BATTERY PARK FUND INC\FA, N-1A EL/A, 1996-10-10

BATTERY PARK FUND INC\FA
N-1A EL/A, 1996-10-10

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As filed with the Securities and Exchange Commission on October 10, 1996

Securities Act File No. 333-7805
Investment Company Act File No. 811-7675

- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/

Pre-Effective Amendment No. 2 /x/

Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/

Amendment No. 2 /x/

(Check Appropriate Box or Boxes)
___________

BATTERY PARK FUNDS, INC.*
(Exact Name of Registrant as Specified in Charter)

2 World Financial Center, Building B
New York, New York 10281-1198
(Address of Principal Executive Offices) (Zip Code)

(212) 667-9300
(Registrant's Telephone Number, including Area Code)

Mr. Robert Levine
c/o Nomura Corporate Research and Asset Management Inc.
2 World Financial Center, Building B
New York, New York 10281-1198
(Name and Address of Agent for Service)
___________

Copies to:
Deborah A. Montick, Esq.
c/o Nomura Corporate Research John A. MacKinnon, Esq.
and Asset Management Inc. Brown & Wood LLP
2 World Financial Center, Building B One World Trade Center
New York, New York 10281-1198 New York, New York 10048-0557
___________

Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
___________

An indefinite number of shares of common stock of the Registrant is being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to Rule 24f-2 under the Investment Company Act of 1940.

- ----------

*This registration statement relates to the Battery Park(Service Mark) High
Yield Fund series of the Registrant.

BATTERY PARK FUNDS, INC.
BATTERY PARK HIGH YIELD FUND

Registration Statement on Form N-1A

CROSS REFERENCE SHEET

N-1A Item No.
- -------------

PART A
- ------
Item 1. Cover Page ........................... Prospectus Front
Cover Page
Item 2. Synopsis ............................. Fee Table
Item 3. Condensed Financial Information ...... Not Applicable
Item 4. General Description of Registrant .... Investment Objectives
and Policies;
Additional
Information -
Organization of the
Fund
Item 5. Management of the Fund ............... Fee Table; Management
of the Fund;
Prospectus Back Cover
Page
Item 5A. Management's Discussion of
Fund Performance ..................... Not Applicable
Item 6. Capital Stock and Other Securities ... Prospectus Cover Page;
Purchase of Shares;
Redemption of Shares;
Taxes; Shareholder
Services; Additional
Information
Item 7. Purchase of Securities Being
Offered .............................. Prospectus Cover
Page; Fee Table;
Purchase of
Shares; Additional
Information -
Determination of
Net Asset Value;
Shareholder
Services;
Prospectus Back
Cover Page
Item 8. Redemption or Repurchase ............. Fee Table; Purchase of
Shares; Redemption of
Shares
Item 9. Pending Legal Proceedings ............ Not Applicable

PART B
- ------

Item 10. Cover Page ........................... Statement of
Additional
Information Front
Cover Page
Item 11. Table of Contents .................... Statement of
Additional
Information Back
Cover Page
Item 12. General Information and History ...... Not Applicable
Item 13. Investment Objectives and Policies ... Investment Objectives
and Policies;
Portfolio Transactions
and Brokerage
Item 14. Management of the Fund ............... Management of the Fund
Item 15. Control Persons and Principal
Holders of Securities ................ Management of the Fund
Item 16. Investment Advisory and Other
Services ............................. Statement of
Additional
Information Front
Cover Page;
Management of the
Fund; Purchase of
Shares; Redemption
of Shares;
Shareholder
Services; General
Information
Item 17. Brokerage Allocation and Other
Practices ............................ Portfolio
Transactions and
Brokerage
Item 18. Capital Stock and Other Securities ... Purchase of Shares;
Redemption of Shares;
Shareholder Services;
General Information
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered ............. Purchase of Shares;
Redemption of Shares;
Determination of Net
Asset Value;
Shareholder Services;
General Information
Item 20. Tax Status ........................... Taxes
Item 21. Underwriters ......................... Portfolio
Transactions and
Brokerage;
Purchase of Shares
Item 22. Calculation of Performance Data ...... Performance Data
Item 23. Financial Statements ................. Independent
Auditor's Report;
Statement of
Assets and
Liabilities

PART C
- ------

Items 24-32. Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this
Registration Statement.

PROSPECTUS
__________

BATTERY PARK(SERVICE MARK) HIGH YIELD FUND
2 WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1198, (212) 667-9300

ABOUT THE Battery Park(Service Mark) High Yield Fund (the "Fund") is the
FUND only existing series of
Battery Park Funds, Inc., a newly organized, diversified, open-
end series-type investment company. The Fund's investment
objective is to provide shareholders with high total return,
consisting of current income and capital appreciation. The
Fund attempts to achieve its objective by investing principally
in fixed income securities of U.S. companies which are rated in
the lower rating categories of the established rating services
or are unrated securities of comparable quality. See
"Investment Objective and Policies." No assurance can be given
that the Fund's investment objective will be realized.

The Fund's Investment Adviser is Nomura Corporate Research and
Asset Management Inc.

RISK FACTORS The Fund may invest up to 100% of its assets in lower rated or
unrated securities (commonly referred to as "junk bonds").
Investment in junk bonds involves special considerations and
certain risks, including risks of default and price volatility,
and such securities are regarded as being predominantly
speculative as to the issuer's ability to make payments of
principal and interest. Investors should consider these risks
carefully before investing. See "Risk Factors and Special
Considerations" and "Appendix A - Ratings of High Yield Debt
Securities."

PURCHASING The Fund offers two classes of shares with different fees and
SHARES other features.
Shares may be purchased from securities dealers which have
entered into selected dealer agreements with Nomura Securities
International, Inc. ("NSI" or the "Distributor"), 2 World
Financial Center, Building B, New York, New York 10281. The
minimum initial purchase for Class A shares is $1,000 and the
minimum subsequent purchase is $100. The minimum initial
purchase for Class Y shares is $1 million. See "Purchase of
Shares."

ABOUT THIS This Prospectus is a concise statement of information about the
PROSPECTUS Fund that a
prospective investor should know before investing in the Fund.
This Prospectus should be retained for future reference. A
statement containing additional information about the Fund
dated October 10, 1996 (the "Statement of Additional
Information") has been filed with the Securities and Exchange
Commission (the "SEC") and is available, without charge, by
calling the Transfer Agent toll-free at 1-888-254-2874 or
writing to the Transfer Agent at its address on the back cover
of the Prospectus. The Statement of Additional Information is
hereby incorporated by reference into this Prospectus.

The date of this Prospectus
is October 10, 1996

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.

TABLE OF CONTENTS

Summary of Fund Expenses . . . 3 Reinvestment of Dividends and
The Fund . . . . . . . . . . . 5 Capital Gains Distributions . . 22
The Investment Adviser . . . . 5 Retirement Plans . . . . . . . 22
Investment Objective and Exchange Privilege . . . . . . 23
Policies . . . . . . . . . . . 10 Taxes . . . . . . . . . . . . . 23
Other Investment Policies Performance Data . . . . . . . 25
and Practices . . . . . . . . 11 Portfolio Transactions . . . . 26
Investment Restrictions . . . 13 Additional Information . . . . 27
Risk Factors and Special Dividends and Distributions . 27
Considerations . . . . . . . . 13 Determination of Net Asset Value 27
Management of the Fund . . . . 16 Organization of the Fund . . 28
Directors . . . . . . . . . . 16 Shareholder Inquiries . . . . 29
Management and Advisory Shareholder Reports . . . . . 29
Arrangements . . . . . . . . 16 Appendix A - Ratings of High Yield
Transfer Agency Services . . 17 Debt Securities . . . . . . . . A-1
Purchase of Shares . . . . . . 17 Appendix B - Hedging Techniques B-1
Class A Shares . . . . . . . 18
Class Y Shares . . . . . . . 20
Redemption of Shares . . . . . 21
Shareholder Services . . . . . 22
Investment Account . . . . . 22

SUMMARY OF FUND EXPENSES

<TABLE>
<CAPTION>
CLASS A CLASS Y(1)
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.50%(2) None
Maximum Sales Load Imposed on Reinvested Dividend (as a percentage
of offering price) . . . . . . . . . . . . . . . . . . . . . . . . None None
Deferred Sales Load (as a percentage of original purchase price or
redemption proceeds, as applicable) . . . . . . . . . . . . . . . . None None
Redemption Fees (as a percentage of amount redeemed, if applicable) . None None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . None None

ANNUAL FUND OPERATING EXPENSES(3)
(AS A PERCENTAGE OF PROJECTED AVERAGE NET ASSETS)

Management Fees (after waiver)(4) . . . . . . . . . . . . . . . . . . 0.37% 0.37%
Rule 12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25% None
Total Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . 0.63% 0.63%
----- -----
Total Annual Fund Operating Expenses(5) . . . . . . . . . . . 1.25% 1.00%
----- -----
----- -----
</TABLE>
____________________________

(1) Class Y shares are sold only to certain specified investors. See
"Purchase of Shares--Class Y Shares."

(2) Class A shares of the Fund held in accounts of financial planners or
individuals will convert to Class Y shares when the aggregate value of
the Class A shares in such account reaches $1 million or more. See
"Purchase of Shares--Class A Shares--Conversion of Class A Shares to
Class Y Shares."

(3) Annual Fund Operating Expenses are estimated based on average expenses
expected to be incurred during the fiscal year ending September 30,
1997. During the course of this period, expenses may be more or less
than the average amount shown.

(4) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee by the investment adviser. The adviser
can terminate this voluntary waiver at any time at its sole discretion.
The maximum management fee is 0.65%.

(5) Total Annual Fund Operating Expenses for the Class A and Class Y Shares
are estimated to be 1.53% and 1.28% respectively, absent the voluntary
waiver of management fees.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder will bear either directly or
indirectly. For more complete descriptions of the various costs and
expenses, see "Purchase of Shares."

