shall likewise reimburse Custodian for its costs, expenses and disbursements
as contemplated by this agreement. Upon termination, except as otherwise
provided herein including the payment of all monies owed to Custodian as set
forth in Section 14 and except for Section 23 and for any liability of the
Custodian to the Principal, or of the Principal to the Custodian, arising
hereunder, all obligations of each party to the other party hereunder shall
cease.
In connection with the operation of this agreement, Custodian and
the Principal may agree from time to time on such provisions interpretive or in
addition to the provisions of this agreement as may in their joint opinion be
consistent with the general tenor of this agreement. Any such interpretive or
additional provisions shall be signed by both parties and annexed hereto,
provided that no such interpretive or additional provisions shall contravene any
applicable federal or state law regulations.
13. SUCCESSOR CUSTODIAN. If a successor custodian is appointed by the
Principal, Custodian shall, upon termination, deliver to such successor
custodian, duly endorsed and in form
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<PAGE> 14
for transfer, all Securities then held hereunder and all other property of the
Principal deposited with or held by it hereunder and Custodian shall be released
of all duties and obligations under this agreement. If no such successor
custodian is appointed and this agreement is terminated pursuant to Section 12,
Custodian shall, in like manner, at its office, upon receipt of proper
instructions from the Principal, deliver such property in accordance with such
instructions. Delivery and release of Securities and other property shall be
made provided Custodian shall have no liability for shipping or insurance costs
associated therewith and full payment has been made to Custodian of all its
compensation, costs, expenses and other amounts hereunder.
In the event that property of the Principal remains in the
possession of Custodian after the date of termination hereof owing to the
failure of the Principal to appoint a successor custodian or provide proper
instructions, Custodian shall be entitled to compensation for its services
during such period and the provisions of this agreement relating to the duties
and obligations of Custodian shall remain in full force and effect.
Alternatively, Custodian shall have the right to commence an action in the
nature of an interpleader, and seek to deposit the property in a court of
competent jurisdiction.
14. COMPENSATION OF CUSTODIAN AND REIMBURSEMENT OF EXPENSES. Custodian
shall be entitled to compensation for its services as set forth in Schedule A
attached hereto and made a part hereof (the "Fee Schedule"), for reimbursement
of its out of pocket expenses as provided in this agreement, and for all other
necessary and proper disbursements and expenses made or incurred by Custodian in
the performance of its duties and obligations under this agreement. The
Principal shall pay or reimburse Custodian from time to time for any transfer
taxes payable upon transfers of Securities made hereunder.
The Principal shall promptly pay or reimburse Custodian for the
payment of any expense or liability named by the Principal, including but not
limited to the following payments for the account of the Principal: delivery
charges, insurance, interest, taxes, management, accounting and legal fees, and
other operating expenses of the Principal.
15. NOTICES. Any notices required or desired to be given to any party
hereto shall be in writing, shall be addressed to such other party at that
party's address set forth at the beginning of this agreement and shall be deemed
given when deposited in the United States mail, certified, return receipt
requested, or actually received by the party to whom it was addressed if
delivered by an alternate method. Any party may change the address to which
notices or other communications are to be given by giving the other party notice
of such change.
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<PAGE> 15
16. OVERDRAFTS OR INDEBTEDNESS. If Custodian, in its sole discretion,
advances cash on behalf of the Principal which results in an overdraft because
the cash held by Custodian for the account of the Principal shall be
insufficient to pay the total amount payable upon a purchase of Securities as
set forth in proper instructions or which results in an overdraft for some other
reason, or if the Principal is for any other reason indebted to Custodian
(including any amount owed by Principal to Custodian pursuant to Section 14,
above, and except for other borrowings for temporary or emergency purposes using
securities as collateral pursuant to a separate agreement), such overdraft or
indebtedness shall be deemed to be a loan made by Custodian to the Principal
payable on demand and shall bear interest from the date incurred at a rate per
annum (based on a 360-day year for the actual number of days involved) equal to
2% over the prime rate in effect from time to time as announced by The Wall
Street Journal under the section titled Money Rates, or any successor title,
such rate to be adjusted on the effective date of any change in such prime rate.
In addition, to the extent permitted by the Investment Company Act of 1940, the
Principal hereby grants to and agrees that Custodian shall have a continuing
lien and security interest in and to any property at any time held by it for the
benefit of the Principal or in which the Principal may have an interest which is
then in Custodian's possession or control or in possession or control, of any
third party acting on Custodian's behalf. The Principal authorizes Custodian, in
its sole discretion, at any time to charge any such overdraft or indebtedness
together with interest due thereon against any balance of account standing to
the Principal's credit on the Custodian's books.
17. GOVERNING LAW. This agreement shall be construed and enforced
according to the laws of the State of Ohio and all provisions shall be
administered according to the laws of said State, except as said laws are
superseded or preempted by any Federal law.