EXAMPLE

You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return; (2) redemption at the end of each time period; and (3) payment
of the maximum sales charge, if applicable. The Fund charges no redemption
fees.

<TABLE>
<CAPTION>
Class A Class Y
------- -------
<S> <C> <C>
1 Year . . . . . . . . . . . . . . $57 $10
3 Years . . . . . . . . . . . . . $83 $32
</TABLE>

The above example should not be considered a representation of past or
future performance. Actual expenses may be greater or less than those shown.
This example is based on estimated data for the Fund's fiscal year ending
September 30, 1997.

THE FUND

Battery Park(Service Mark) High Yield Fund (the "Fund") is a
diversified, open-end investment company. The Fund is the only existing
series of Battery Park Funds, Inc. (the "Company"), a newly organized series-
type investment company that was incorporated under the laws of the State of
Maryland on June 4, 1996, and is registered under the Investment Company Act
of 1940 (the "Investment Company Act"). The Fund's principal office is
located at 2 World Financial Center, Building B, New York, New York 10281-
1198 and its telephone number is (212) 667-9300. The Fund's investment
objective is to provide shareholders with high total return, consisting of
current income and capital appreciation. The Fund attempts to achieve its
objective by investing principally in fixed income securities of U.S.
companies which are rated in the lower rating categories of the established
rating services or are unrated securities of comparable quality. There can
be no assurance that the Fund's investment objective will be realized. See
"Investment Objective and Policies."

Investment in lower rated or unrated securities (commonly referred to as
"junk bonds") involves special considerations and certain risks, including
risks of failure to pay interest and principal, default and price volatility.
Investors should carefully consider these risks before investing. See "Risk
Factors and Special Considerations."

THE INVESTMENT ADVISER

The Fund's Investment Adviser is Nomura Corporate Research and Asset
Management Inc. (the "Investment Adviser" or "NCRAM"). As of September 30,
1996, NCRAM managed in excess of $1.0 billion in high yield bonds.

Historical Investment Results of the Investment Adviser. Set forth
below is certain performance data provided by the Investment Adviser relating
to investment results of a composite of all client accounts whose portfolios
were managed by the Investment Adviser during a five year period
commencing in 1991, which had the same investment objective as the Fund and
were managed using substantially similar, though not necessarily identical,
investment strategies and techniques as those contemplated by the Fund (the
"Advisory Accounts"). See "Investment Objective and Policies". Because of
the similarities in investment strategies and techniques, the Investment
Adviser believes that the Advisory Accounts are sufficiently comparable to
the Fund to make performance data listed below relevant to investors in the
Fund. The results presented (the "Total Return Composite") are not intended
to predict or suggest the returns that will be experienced by the Fund or the
return an investor will achieve by investing in the Fund. Different methods
of determining performance from those described in the footnotes to the
charts below may result in different performance figures. An investor should
not rely on the following performance figures as an indication of future
performance of either the Investment Adviser's separate Advisory Accounts or
the Fund.

<TABLE>
<CAPTION>
NCRAM High Yield Total Return Figures
Total Return Composite October 1, 1991 to September 30, 1996
Average Total Return Net of Fees
<S> <C>
1991 (Fourth Quarter) 4.22%
1992 18.70%
1993 25.37%
1994 8.39%
1995 22.43%
1996 (First through Third Quarter) 12.27%
Annualized Total Return Since Inception 18.24%

</TABLE>

Another way to consider the above schedule is as follows: $10,000
invested in an Advisory Account on October 1, 1991 which received a return
based on the Total Return Composite would have grown to $23,109, including
reinvestment of dividends, by September 30, 1996.

<TABLE>
Performance of NCRAM High Yield Total Return Composite vs. Lipper High Yield Fund Average
<CAPTION>
(Net of Fees) Q1 Q2 Q3 Q4 Annual
<S> <C> <C> <C> <C> <C>
1996
NCRAM +2.43% +2.69 +6.73 N/A N/A
Lipper* +2.82% +2.03 +4.66 N/A N/A
1995
NCRAM +5.97% +6.19% +3.64% +4.99% +22.43%
Lipper* +4.37% +5.28% +3.13% +2.95% +16.66%
1994
NCRAM +3.60% +1.22% +0.51% +2.83% +8.39%
Lipper* -1.10% -1.37% -0.13% -1.32% -3.87%
1993
NCRAM +9.41% +5.17% +2.79% +6.00% +25.37%
Lipper* +6.71% +4.74% +2.04% +4.43% +19.10%
1992
NCRAM +5.45% +2.98% +7.29% +1.89% +18.70%
Lipper* +8.03% +3.21% +4.11% +1.11% +17.37%
1991
NCRAM N/A N/A N/A +4.22% N/A
Lipper* N/A N/A N/A +5.04% N/A

</TABLE>

*Source: Lipper Analytical Services, Inc.

The indices above each represent past performance, are shown solely for
comparative purposes and may not be indicative of future returns. Past
performance is no guarantee of future results. Mutual funds, including the
Fund and those funds comprising the Lipper High Yield Fund Average, typically
are subject to portfolio management restrictions, investment limitations and
diversification requirements imposed by the Investment Company Act and the
Internal Revenue Code of 1986 that are not applicable to private accounts.
The imposition of such restrictions may result in lower returns than
reflected in the above table for the NCRAM High Yield Total Return Composite,
as discussed in note 6, below. In particular, such funds are subject to
limitations on their profits attributable to purchases and sales of shares
held for less than three months. See "Investment Objective and Policies -
Other Investment Policies and Practices -- Portfolio Turnover."

Notes to Investment Performance

The schedule on page 6 represents the average investment results for the
periods ending after October 1, 1991 for all clients whose portfolios were
included in the Advisory Accounts managed by the Investment Adviser.

1. TYPES OF ACCOUNTS AND ELIGIBLE ACCOUNTS FOR COMPOSITE

The Total Return Composite contains accounts that are aggressively
managed for a high level of current income and capital appreciation.
Accounts in the Total Return Composite invest primarily in fixed income
securities of U.S. issuers which are rated in the lower rating categories of
the established rating services or are unrated securities of comparable
quality. Investments in fixed income securities include cash pay securities,
pay-in-kind and zero coupon notes, convertible debt securities and increasing
rate and resettable notes. These investments include both new issues and
issues traded in the secondary market.

New accounts are eligible for inclusion in the composite rate of return
calculations upon completion of the first full quarter under management.
Closed accounts are eligible for inclusion in the composite rate of return
calculations through the completion of the last full quarter under
management. All existing accounts under management are reevaluated for
possible inclusion in the composite on a quarterly basis.

2. CALCULATION OF RATES OF RETURN

All rate of return calculations conform to standards established by the
Association for Investment Management and Research. All accounts are valued
monthly based on principal market values plus accrued income. Account
returns are calculated monthly utilizing the modified Dietz methodology where
security and cash flows are "day-weighted" during the month. All amounts are
rounded to the nearest one-hundredth of one percent. Monthly returns are
geometrically linked to determine quarterly returns.

3. COMPOSITE CHANGES AND OTHER MATTERS

No alteration of Total Return Composite as presented here has occurred
at any time because of changes in personnel. The composition of the
composite has been amended only where a change in the investment mandates of
an account so dictates. Leverage has not been used in portfolios
included in the Total Return Composite. An affiliated account which
represents an average of approximately 7.58% of the total assets of the Total
Return Composite (for the period October 1, 1992 through March 31, 1994) was
a non-fee paying account. Due to a change of investment strategy, this
account was removed from the Total Return Composite as of April 1, 1994.

There has been no linkage with simulated portfolios.

4. TOTAL RETURN COMPOSITE

During the term of its existence, the Total Return Composite comprised
five or fewer separate accounts. As of September 30, 1996, assets in the
Total Return Composite Accounts aggregated approximately $112 million
(approximately 7.21% of the Investment Adviser's total assets under
management). As of September 30, 1996, the Investment Adviser also managed
approximately $400 million of assets in portfolios comprised of
collateralized bond obligations ("CBOs") and approximately $625 million of
assets in a high yield mutual fund registered in Japan.

5. FEES

Fees range from .50% to 1% of assets under management.

6. LIPPER HIGH CURRENT YIELD FUND AVERAGE

The Lipper High Current Yield Fund Average (the "Index") is a published
average total return net of fees figure for approximately 140 high current
yield funds monitored by Lipper Analytical Services ("Lipper"). Lipper
defines High Current Yield Funds as those that "aim at high (relative)
current income from fixed income securities." The Index has no quality or
maturity restrictions and the funds comprising the Index tend to invest in
lower-grade debt securities. Typically, such funds have concentration,
diversification, liquidity, portfolio turnover and distribution restrictions
which may result in lower returns than aggressively traded accounts such as
those included in the Total Return Composite.

* * *

Experienced Management. NCRAM is 80% owned by Nomura Holding America
Inc. ("NHA") and 20% owned by The Nomura Securities Co., Ltd. ("NSC"), the
parent of NHA. NCRAM is affiliated with NSI, a broker-dealer and investment
adviser dually registered with the SEC. NSC and the Investment Adviser are
part of an affiliated group of Nomura companies.

Mr. Robert Levine founded the Investment Adviser in 1991 and is its
current President and Chief Executive Officer. He is a member of the Board
of Directors of the Investment Adviser and an Executive Managing Director of
NHA. Mr. Levine is responsible for the structuring, credit selection and
management of all the Investment Adviser's high yield portfolios. Mr. Levine
will be the chief investment officer for the Fund. Prior to his present
position at NCRAM, Mr. Levine was with Kidder, Peabody & Co., Inc. ("Kidder")
for 13 years. His most recent position at Kidder was President of Kidder,
Peabody High Yield Asset Management, Inc. and Managing Director for Kidder.
Mr. Richard A. Buch, the Fund's portfolio manager, heads up the Investment
Adviser's trading operations and also is a member of its Board of Directors.
Mr. Buch joined the Investment Adviser from Kidder in 1993. He has extensive
experience in credit selection and the management of high
yield portfolios. Messrs. Levine and Buch are supported by six credit
analysts who specialize in different high yield industry sectors.

Investment Philosophy. NCRAM believes that the domestic high yield
market provides attractive investment opportunities for investors who
approach it with a long-term, diligent research-intensive approach. NCRAM's
investment approach is based upon identifying and investing in those
companies that it believes to be the strongest in the high yield market.

NCRAM's investment philosophy, style and approach in managing high yield
bonds are less dependent on interest rate exposure and forecasts and more
dependent on company success, i.e., credit risk. Credit research is the
fundamental basis for decision making. NCRAM seeks companies (bottom-up
approach) which it believes are improving their ability to service debt.
NCRAM refers to these companies as "strong horses". The securities of these
"strong horses" constitute the core holdings of NCRAM's high yield
portfolios.

Research constitutes the backbone of NCRAM and thus substantial
resources are allocated to the Investment Adviser's analysts, including five
in-house trained industry-specific research analysts plus two senior
analysts/managers, who provide in-depth coverage.

Initial Investment by NCRAM Affiliates. To facilitate the establishment
of the Fund's portfolio, NHA, an affiliate of NCRAM, will invest
approximately $10 million in the Fund shortly after its commencement of
operations. Although NHA will purchase Fund shares for investment purposes,
all or a portion of this investment may be redeemed at any time.

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to provide shareholders with high
total return, consisting of current income and capital appreciation. The
foregoing investment objective is a fundamental policy of the Fund and may
not be changed without a vote of a majority of the outstanding shares of the
Fund. The Fund attempts to achieve its objective by investing principally in
fixed income securities which are rated in the lower rating categories of the
established rating services or are unrated securities of comparable quality.
No assurance can be given that the Fund's investment objective will be
realized.

Under normal circumstances, the Fund will invest at least 80% of its
total assets in fixed income securities rated Ba1 or lower by Moody's
Investors Service, Inc. ("Moody's") or BB+ or lower by Standard & Poor's
Ratings Group ("S&P"), or unrated securities of comparable quality. The Fund
has established no minimum acceptable rating for the securities in which it
will invest, and the Fund may, from time to time, purchase or hold securities
in the lowest rating categories. Securities rated below Baa by Moody's or
below BBB by S&P, and unrated securities of comparable quality, are commonly
known as "junk bonds." See Appendix A - "Ratings of High Yield Debt
Securities" for a description of these rating categories. The high yield
market is generally defined as including bonds with ratings below investment
grade. However, when prevailing economic conditions cause a narrowing of
spreads between the yields derived from medium to lower rated or comparable
non-rated securities and those derived from higher rated securities, the Fund
may invest in higher rated fixed income securities which provide similar
yields with less risk. Since some issuers do not seek ratings for their
securities, unrated securities also will be considered for investment, but
only when the Investment Adviser believes that the financial condition of the
issuers of such securities and/or the protection afforded by the terms of the
securities themselves limit the risk to the Fund to a degree comparable to
that of the rated securities which are consistent with the Fund's investment
objective and policies.

The Fund will seek to achieve its objective of high total return by
investing in a variety of high yield, high current income securities
including both convertible and non-convertible debt securities, preferred
stock, units of high yield securities (including warrants), pay-in-kind bonds
or notes, contingent interest securities and increasing rate and resettable
and extendable notes. In seeking capital appreciation, the Fund also may
invest in zero coupon bonds or notes, or common stock, rights or other equity
securities which do not provide high current income but offer the potential
for capital appreciation. See "Risk Factors and Special Considerations."

The average maturity of the Fund's portfolio securities will vary based
upon the Investment Adviser's assessment of economic and market conditions.
The Fund reserves the right, as a temporary defensive measure or in
anticipation of purchasing high yield securities, to hold cash or short-term,
high quality securities such as United States Government securities, United
States Government agency or instrumentality securities, domestic bank or
savings institution certificates of deposit and bankers' acceptances, short-
term debt securities such as commercial paper and other corporate debt, and
repurchase agreements.

OTHER INVESTMENT POLICIES AND PRACTICES

Convertible Securities. The Fund may invest in convertible securities,
which include any corporate debt security or preferred stock which may be
converted into underlying shares of common stock. Convertible securities
entitle the holder to receive interest payments paid on corporate debt
securities or the dividend preference on a preferred stock until such time as
the convertible security matures or is redeemed or until the holder elects to
exercise the conversion privilege. Although the Fund generally expects that
it will sell convertible securities rather than convert such securities into
common stock, the Fund may, at various times, exercise conversion rights on
convertible securities.

Non-U.S. Securities. The Fund may invest up to 25% of its total assets
in securities issued by non-U.S. issuers. Included within such investments,
the Fund may invest up to 15% of its total assets in securities of issuers in
emerging markets. All of the Fund's investments in securities of non-U.S.
issuers will be U.S. dollar-denominated. Investment in securities of foreign
issuers involves risks not typically related to domestic investment. See
"Risk Factors and Special Considerations."

Corporate Loans. The Fund may invest in corporate loans made by banks
or other financial institutions either at origination or by acquiring
participations in, assignments of or novations of corporate loans. Corporate
loans generally are not readily marketable and may be subject to restrictions
on resale and are therefore subject to the Fund's limitation on illiquid
securities, as set forth below. The corporate loans in which the Fund
invests typically are originated, negotiated and structured by a syndicate of
co-lenders, one or more of which administers the loan on behalf of the
syndicate. The value of a corporate loan depends primarily on the
creditworthiness of the borrower. The Fund will invest in a corporate loan
only if, in the Investment Adviser's judgment, the borrower can meet debt
service on such loan; however, the Investment Adviser has set no minimum
credit rating criteria regarding the borrowers. Although the Investment
Adviser will continue to monitor the creditworthiness of the borrowers of
corporate loans in which the Fund invests, there can be no assurance that
such analysis will disclose factors that will impair the value of a corporate
loan.

Asset-Backed Securities. The Fund may invest in asset-backed
securities, which are securities that directly or indirectly represent an
interest in, or are backed by and payable from, receivables (including lease
receivables) on pools of assets such as (but not limited to) mortgage loans
secured by real property, notes secured by property, equipment or lease
payments, credit card debt, automobile loans or student loans. Asset-backed
securities are issued in structured financings wherein the sponsor is often a
special purpose entity established for the purpose of securitizing the
underlying assets in order to increase the liquidity of those assets or to
achieve certain other financial goals. In choosing asset-backed securities
in which the Fund will invest, the Investment Adviser will take into
consideration, among other things, the underwriting standards of the
originator of the underlying obligations, applicable loan-to-value ratios and
the general sensitivity of the securities to economic conditions and trends.

Repurchase Agreements. The Fund may invest in securities pursuant to
repurchase agreements. U.S. dollar-denominated repurchase agreements may be
entered into only with a member bank of the Federal Reserve System or a
primary dealer in U.S. Government securities or an affiliate thereof. Under
such agreements, the bank or primary dealer or an affiliate thereof agrees,
upon entering into the contract, to repurchase the security at a mutually
agreed upon time and price, thereby determining the yield during the term of
the agreement. This results in a fixed rate of return insulated from market
fluctuations during such period. Repurchase agreements may be construed to
be collateralized loans by the purchaser to the seller secured by the
securities transferred to the purchaser. As a purchaser, the Fund will
require the seller to provide additional collateral if the market value of
the securities that are the subject of the repurchase agreement falls below
the repurchase price at any time during the term of the repurchase agreement.
In the event of default by the seller under a repurchase agreement construed
to be a collateralized loan, the underlying securities are not owned by the
Fund but only constitute collateral for the seller's obligation to pay the
repurchase price. Therefore, the Fund may suffer time delays and incur costs
or possible losses in connection with disposition of the collateral.

"When-Issued" and "Delayed Delivery" Transactions. The Fund may
purchase and sell portfolio securities on a "when-issued" and "delayed
delivery" basis. No income accrues to the Fund in such securities in
connection with such transactions prior to the date the Fund actually takes
delivery of such securities. These transactions are subject to market
fluctuation; the value of the securities at delivery may be more or less than
their purchase price, and yields generally available on such securities when
delivery occurs may be higher or lower than yields on the securities obtained
pursuant to such transactions. Failure of the buyer or seller, as the case
may be, to consummate the transaction may result in a missed opportunity to
obtain the best price or yield available on the purchase or sale of the
subject security.

Lending of Portfolio Securities. The Fund may from time to time lend
securities from its portfolio with a value not exceeding 33 1/3% of its total
assets, to banks, brokers and other financial institutions and receive
collateral in cash or securities issued or guaranteed by the United States
Government which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. During the
period of this loan, the Fund receives the income on the loaned securities
and either receives the income on the collateral or other compensation (i.e.,
negotiated loan premium or fee) for entering into the loan and thereby
increases its yield. In the event that the borrower defaults on its
obligation to return borrowed securities, because of insolvency or otherwise,
the Fund could experience delays and costs in gaining access to the
collateral and could suffer a loss to the extent that the value of the
collateral falls below the market value of the borrowed securities.

Illiquid Securities. The Fund may invest up to 15% of its net assets in
securities that are not readily marketable, including securities that are
restricted as to disposition under the federal securities laws or otherwise.
If registration of such securities under the Securities Act of 1933 (the
"Securities Act") is required, such registration may not be readily
accomplished, and if such securities may be resold without registration, such
resale may be permissible only in limited quantities. In either event, the
inability to sell securities at the most opportune time may affect negatively
the net asset value of the Fund. Notwithstanding the foregoing, the Fund may
purchase certain restricted securities ("Rule 144A securities") for which
there is a secondary market of qualified institutional buyers as defined by
Rule 144A under the Securities Act. Rule 144A securities held by the Fund
that are determined to be liquid securities, either by the Fund's Board of
Directors or by the Investment Adviser pursuant to guidelines approved by the
Fund's Board, will not be subject to the Fund's limitation on illiquid
securities. See "Investment Objective and Policies - Rule 144A Securities"
in the Statement of Additional Information for additional information
regarding Rule 144A securities.