18. SEVERABILITY. The intention of the parties to this agreement is to
comply fully with all laws, rules, regulations and public policies, and this
agreement shall be construed consistently with all laws, rules, regulations and
public policies to the extent possible. If and to the extent that any court of
competent jurisdiction determines it is impossible to construe any provision of
this agreement consistently with any law, rule, regulation or public policy and
consequently holds that provision to be invalid, such holding shall in no way
affect the validity of the other provisions of this agreement, which shall
remain in full force and effect.
19. NON-WAIVER. No failure by any party to insist upon compliance with
any term of this agreement, to exercise any option, enforce any right, or seek
any remedy upon any default of
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<PAGE> 16
any other party shall affect, or constitute a waiver of, the first party's right
to insist upon such strict compliance, exercise that option, enforce that right,
or seek that remedy with respect to that default or any prior, contemporaneous,
or subsequent default. No custom or practice of the parties at variance with any
provision of this agreement shall affect or constitute a waiver of, any party's
right to demand strict compliance with all provisions of this agreement.
20. NO THIRD PARTY BENEFIT. This agreement is intended for the
exclusive benefit of the parties to this agreement and their respective
successors and assigns, and nothing contained in this agreement shall be
construed as creating any rights or benefits in or to any third party.
21. CAPTIONS. The captions of the various sections of this agreement
are not part of the context of this agreement, but are only labels to assist in
locating those sections and shall be ignored in construing this agreement.
22. DISPUTE RESOLUTION AND ARBITRATION. Any controversy or claim
arising out of or relating to this agreement, or the breach of the same, shall
be settled through consultation and negotiation in good faith and a spirit of
mutual cooperation. However, if those attempts fail, the parties agree that any
misunderstandings or disputes arising from this agreement shall be decided by
arbitration which shall be conducted, upon request by either party, before three
(3) arbitrators (unless both parties agree on one (1) arbitrator) designated by
the American Arbitration Association (the "AAA"), in accordance with the terms
of the Commercial Arbitration Rules of the AAA, and, to the maximum extent
applicable, the United States Arbitration Act (Title 9 of the United States
Code), or if such Act is not applicable, any substantially equivalent state law.
The parties further agree that the arbitrator(s) will decide which party must
bear the expenses of the arbitration proceedings.
23. CONFIDENTIALITY. Custodian shall treat confidentially and as
proprietary information of Principal's records and other information relative to
Principal and prior, present or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder. Notwithstanding the foregoing, Custodian
shall have the right to disclose such records and other information to any
Federal or State authority with whom Principal or its shares are registered, and
Custodian shall further have the right to exhibit any such records and
information to any person whenever it receives an opinion from its counsel that
there is a reasonable likelihood that Custodian will be held liable for the
failure to exhibit such records or information to such person, provided,
however, that in connection with any such disclosure
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<PAGE> 17
Custodian shall promptly notify Principal that such disclosure is to be made.
24. ENTIRE AGREEMENT. This agreement represents the entire agreement
between the parties and may not be modified or amended except by a writing
signed by the party to be charged, except as otherwise provided herein.
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BANK ONE TRUST COMPANY, NA
CUSTODY AGREEMENT
SCHEDULE A
FEE SCHEDULE
This Schedule A sets forth the compensation agreed upon by Investment
Services for Education Associations Trust (ISEA) (the "Principal") to be paid to
Bank One Trust Company, NA (the "Custodian") pursuant to the terms and
conditions of Section 14 of the Custody Agreement effective October __, 1997 and
executed by such parties. Any changes to the fee schedule shall be by execution
of a new Schedule A.
I. INITIAL ACCEPTANCE FEE - Waived
II. ANNUAL BASE FEE - $7,500
(A) ASSET HOLDINGS - Waived
(B) TRADES
DTC/Fed Eligible $10.00 per transaction
DTC/Fed Ineligible $10.00 per transaction
GNMA's & Other
Amortized Securities $10.00 per principal paydown
NOTE: Transaction fees for all other types of assets are
negotiable.
(C) ASSET FEE
$0.00003 times the market value of the assets under custody
III. SPECIAL FEES
Wire $5.00
Check Cut $2.00
* Pass through charges for Exception Services
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<PAGE> 19
IV. TERMINATION FEE - Waived
For purposes of this Schedule A, a "transaction" will be defined as any purchase
or sale of a security, free receipt, free delivery, and corporate reorganization
items such as tenders, mergers, and acquisitions.
Additional fees will be negotiated for accounts in excess of those listed on
Schedule B of the Custody Agreement.
Effective Date of this Fee Schedule: 10/23/97, 1997
CUSTODIAN PRINCIPAL
Bank One Trust Company, NA Investment Services for Education
Associations Trust (ISEA)
By:/s/W.J. Albach By:/s/William T. Sullivan, Jr.
- ----------------- ------------------------------
Printed Name:W.J. Albch Printed Name: William T. Sullivan, Jr.