Portfolio Turnover. Generally, the Fund does not purchase securities
for short-term trading profits. However, the Fund may dispose of securities
without regard to the time they have been held when such actions, for
defensive or other reasons, appear advisable to the Investment Adviser in
light of a change in circumstances in general market, economic or financial
conditions. As a result of its investment policies, the Fund may engage in a
substantial number of portfolio transactions. Accordingly, while the Fund
anticipates that its annual portfolio turnover rate should not exceed 200%
under normal conditions, it is impossible to predict portfolio turnover
rates. The portfolio turnover rate is calculated by dividing the lesser of
the Fund's annual sales or purchases of portfolio securities (exclusive of
purchases or sales of securities whose maturities at the time of acquisition
were one year or less) by the monthly average value of the securities in the
portfolio during the year. Higher portfolio turnover (over 100%) involves
correspondingly greater transaction costs and may result in the realization
of greater net short-term capital gains. In order to qualify as a regulated
investment company for federal income tax purposes, less than 30% of the
annual gross income of the Fund must be derived from the sale or other
disposition of securities and certain other investments held by the Fund for
less than three months.

Leverage. Although the Fund does not presently intend to utilize
leverage to purchase portfolio securities, it is authorized to borrow from
banks amounts of up to 33 1/3% of its total assets (including the amount
borrowed). The Fund may also utilize its borrowing authority to obtain funds
to meet redemption requests or settle investment transactions or for
temporary or emergency purposes.

Borrowings by the Fund create an opportunity for greater total return
but, at the same time, increase exposure to capital risk. For example,
leveraging may exaggerate changes in the net asset value of Fund shares and
in the yield on the Fund's portfolio. Borrowing will create interest
expenses for the Fund which can exceed the income from the assets
attributable to the borrowed funds. To the extent the income derived from
securities purchased with borrowed funds exceeds the interest the Fund will
have to pay, the Fund's net income will be greater than if borrowing were not
used. Conversely, if the income from the assets acquired with borrowed funds
is not sufficient to cover the cost of borrowing, the net income of the Fund
will be less than if borrowing were not used, and therefore the amount
available for distribution to shareholders as dividends will be reduced.

Options and Futures Transactions. The Fund is authorized, but does not
currently intend, to engage in various portfolio strategies to hedge its
portfolio against investment and interest rate risks, including the
utilization of options and futures. See Appendix B - "Hedging Techniques."

INVESTMENT RESTRICTIONS

The Fund has adopted a number of restrictions and policies relating to
the investment of its assets and its activities which are fundamental
policies and may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities, as defined in the
Investment Company Act. Investors are referred to the Statement of
Additional Information for a complete description of such restrictions and
policies.

RISK FACTORS AND SPECIAL CONSIDERATIONS

Junk Bonds. Junk bonds (sometimes referred to as "high yield
securities") are predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of
the security and generally involve a greater volatility of price than
securities in higher rating categories. In purchasing such junk bonds, the
Fund will rely on the Investment Adviser's
judgment, analysis and experience in evaluating the creditworthiness of an
issuer of such securities. The Investment Adviser will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters.

The market values of junk bonds tend to reflect individual issuer
developments to a greater extent than do higher rated securities, which react
primarily to fluctuations in the general level of interest rates. Issuers of
junk bonds may be highly leveraged and may not have available to them more
traditional methods of financing. Therefore, the risk associated with
acquiring the securities of such issuers generally is greater than is the
case with higher-rated securities. For example, during an economic downturn
or a sustained period of rising interest rates, issuers of junk bonds may be
more likely to experience financial stress, especially if such issuers are
highly leveraged. During periods of economic recession, such issuers may not
have sufficient revenues to meet their interest payment obligations. The
issuer's ability to service its debt obligations also may be adversely
affected by specific issuer developments or the issuer's inability to meet
specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of junk bonds because such securities may be
unsecured and may be subordinated to other creditors of the issuer.

Junk bonds may have call or redemption features which would permit an
issuer to repurchase the securities from the Fund. If a call were exercised
by the issuer during a period of declining interest rates, the Fund likely
would have to replace such called securities with lower-yielding securities,
thus decreasing the net investment income to the Fund and dividends to
shareholders.

As with all fixed income securities, changes in the market yield will
affect the Fund's net asset value as the prices of junk bonds generally
increase when interest rates decline and decrease when interest rates rise.
Prices of longer term securities generally fluctuate more in response to
interest rate changes than do shorter term securities.

The Fund may have difficulty disposing of certain junk bonds because
there may be a thin trading market for such securities. To the extent that a
secondary trading market for junk bonds does exist, it is generally not as
liquid as the secondary market for higher-rated securities. Reduced
secondary market liquidity may have an adverse effect on market price and the
Fund's ability to dispose of particular issues which is necessary to meet the
Fund's liquidity needs or in response to a specific economic event such as
deterioration in the creditworthiness of the issuer. Reduced secondary
market liquidity for certain junk bonds also may make it more difficult for
the Fund to obtain accurate market quotations for purposes of valuing the
Fund's portfolio. Market quotations are generally available on many junk
bonds only from a limited number of dealers and may not necessarily represent
firm bids of such dealers or prices for actual sales. The Fund's Directors,
or the Investment Adviser pursuant to guidelines which may be adopted by the
Directors, will carefully consider the factors affecting the market for junk
bonds in determining whether any particular security is liquid or illiquid
and whether market quotations are readily available for purposes of valuing
portfolio securities.

Adverse publicity and investor perceptions, which may not be based on
fundamental analysis, also may decrease the value and liquidity of junk
bonds, particularly in a thinly traded market. Factors adversely affecting
the market value of junk bonds are likely to affect adversely the Fund's net
asset value. In addition, the Fund may incur additional expenses to the
extent it is required to
seek recovery upon a default on a portfolio holding or participate in the
restructuring of the obligation.

Foreign and Emerging Market Securities. Investment in the securities of
foreign issuers involves special considerations that are not typically
associated with investment in the securities of U.S. issuers. These risks
include adverse political, economic and social developments, trading
restrictions, low trading volume, greater price volatility, settlement delays
and less governmental supervision and regulation. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rates of inflation, capital
reinvestment, resources, self-sufficiency and balance of payments position.
Other risks include imposition of foreign withholding taxes on Fund income,
the possible seizure or nationalization of foreign assets and the possible
establishment of exchange controls, expropriation, confiscatory taxation, or
other foreign laws or restrictions that might affect adversely payments due
on securities held by the Fund. Moreover, brokerage commissions and other
transaction costs on foreign securities are generally higher than in the
United States. In addition, in the event of a default on a foreign
obligation, it may be more difficult for the Fund to obtain or enforce a
judgment against the issuer of such obligation.

There may be less publicly available information about a foreign issuer
than a U.S. issuer, and foreign issuers may not be subject to the same
auditing and financial recordkeeping standards and requirements as U.S.
issuers. Often foreign issuers are not subject to uniform accounting,
auditing and financial reporting standards or to practices comparable to
those applicable to U.S. companies, and therefore a foreign issuer's
financial statements may not reflect its financial position or results of
operations as they would be reflected had the financial statements been
prepared in accordance with U.S. generally accepted accounting principles.

These risks may be heightened in connection with investments in issuers
in emerging markets. Investment in certain emerging market securities is
restricted or controlled to varying degrees which may at times limit or
preclude investment in or disposal of those securities and may increase the
costs and expenses of trading in those securities to the Fund. In addition,
certain emerging market countries may significantly restrict foreign
investment, require governmental approval for investment by foreign investors
or to repatriate investment income, capital or the proceeds of sales of
securities by foreign investors, which also may adversely affect the Fund.

In addition to the risks described above, investors will be subject to
risks resulting from the Fund's investment policies described under
"Investment Objective and Policies -- Other Investment Policies and
Practices."

MANAGEMENT OF THE FUND

DIRECTORS

The Directors of the Fund consist of five individuals, three of whom are
not "interested persons" as defined in the Investment Company Act. The
Directors are responsible for the overall supervision of the operations of
the Fund and perform the various duties imposed on the directors of
investment companies by the Investment Company Act.

The Directors of the Fund are:

Robert Levine* --Founder, President and Chief Executive Officer of the
Investment Adviser and an Executive Managing Director of NHA.

Michael A. Berman* --Chairman and Chief Executive Officer of NSI.

John Fitting, Jr.--Former Chairman and Chief Executive Officer of
National Securities & Research, Inc.

Francis L. Fraenkel--President of Delta Capital Management Inc.

Frank K. Reilly--Bernard J. Hank Professor of Business Administration,
University of Notre Dame College of Business Administration.

______________________________
* Interested person, as defined in the Investment Company Act, of the Fund.

MANAGEMENT AND ADVISORY ARRANGEMENTS

Subject to the direction of the Directors, the Investment Adviser is
responsible for the actual management of the Fund's portfolio and constantly
reviews the Fund's holdings in light of its own research analysis and that
from other relevant sources. The responsibilities for making decisions to
buy, sell or hold a particular security rest with the Investment Adviser.
The Investment Adviser performs certain of the other administrative services
and provides office space, facilities, equipment and personnel necessary for
management of the Fund.

Pursuant to the management agreement between the Investment Adviser and
the Fund (the "Investment Advisory Agreement"), the Investment Adviser is
entitled to receive from the Fund a monthly fee based upon the average daily
net assets of the Fund at an annual rate of 0.65%. During the Fund's first
year of operations, the Investment Adviser has agreed to waive that portion
of the investment advisory fee necessary to limit the total operating
expenses of each class of the Fund to 1.25% of average daily net assets. The
Investment Adviser may discontinue this waiver any time after the Fund's
first year of operations.

The Investment Advisory Agreement obligates the Fund to pay certain
expenses incurred in the Fund's operations, including, among other things,
the management fee, legal and audit fees, unaffiliated Directors' fees and
expenses, registration fees, custodian and transfer agency fees,
accounting and pricing costs, and certain of the costs of printing proxies,
shareholder reports, prospectuses and statements of additional information.
To the extent that accounting services are provided to the Fund by the
Investment Adviser, the Fund will reimburse the Investment Adviser for its
costs in connection with such services.

TRANSFER AGENCY SERVICES

Federated Shareholder Services Company ("FSS"), acts as the Fund's
transfer agent (the "Transfer Agent") pursuant to an agreement (the "Transfer
Agency Agreement"). Pursuant to the Transfer Agency Agreement, the Transfer
Agent is responsible for the issuance, transfer and redemption of shares and
the opening and maintenance of shareholder accounts.

PURCHASE OF SHARES

Shares of the Fund are offered continuously for sale by the Distributor
and other eligible securities dealers. The minimum initial purchase for
Class A shares is $1,000 and the minimum subsequent purchase is $100; the
minimum initial purchase for Class Y shares is $1 million.

The Fund offers its shares in two classes at a public offering price
equal to the next determined net asset value per share plus, in the case of
Class A shares, a sales charge imposed at the time of purchase. Class A
shares may be purchased through securities dealers that have entered into
selected dealer agreements with the Distributor. Class Y investors not
purchasing through a securities dealer should contact the Fund's Transfer
Agent at 1-888-254-2874 prior to sending a purchase wire. Failure to notify
the Transfer Agent in advance may result in a delay in processing the
purchase. Purchase wires should be sent to The Bank of New York, New York,
NY, ABA# 021-000-018, Nomura Securities Deposit Account, Account #8900312076,
c/o Federated Shareholder Services Company, For Further Credit To: Battery
Park(Service Mark) High Yield Fund; an investor should indicate his or her
account number and the name under which the account is registered. Purchase
orders for Class A shares of the Fund must be submitted through a securities
dealer to the Fund's Transfer Agent. Purchase orders must be received by
securities dealers prior to the close of business on the New York Stock
Exchange (the "NYSE") which is normally 4:00 p.m. E.S.T. and will include
orders received after the close of business on the previous day. The
applicable offering price will be based on the net asset value determined as
of the close of business on the NYSE that day, provided the Transfer Agent
in turn receives the order from the securities dealer prior to 30 minutes
after the close of business on the NYSE on that day (normally 4:30 p.m.
E.S.T.). If the purchase orders are not received by the Transfer Agent
prior to 30 minutes after the close of business on the NYSE, such orders
shall be deemed received on the next business day.

The Fund or the Distributor may suspend the continuous offering of any
class of the Fund's shares at any time in response to conditions in the
securities markets or otherwise and may thereafter resume such offering from
time to time. Any order may be rejected by the Distributor or the Fund.
Neither the Distributor nor the dealers are permitted to withhold placing
orders to benefit themselves by a price change.

Each Class A share and Class Y share of the Fund represents an identical
interest in the investment portfolio of the Fund and has the same rights,
except that Class A shares bear the expenses of the ongoing distribution fees
and Class A shares may convert to Class Y shares. See
"Class A Shares - Conversion of Class A Shares to Class Y Shares." The
distribution fees that are imposed on Class A shares will be imposed directly
against the assets represented by Class A shares and not against all assets
of the Fund and, accordingly, such charges will not affect the net asset
value of Class Y shares or have any impact on investors choosing Class Y
shares. Dividends paid by the Fund for both classes of shares will be
calculated in the same manner at the same time and will differ only to the
extent that distribution fees and any incremental costs relating to a
particular class are borne exclusively by that class. Class A shares have
exclusive voting rights with respect to the Class A Rule 12b-1 distribution
plan. See "Distribution Plan" below. Each class has an exchange privilege
with the Liberty U.S. Government Money Market Trust. See "Shareholder
Services--Exchange Privilege."

CLASS A SHARES

The public offering price of Class A shares is the next determined net
asset value plus varying sales charges (i.e., sales loads) as set forth in
the table below:

<TABLE>
<CAPTION>
Discount to
Selected Dealers
Sales Charge as a Sales Charge as a as a Percentage
Amount of Percentage of Percentage* of the of the Offering
Purchase Offering Price Net Amount Invested Price
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 - $99,999 4.00% 4.17% 3.50%
$100,000 - $249,999 3.25% 3.36% 2.75%
$250,000 - $499,999 2.50% 2.56% 2.25%
$500,000 - $999,999 2.00% 2.04% 1.80%
$1,000,000 or more 0.00% 0.00% N/A

</TABLE>

____________________
* Rounded to the nearest one-hundredth percent.

Reduced initial sales charges are applicable to Class A share purchases
aggregating $50,000 or more made within a 13-month period starting with the
first purchase pursuant to a letter of intention. The letter of intention
is not a binding obligation to purchase any amount of Class A shares;
however, its execution will result in the purchaser paying a lower sales
charge at the appropriate quantity level. For details regarding letters of
intention, see "Purchase of Shares-Letter of Intention" in the Statement of
Additional Information.

The Distributor may reallow discounts to selected dealers and retain the
balance over such discounts. At times the Distributor may reallow the entire
sales charge to such dealers. Since securities dealers selling Class A
shares of the Fund will receive a concession equal to a substantial portion
of the sales charge, they may be deemed underwriters under the Securities
Act.

Class A shares are available to certain qualified investors and other
entities (herein referred to as "Qualified Investors") without a sales
charge. Qualified Investors include:

- U.S. purchasers which place orders through a broker that
maintains an omnibus account with the Fund and makes such
purchases: (i) through U.S. investment advisers or
financial planners placing trades for their accounts or
the accounts of their clients, and who charge a fee for
their services; (ii) for U.S. clients of such investment
adviser or financial planner who place trades for their
own accounts if the accounts are linked to a master
account of such investment adviser or financial planner on
the books and records of the broker or agent; (iii) for
U.S. retirement and deferred compensation plans, and
trusts used to fund those plans, including but not limited
to those defined in section 401(a), 403(b) or 457 of the
Internal Revenue Code or "rabbi trusts" or (iv) using the
proceeds of a redemption of shares of another registered
open-end investment company;

- charitable organizations (as defined in section 501(c) of
the Internal Revenue Code of 1986, as amended) investing
$100,000 or more;

- any U.S. pension fund, corporation, state or local
government, Taft Hartley plan, foundation and/or endowment
which is a client of a consulting firm, if that firm has
made appropriate arrangements with the Fund, NHA, NCRAM or
any affiliate of NHA or NCRAM with respect to furnishing
advice to the client or with respect to the purchase of
Fund shares by such client;

- accounts as to which a U.S. bank or broker-dealer charges
an account management fee, provided the bank or broker-
dealer has an agreement with NCRAM or NHA relating to
investment in the Fund;

- U.S. investors, and their spouses and minor children, who
are investment advisory clients of NCRAM or NHA or any of
their affiliates or who are affiliated persons or
sponsoring companies of those clients; and

- employees (and their spouses and minor children) of the Investment
Adviser.

Distribution Plan. The Fund has adopted a distribution plan for Class A
shares pursuant to Rule 12b-1 under the Investment Company Act (the
"Distribution Plan") with respect to the distribution fees paid by the Fund
to the Distributor with respect to such class.

Under the Distribution Plan, the Distributor will be paid a fee in an
amount computed at an annual rate of .25 of 1% of the average daily net
assets of Class A shares, accrued daily and paid monthly, to finance any
activity which is principally intended to result in the sale of Class A
shares. Under the Distribution Plan, all or part of this fee will be paid to
financial institutions such as banks, fiduciaries, custodians for public
funds, investment advisers and broker/dealers that have entered into
agreements with the Fund or the Distributor to provide sales services or
distribution-related support services to the Fund.

Shareholder Services Agreement. The Fund also may enter into a
Shareholder Services Agreement with FSS under which the Fund may make
additional payments up to .25 of 1% of the average daily net asset value of
Class A shares to obtain certain personal services for certain shareholders
and the maintenance of certain shareholder accounts. Under this Shareholder
Services Agreement, FSS would either perform shareholder services directly or
will select financial institutions to perform shareholder services, and
financial institutions would receive fees based upon Class A shares owned by
their clients or customers. The schedules of such fees and the basis upon
which such fees would be paid will be determined from time to time by the
Fund and FSS. The Fund has no current intention to enter into any
Shareholder Services Agreement.

Conversion of Class A Shares to Class Y Shares. When the aggregate net
investments of clients of a securities dealer or fee-based financial planner
with appropriate arrangements with the Fund or NCRAM or the investment of a
single investor in Class A shares reaches $1 million, such Class A shares
will convert to Class Y shares upon written request by the securities dealer
or investor. Thereafter, such securities dealer or individual investor will
be offered Class Y shares of the Fund so long as such investor has at least
$1 million invested in the Fund at the date the purchase order is accepted
by the Transfer Agent. Eligible shares will be transferred from Class A to
Class Y at net asset value on the day that the written request is received
by the Transfer Agent without the imposition of any fee or other charge.

If share certificates were issued, share certificates for Class A shares
of the Fund to be converted must be delivered to the Transfer Agent with the
written request to transfer the shares. In the event such certificates are
not received by the Transfer Agent together with the request, the related
Class A shares will convert to Class Y shares on the next scheduled
conversion date after such certificates are delivered.

Reinstatement Privilege. Shareholders who have redeemed their Class A
shares have a one-time privilege to reinstate their accounts by purchasing
Class A shares of the Fund, at net asset value without a sales charge, up to
the dollar amount redeemed. The reinstatement privilege may be exercised by
sending a notice of exercise along with a check for the amount to be
reinstated to the Transfer Agent within 90 days of the date the request for
redemption was accepted by the Transfer Agent. The reinstatement will be
made at the net asset value per share next determined after the notice of
reinstatement is received and cannot exceed the amount of the redemption
proceeds. The reinstatement privilege is a one-time privilege and may be
exercised only the first time a Class A shareholder makes a redemption.