Title:A.V.P. & Client Service Title:
Officer
Dated:10/23/97 Dated:
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<PAGE> 1
Exhibit (9)
ADMINISTRATION AGREEMENT
BETWEEN
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS
AND
CADRE FINANCIAL SERVICES, INC.
DATED AS OF JULY 1, 1997
<PAGE> 2
TABLE OF CONTENTS
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
<PAGE> 3
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
Section 7.15 Effectiveness............................................13
Execution..............................................................14
<PAGE> 4
INVESTMENT SERVICES FOR EDUCATION ASSOCIATIONS
ADMINISTRATION AGREEMENT
This Agreement, made as of the 1st day of July, 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 (.15% 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 will continue in effect until June 30, 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 voting
8
<PAGE> 12
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
William M. Sullivan, Esq.
Cadre Consulting Services, Inc.
905 Marconi Avenue
Ronkonkoma, NY 11779-7255
with a copy to;
Michael P. Malloy, Esquire
Drinker Biddle & Reath LLP
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
12
<PAGE> 16
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 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.
13
<PAGE> 17
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:/s/Don I. Tharpe
- -------------------
Cadre Financial Services, Inc.
by:/s/William T. Sullivan
- -------------------------
14
<PAGE> 1
Exhibit (10)
Law Offices
DRINKER BIDDLE & REATH LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
Telex: 834684
Fax: (215) 988-2757
March 31, 1998
Investment Services For
Education Associations Trust
905 Marconi Avenue
Ronkonkoma, NY 11779
RE: POST-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT ON
FORM N-1A (FILE NOS. 333-17789 AND 811-7967)
---------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Investment Services For Education
Associations Trust, a Delaware business trust (the "Trust"), in connection with
the preparation and filing with the Securities and Exchange Commission of
Post-Effective Amendment No. 1 (the "Amendment") to the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended.
The Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), with a par value of $0.0001 per share. The
Board of Trustees of the Trust has the power to create and establish one or
more investment portfolios ("Portfolio") of Shares and to classify or
reclassify any unissued Shares with respect to such Portfolios. Currently the
Trust is offering Shares of one Portfolio, the Investment Services For
Education Association Money Market Fund. The Board of Trustees have previously
authorized the issuance of Shares to the public.
We have reviewed the Trust's Amended and Restated Agreement of Trust
(the "Trust Agreement"), By-Laws, resolutions of its Board of Trustees and such
other legal and factual matters as we have deemed appropriate. We assume that
the Shares have been or will be issued against payment therefor as described in
the Trust's applicable Prospectus.
This opinion is based exclusively on the Delaware Business Trust Act
and the federal law of the United States of America.
<PAGE> 2
Investment Services For
Education Associations Trust
March 31, 1998
Page 2
Based upon the foregoing, it is our opinion that the Shares have been
and will be validly issued, fully paid and non-assessable by the Trust, and
that the holders of Shares will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the general corporation law of the State of Delaware (except that we
express no opinion as to such holders who are also trustees of the Trust).
We hereby consent to the filing of this opinion as an exhibit to the
Amendment to the Trust's Registration Statement.
Very truly yours,
/s/DRINKER BIDDLE & REATH LLP
DRINKER BIDDLE & REATH LLP
<PAGE> 1
Exhibit (11)(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 1 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated June
23, 1997, relating to the financial statements and financial highlights of the
Investment Services Education Association Trust, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the heading
"Independent Auditor" in such Statement of Additional Information.
/s/Price Waterhouse LLP
Price Waterhouse LLP
201 North Service Road
Melville, New York 11747
March 29, 1998
<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 Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, 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 of the rules and regulations of the Securities and Exchange
Commission thereunder.
/s/DRINKER BIDDLE & REATH LLP
-----------------------------
DRINKER BIDDLE & REATH LLP
Philadelphia, Pennsylvania
March 31, 1998
<PAGE> 1
[ARTICLE] 6
[CURRENCY] U.S. DOLLARS
<TABLE>
<S> <C>
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] JUN-30-1998
[PERIOD-START] JAN-01-1997
[PERIOD-END] DEC-31-1997
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 8,523,019
[INVESTMENTS-AT-VALUE] 0
[RECEIVABLES] 0
[ASSETS-OTHER] 15,967
[OTHER-ITEMS-ASSETS] 113,162
[TOTAL-ASSETS] 8,652,088
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 80,081
[TOTAL-LIABILITIES] 80,081
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 8,571,149.80
[SHARES-COMMON-STOCK] 857.20
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 8,572,007
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 119,633
[OTHER-INCOME] 0
[EXPENSES-NET] 8,499
[NET-INVESTMENT-INCOME] 111,134
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 111,134
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 111,134
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 14,553,837
[NUMBER-OF-SHARES-REDEEMED] 6,092,964
[SHARES-REINVESTED] 111,134
[NET-CHANGE-IN-ASSETS] 8,572,007
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3,170
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14,839
[AVERAGE-NET-ASSETS] 8,396,138
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] 1.00
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .013
[PER-SHARE-DISTRIBUTIONS] .013
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .001
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