CLASS Y SHARES

Class Y shares are offered at net asset value without a sales charge to
an investor that invests at least $1 million in the Fund or purchases shares
through a fee-based financial planner whose clients have a current investment
in the Fund aggregating at least $1 million. Class Y shares also are
offered for purchases of less than $1 million to Directors of the Fund and to
retirement plans administered by the Investment Adviser or its affiliates for
the benefit of employees of the Investment Adviser and/or its affiliates.

* * *

Supplemental Payments to Financial Institutions. The Investment Adviser
and/or the Distributor also may pay financial institutions a fee for
providing certain services to both Class A and Class Y shareholders. This
fee is in addition to the amounts paid under the Distribution Plan and/or
Shareholder Services Agreement and, to the extent paid, will be reimbursed by
the Investment Adviser and not the Fund.

REDEMPTION OF SHARES

The Fund is required to redeem for cash all shares of the Fund upon
receipt of a written request in proper form. Class A shares and Class Y
shares of the Fund may be redeemed through securities dealers, or when
appropriate in the case of Class Y shares, by contacting the Transfer Agent
at 1-888-254-2874. The redemption price is the net asset value per share
next determined after the initial receipt of proper notice of redemption.
There will be no charge for redemption. Shareholders liquidating their
holdings will receive on redemption all dividends declared through the date
of redemption. The value of shares at the time of redemption may be more or
less than the shareholder's cost, depending on the market value of the
securities held by the Fund at such time.

A shareholder may redeem shares by sending a written request to the
Transfer Agent. The written request should include the shareholder's name,
the Fund name, the account number, the share or dollar amount requested and,
if share certificates were issued, the share certificates. Shareholders
should call the Transfer Agent for assistance in redeeming by mail.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to a shareholder of record must have signatures
on written redemption requests guaranteed by:

. a trust company or commercial bank whose deposits are insured
by the Bank Insurance Fund, which is administered by the
Federal Deposit Insurance Corporation ("FDIC");

. a member of the New York, American, Boston, Midwest or Pacific
Stock Exchange;

. a savings bank or savings association whose deposits are
insured by the Savings Association Insurance Fund, which is
administered by the FDIC; or

. any other "eligible guarantor institution" as defined by the
Securities Exchange Act of 1934.

The Transfer Agent does not accept signatures guaranteed by a notary
public. The Fund and its Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Transfer Agent may
elect in the future to limit eligible signature guarantees to institutions
that are members of a signature guarantee program. The Fund and its Transfer
Agent reserve the right to amend these standards at any time without notice.

At various times the Fund may be requested to redeem shares for which it
has not yet received good payment (e.g., cash, Federal funds or certified
check drawn on a United States bank). The Fund may delay or cause to be
delayed the mailing of a redemption check until such time as it has assured
itself that good payment has been collected for the purchase of such Fund
shares, which will not exceed seven days.

_______________________

Due to the relatively high cost of maintaining accounts of less than
$500, the Fund reserves the right to redeem shares in any Class A share
account for their then current net asset value (which will be promptly paid
to the shareholder), if at any time the total investment does not have a
value of at least $500. Shareholders will be notified that the value of
their account is less than $500 and allowed 60 days to make an additional
investment before the redemption is processed. In such event, the $100
minimum on subsequent investment will not be applicable.

SHAREHOLDER SERVICES

The Fund offers a number of shareholder services and investment plans
described below which are designed to facilitate investment in shares of the
Fund. Full details as to each of such services can be obtained from the Fund
by calling the telephone number on the cover page hereof or from the Transfer
Agent. Included in such services are the following:

INVESTMENT ACCOUNT

An Investment Account is established by the Transfer Agent for each
shareholder. The shareholder will receive statements with respect to share
transactions showing the activity in the shareholder's Investment Account.
Share certificates for full shares will be issued without charge upon the
request of the shareholder to the Transfer Agent.

REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

Unless specific instructions to the contrary are given as to the method
of payment of dividends and capital gains distributions, dividends and
distributions will automatically be reinvested in additional shares of the
Fund. Such reinvestment will be at the net asset value of shares of the
Fund, without sales charge, as of the close of business on the last business
day of each month. Shareholders may elect in writing to receive either their
income dividends or capital gains distributions, or both, in cash, in which
event payment will be mailed on the payment date.

Shareholders may, at any time, notify the Transfer Agent in writing that
they no longer wish to have their dividends and/or distributions reinvested
in shares of the Fund or vice versa, and commencing ten days after the
receipt by the Transfer Agent of such notice, those instructions will be
effected.

RETIREMENT PLANS

Shares of the Fund may be purchased in connection with individual
retirement accounts. Copies of plans establishing such accounts are
available from dealers offering shares of the Fund.

Capital gains and income received in retirement plans are generally
exempt from federal taxation until distributed from the plans. Investors
considering participation in any such plan should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan.

EXCHANGE PRIVILEGE

Shareholders of each class of shares of the Fund have an exchange
privilege with Liberty U.S. Government Money Market Trust (the "Money Fund"),
a money market mutual fund advised by Federated Advisers, an affiliate of
FSS. There is currently no limitation on the number of times a shareholder
may exercise the exchange privilege. The exchange privilege may be modified
or terminated in accordance with the rules of the SEC. The exchange
privilege is available only to U.S. shareholders in states where the exchange
legally may be made. Exchanges of Class A shares and Class Y shares for
shares of the Money Fund are made on the basis of the relative net asset
values per Class A share or Class Y share, respectively, without the
imposition of any fee or other charge. Shareholders of the Money Fund who
wish to exchange their Money Fund shares for Class A shares of the Fund and
who did not acquire their Money Fund shares in exchange for Class A shares
will be required to pay the sales charge applicable to the Class A shares
acquired in exchange for those Money Fund shares.

Should the relationship between the Fund and FSS terminate, the Fund
will seek to enter into arrangements with another similar money market fund
to continue to provide the exchange privilege. Should FSS be replaced,
former Fund shareholders who exchanged their shares of the Fund for shares of
the Money Fund will be given a one-time opportunity to exchange their shares
of the Money Fund for shares of the new money market fund and thus preserve
the ability to exchange their money market fund shares for shares of the Fund
at a future date.

TAXES

The Fund intends to elect and to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue
Code of 1986, as amended (the "Code"). If it so qualifies, the Fund (but not
its shareholders) will not be subject to Federal income tax on the part of
its net ordinary income and net realized capital gains which it distributes
to Class A and Class Y shareholders (together, the "shareholders"). The Fund
intends to distribute all of such income.

Dividends paid by the Fund from its ordinary income or from an excess of
net short-term capital gains over net long-term capital losses (together
referred to hereafter as "ordinary income dividends") are taxable to
shareholders as ordinary income. Distributions made from an excess of net
long-term capital gains over net short-term capital losses (including gains
or losses from certain transactions in futures and options) ("capital gain
dividends") are taxable to shareholders as long-term capital gains,
regardless of the length of time the shareholder has owned Fund shares. Any
loss upon the sale or exchange of Fund shares held for one year or less,
however, will be treated as long-term capital loss to the extent of any
capital gain dividends received by the shareholder. Distributions in excess
of the Fund's earnings and profits will first reduce the adjusted tax basis
of a holder's shares and, after such adjusted tax basis is reduced to zero,
will constitute capital gains to such holder (assuming the shares are held as
a capital asset).

Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. Not later than 60 days after the close of the
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Fund, whether from ordinary income or
capital gains, generally will not be eligible for the dividends received
deduction allowed to corporations under the Code. If the Fund pays a
dividend in January which was declared in the previous October, November or
December to shareholders of record on a specified date in one of such months,
then such dividend will be treated for tax purposes as being paid by the Fund
and received by its shareholders on December 31 of the year in which such
dividend was declared.

Ordinary income dividends paid to shareholders who are nonresident
aliens or foreign entities will be subject to a 30% United States withholding
tax under existing provisions of the Code applicable to foreign individuals
and entities unless a reduced rate of withholding or a withholding exemption
is provided under applicable treaty law. Nonresident shareholders are urged
to consult their own tax advisers concerning the applicability of the United
States withholding tax.

Dividends and interest received by the Fund may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between
certain countries and the United States may reduce or eliminate such taxes.

Under certain provisions of the Code, some shareholders may be subject
to a 31% withholding tax on ordinary income dividends, capital gain dividends
and redemption payments ("backup withholding"). Generally, shareholders
subject to backup withholding will be those for whom no certified taxpayer
identification number is on file with the Fund or who, to the Fund's
knowledge, have furnished an incorrect number. When establishing an account,
an investor must certify under penalty of perjury that such number is correct
and that such investor is not otherwise subject to backup withholding.

No gain or loss will be recognized on the conversion of Class A shares
into Class Y shares in the circumstances described in the Prospectus. A
shareholder's basis in the shares acquired will be the same as such
shareholder's basis in the shares converted, and the holding period of the
acquired shares will include the holding period for the converted shares.

If a shareholder exercises an exchange privilege within 90 days of
acquiring the shares, then the loss the shareholder can recognize on the
exchange will be reduced (or the gain increased) to the extent any sales
charge paid to the Fund on the exchanged shares reduces any sales charge the
shareholder would have owed upon purchase of the new shares in the absence of
the exchange privilege. Instead, such sales charge will be treated as an
amount paid for the new shares.

A loss realized on a sale or exchange of shares of the Fund will be
disallowed if other Fund shares are acquired (whether through the automatic
reinvestment of dividends or otherwise) within a 61-day period beginning 30
days before and ending 30 days after the date that the shares are disposed
of. In such a case, the basis of the shares acquired will be adjusted to
reflect the disallowed loss.

The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and the Treasury regulations promulgated thereunder. The Code and
the Treasury regulations are subject to change by legislative, judicial or
administrative action either prospectively or retroactively.

Ordinary income and capital gain dividends may also be subject to state
and local taxes.

Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on U.S. Government obligations. State law
varies as to whether dividend income attributable to U.S. Government
obligations is exempt from state income tax.

Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors
should consider applicable foreign taxes in their evaluation of an investment
in the Fund.

PERFORMANCE DATA

From time to time the Fund may include its average annual total return
and yield for various specified time periods in advertisements or information
furnished to present or prospective shareholders. Average annual total
return and yield are computed separately for Class A and Class Y shares in
accordance with formulas specified by the SEC.

Average annual total return quotations for the specified period will be
computed by finding the average annual compounded rates of return (based on
net investment income and any realized and unrealized capital gains or losses
on portfolio investments over such periods) that would equate the initial
amount invested to the redeemable value of such investment at the end of each
period. Average annual total return will be computed assuming all dividends
and distributions are reinvested and taking into account all applicable
recurring and nonrecurring expenses, and the maximum sales charge in the case
of Class A shares. Dividends paid by the Fund with respect to all shares, to
the extent any dividends are paid, will be calculated in the same manner at
the same time on the same day and will be in the same amount, except that
account maintenance and distribution fees and any incremental transfer agency
costs relating to each class of shares will be borne exclusively by that
class. The Fund will include performance data for all classes of shares of
the Fund in any advertisement or information including performance data of
the Fund.

In addition, advertisements may include performance data that does not
take the Class A sales charge into account and therefore may
reflect greater total return since a lower amount of expenses is deducted.
See "Purchase of Shares." The Fund's total return may be expressed either
as a percentage or as a dollar amount in order to illustrate such total
return on a hypothetical $1,000 investment in the Fund at the beginning of
each specified period.

Yield quotations will be computed based on a 30-day period by dividing
(a) net income based on the yield of each security earned during the period
by (b) the average daily number of shares outstanding during that period that
were entitled to receive dividends multiplied by the maximum offering price
per share on the last day of the period.

Total return and yield figures are based on the Fund's historical
performance and are not intended to indicate future performance. The Fund's
total return and yield will vary depending on market conditions, the
securities comprising the Fund's portfolio, the Fund's operating expenses and
the amount of realized and unrealized net capital gains or losses during the
period. The value of an investment in the Fund will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.

On occasion, the Fund may compare its performance to performance data
published by the Merrill Lynch High Yield Bond Index, Lipper Analytical
Services, Inc., Morningstar Publications, Inc., Money Magazine, U.S. News &
World Report, Business Week, CDA Investment Technology, Inc., Forbes
Magazine and Fortune Magazine. From time to time, the Fund may include the
Fund's Morningstar risk-adjusted performance ratings in advertisements or
supplemental sales literature. As with other performance data, performance
comparisons should not be considered indicative of the Fund's relative
performance for any future period.

PORTFOLIO TRANSACTIONS

Subject to policies established by the Board of Directors of the Fund,
the Investment Adviser is primarily responsible for the execution of the
Fund's portfolio transactions. In executing such transactions, the
Investment Adviser seeks to obtain the best results for the Fund, taking into
account such factors as price (including the applicable brokerage commission
or dealer spread), size of order, difficulty of execution and operational
facilities of the firm involved and the firm's risk in positioning a block of
securities. While the Investment Adviser generally seeks reasonably
competitive commission rates or spreads, the Fund does not necessarily pay
the lowest commission or spread available.

The Fund has no obligation to deal with any broker or dealer in
execution of transactions in portfolio securities. Subject to obtaining the
best price and execution, securities firms which provided supplemental
investment research to the Investment Adviser, including NSI, may receive
orders for transactions by the Fund. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Investment Adviser under the Investment Advisory Agreement, and the expenses
of the Investment Adviser will not necessarily be reduced as a result of the
receipt of such supplemental information. In addition, consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc. and
policies established by the Directors of the Fund, the Investment Adviser may
consider sales of shares of the Fund as a factor in the selection of brokers
or dealers to execute portfolio transactions for the Fund.

The securities in which the Fund invests are traded primarily in the
over-the-counter market. Since portfolio transactions will generally not be
effected on foreign securities exchanges, the Fund
does not expect typically to incur potential settlement delays which may
occur on certain of such exchanges. Where possible, the Fund will deal
directly with the dealers who make a market in the securities involved except
in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own
account. On occasion, securities may be purchased directly from the issuer.
Such portfolio securities are generally traded on a net basis and do not
normally involve either brokerage commissions or transfer taxes. Securities
firms may receive brokerage commissions on certain portfolio transactions,
including options, futures and options on futures transactions and the
purchase and sale of underlying securities upon exercise of options. Under
the Investment Company Act, persons affiliated with the Fund, including NSI,
are prohibited from dealing with the Fund as a principal in the purchase and
sale of securities unless a permissive order allowing such transactions is
obtained from the SEC. An affiliated person of the Fund may serve as its
broker in transactions conducted on an exchange and in over-the-counter
transactions conducted on an agency basis.

Section 11(a) of the Securities Exchange Act of 1934, as amended,
generally prohibits members of United States national securities exchanges
from executing exchange transactions for their affiliates and institutional
accounts which they manage unless the member (i) has obtained prior express
authorization from the account to effect such transactions, (ii) at least
annually furnished the account with the aggregate compensation received by
the member in effecting such transactions, and (iii) complies with any rules
the SEC has prescribed with respect to the requirements of clauses (i) and
(ii). To the extent Section 11(a) would apply to NSI acting as a broker for
the Fund in any of its portfolio transactions executed on any such securities
exchange of which it is a member, appropriate consents have been obtained
from the Fund and annual statements as to aggregate compensation will be
provided to the Fund.

ADDITIONAL INFORMATION

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute all its net investment income. Dividends
from such net investment income will be declared daily prior to the
determination of net asset value on that day and paid monthly. Shares will
accrue dividends as long as they are issued and outstanding. Shares are
issued and outstanding from the settlement date of a purchase order to the
settlement date of a redemption order. All net realized long-term and
short-term capital gains, if any, will be distributed to the Fund's
shareholders at least annually.

The per share dividends and distributions on each class of shares will
be reduced as a result of any fees or expenses applicable with respect to
such class of shares. See "Additional Information--Determination of Net
Asset Value". Dividends and distributions may be reinvested automatically in
shares of the Fund at net asset value. Shareholders may elect to receive any
such dividends or distributions, or both, in cash. Dividends and
distributions are taxable to shareholders as discussed under "Taxes" whether
they are reinvested in shares of the Fund or received in cash.

DETERMINATION OF NET ASSET VALUE

The net asset value of the Fund is determined as of the close of trading
(normally 4:00 p.m. E.S.T.) on the NYSE, Monday through Friday, except on (i)
days on which there is not sufficient
changes in the value of the Fund's portfolio securities that its net asset
value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or
(iii) the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. The net asset value per share is computed by dividing the value of the
securities held by the Fund plus any cash or other assets (including interest
and dividends accrued but not yet received) minus all liabilities (including
accrued expenses) by the total number of shares outstanding at such time,
rounded to the nearest cent. Expenses, including the fees payable to the
Investment Adviser and any account maintenance and/or distribution fees
payable to the Distributor, are accrued daily.

The per share net asset value of the Class Y shares generally will be
higher than the per share net asset value of the Class A shares, reflecting
the daily expense accruals of the distribution fees applicable to Class A
shares. It is expected, however, that the per share net asset value of the
classes will tend to converge (although not necessarily meet) immediately
after the payment of dividends or distributions, which will differ by
approximately the amount of the expense accrual differentials between the
classes.

ORGANIZATION OF THE FUND

The Fund is the only existing series of the Company, a series-type
investment company incorporated under Maryland law on June 4, 1996. The
Company has an authorized capital of 200,000,000 shares of common stock, par
value $0.001 per share, of which 50,000,000 shares are initially classified
as one series, namely the Fund, consisting of two classes, designated Class A
and Class Y common stock, each of which consists of 25,000,000 shares and the
remainder of 150,000,000 shares are not classified as to any class or series.
Shares of Class A and Class Y common stock represent interests in the same
assets of the Fund and are identical in all respects except that the Class A
shares bear certain expenses related to the shareholder services and
distribution associated with such shares and may cease to be subject to such
expenses if they are converted to Class Y shares. Class A shareholders have
exclusive voting rights with respect to matters relating to that class'
shareholder services and distribution expenditures, as applicable. See
"Purchase of Shares." The Directors of the Company may classify and
reclassify the shares of the Fund and of the Company into additional classes
or series of common stock at a future date.

Shareholders are entitled to one vote for each share held and fractional
votes for fractional shares held and will vote on the election of Directors
and any other matter submitted to a shareholder vote. The Fund does not
intend to hold meetings of shareholders in any year in which the Investment
Company Act does not require shareholders to act upon the election of
directors. Also, the By-laws of the Fund require that a special meeting of
stockholders be held upon the written request of shareholders of the Fund as
required by Maryland corporate law and the Investment Company Act. Voting
rights for Directors are not cumulative. Shares issued are fully paid and
nonassessable and have no preemptive rights. Shares have the conversion
features described in this Prospectus. Each share of common stock is
entitled to participate equally in dividends and distributions declared by
the Fund and in the net assets of the Fund upon liquidation or dissolution
after satisfaction of outstanding liabilities except, as noted above, the
Class A shares bear certain additional expenses.

SHAREHOLDER INQUIRIES

Shareholder inquiries may be addressed to the Fund at the address or
telephone number set forth on the cover page of this Prospectus.

SHAREHOLDER REPORTS

Only one copy of each shareholder report and certain shareholder
communications will be mailed to each identified shareholder regardless of
the number of accounts such shareholder has. If a shareholder wishes to
receive separate copies of each report and communication for each of the
shareholder's related accounts, the shareholder should notify in writing:

Battery Park Funds, Inc.
P.O. Box 1226
Pittsburgh, PA 15230-1226

The written notification should include the shareholder's name, address,
tax identification number and account numbers. If you have any questions
regarding this please call 1-888-254-2874.

APPENDIX A

RATINGS OF HIGH YIELD DEBT SECURITIES

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE RATINGS

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.

B-Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

Caa-Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.

Ca-Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C-Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

NOTE: Moody's applies numerical modifiers l, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.

DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP ("S&P") CORPORATE DEBT RATINGS

An S&P corporate or municipal rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees.

The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.

The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not
perform an audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed, suspended or
withdrawn as a result of changes in, or unavailability of, such information,
or for other circumstances.

The ratings are based, in varying degrees, on the following
considerations:

I. Likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;

II. nature of and provisions of the obligation; and

III. protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.

Debt rated BB, B, CCC, CC and C is regarded, on balance, as having
predominantly speculative characteristics with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.

BB Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating.

B Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.

CCC Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of
principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or B-
rating.

CC The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.

C The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been
filed but debt service payments are continued.

CI The rating CI is reserved for income bonds on which no interest is being
paid.

D Debt rated D is in payment default. The D rating category is also used
when interest payments or principal payments are not made on the date
due even if the applicable grace
period has not expired, unless S&P believes that such payments will be
made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing with the
major ratings categories.

Provisional ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of
the project being financed by the debt being rated and indicates that
payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or risk of default upon
failure of, such completion. The investor should exercise judgment with
respect to such likelihood and risk.

L The letter "L" indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit
collateral is insured by the Federal Savings & Loan Insurance Corp. or
the Federal Deposit Insurance Corp. and interest is adequately
collateralized.

* Continuance of the rating is contingent upon S&P's receipt of an
executed copy of the escrow agreement or closing documentation
confirming investments and cash flows.

NR Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a
particular type of obligation as a matter of policy.

Debt Obligations of Issuers outside the United States and its
territories are rated on the same basis as domestic corporate and municipal
issues. The ratings measure the creditworthiness of the obligor but do not
take into account currency exchange and related uncertainties.

Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, Bonds rated in the top
four categories ("AAA", "AA", "A", "BBB", commonly known as "investment
grade" ratings) are generally regarded as eligible for bank investment. In
addition, the laws of various states governing legal investments may impose
certain rating or other standards for obligations eligible for investment by
savings banks, trust companies, insurance companies and fiduciaries
generally.

The ratings are based on current information furnished to S&P by the
issuer, and obtained by S&P from other sources it considers reliable. The
ratings may be changed, suspended, or withdrawn as a result of changes in, or
unavailability of such information.

APPENDIX B

HEDGING TECHNIQUES

The Fund may engage in various portfolio strategies to hedge its
portfolio against interest rate risks. These strategies include use of
options on portfolio positions, futures and options on such futures. The
Fund may enter into such transactions only in connection with its hedging
strategies. While the Fund's use of hedging strategies is intended to reduce
the volatility of the net asset value of Fund shares, the Fund's net asset
value will fluctuate. There can be no assurance that the Fund's hedging
transactions will be effective and the Fund may not necessarily be engaging
in hedging activities when movements in interest rates occur. See
"Investment Objective and Policies" in the Fund's Prospectus for further
information concerning these strategies.

Although certain risks are involved in options and futures transactions
(as discussed below in "Risk Factors in Options and Futures Transactions"),
the Investment Adviser believes that, because the Fund will only engage in
these transactions for hedging purposes, the options and futures portfolio
strategies of the Fund will not subject the Fund to the risks frequently
associated with the speculative use of options and futures transactions. Tax
requirements may limit the Fund's ability to engage in the hedging
transactions and strategies described below. See "Taxes" in the Statement of
Additional Information.

The Fund may use the hedging instruments described below to hedge
against interest rate risks:

Options. The Fund may purchase and write (i.e., sell) call options and
put options on securities and engage in transactions in financial futures and
related options, as described below.

The Fund may write covered call options with respect to securities it
owns and enter into closing purchase transactions with respect to such
options. A covered call option provides the holder of the option with the
right to buy the underlying security covered by the option at the stated
exercise price until the option expires. A covered call option is an option
where the Fund, in return for a premium, gives another party a right to buy
particular securities held by the Fund at a specified price for a certain
period of time. In return for the premium income realized from the sale of
the option, the Fund gives up the opportunity to profit from a price increase
in the underlying security above the option exercise price while the option
is in effect. In addition, the Fund's ability to sell the underlying
security will be limited until the option is closed or expires. A closing
purchase transaction cancels out the Fund's position as the writer of an
option by means of an offsetting purchase of an identical option prior to the
expiration of the option it has written. The Fund also may purchase call
options on securities held in its portfolio on which it has written call
options or on securities which it intends to purchase. There is no
percentage limitation with respect to portfolio securities on which the Fund
may write call options.

The Fund may purchase put options on portfolio securities. In return
for payment of a premium, the purchase of a put option gives the holder
thereof the right to sell the security underlying the option to another party
at a specified price until the put option is closed out, expires or is
exercised. The Fund will purchase put options to seek to reduce the risk of
a decline in value of the underlying security owned by the Fund. The Fund
does not intend to purchase uncovered puts in
excess of 10% of its total assets. The total return on the security may be
reduced by the amount of the premium paid for the option. The Fund may write
put options which give the holder of the option the right to sell the
underlying security to the Fund at the stated exercise price. The Fund will
receive a premium for writing a put option which increases the Fund's return.
The Fund writes only covered put options which means that so long as the Fund
is obligated as the writer of the option it will have deposited and
maintained with its custodian cash or liquid securities with a value equal to
or greater than the exercise price of the underlying securities. By writing
a put, the Fund will be obligated to purchase the underlying security at a
price that may be higher than the market value of that security at the time
of exercise for as long as the option is outstanding. The Fund may engage in
closing transactions in order to terminate put options that it has written or
purchased. The Fund intends to limit its writing of covered puts so that the
aggregate value of the obligations underlying the puts will not exceed 5% of
its net assets.

Futures. The Fund also may purchase and sell financial futures
contracts ("futures contracts") as a hedge against adverse changes in
interest rates, as described below. A futures contract is an agreement
between two parties which obligates the purchaser of the futures contract to
buy and the seller of a futures contract to sell a security for a set price
on a future date. The Fund may effect transactions in futures contracts in
United States and foreign agency and government securities and corporate debt
securities. Transactions by the Fund in futures contracts are subject to
limitation as described below under "Restrictions on the Use of Futures
Transactions".

The Fund may sell futures contracts in anticipation of an increase in
the general level of interest rates. Generally, as interest rates rise, the
market value of securities held by the Fund will fall, thus reducing the net
asset value of the Fund. As interest rates rise, however, the value of the
Fund's short position in the futures contract also will tend to increase,
thus offsetting all or a portion of the depreciation in the market value of
the Fund's investments which are being hedged. While the Fund will incur
commission expenses in selling and closing out futures positions, these
commissions are generally less than the transaction expenses which would have
been incurred had the Fund sold portfolio securities in order to reduce its
exposure to increases in interest rates.

The Fund may purchase futures contracts in anticipation of a decline in
interest rates when it is not fully invested in a particular market in which
it intends to make investments to gain market exposure that may in part or
entirely offset an increase in the cost of securities it intends to purchase.
The Fund does not consider purchases of futures contracts to be a speculative
practice under these circumstances. In a substantial majority of these
transactions, the Fund will purchase securities upon termination of the
futures contract.

The Fund also may purchase and write call and put options on futures
contracts in connection with its hedging activities. Generally, these
strategies are utilized under the same market and market sector conditions
(i.e., conditions relating to specific types of investments) in which the
Fund enters into futures transactions. The Fund may purchase put options or
write call options on futures contracts rather than selling the underlying
futures contract in anticipation of an increase in interest rates.
Similarly, the Fund may purchase call options or write put options on futures
contracts as a substitute for the purchase of such futures to hedge against
the increased cost resulting from a decline in interest rates of securities
which the Fund intends to purchase. Limitations on transactions in options
on futures contracts are described below.

The Fund may engage in options and futures transactions on exchanges and
in the over-the-counter ("OTC") markets. In general, exchange-traded
contracts are third-party contracts (i.e., performance of the parties'
obligations is guaranteed by an exchange or clearing corporation) with
standardized strike prices and expiration dates. OTC transactions are
two-party contracts with price and terms negotiated by the buyer and seller.
The Fund will engage in OTC options only with member banks of the Federal
Reserve System and primary dealers in U.S. Government securities or with
affiliates of such banks or dealers which have capital of at least $50
million or whose obligations are guaranteed by an entity having capital of at
least $50 million.

The staff of the Securities and Exchange Commission (the "SEC") has
taken the position that purchased OTC options and the assets used as cover
for written OTC options are illiquid securities. Therefore, the Fund has
adopted an investment policy pursuant to which it will not purchase or sell
OTC options (including OTC options on futures contracts) if, as a result of
such transaction, the sum of the market value of OTC options currently
outstanding which are held by the Fund, the market value of the underlying
securities covered by OTC call options currently outstanding which were sold
by the Fund and margin deposits on the Funds existing OTC options on futures
contracts exceed 15% (10% to the extent required by certain state laws) of
the net assets of the Fund, taken at market value, together with all other
assets of the Fund which are illiquid or are not otherwise readily
marketable. However, if the OTC option is sold by the Fund to a primary U.S.
Government securities dealer recognized by the Federal Reserve Bank of New
York and the Fund has the unconditional contractual right to repurchase such
OTC option from the dealer at a predetermined price, then the Fund will treat
as illiquid such amount of the underlying securities as is equal to the
repurchase price less the amount by which the option is "in-the-money" (i.e.,
current market value of the underlying security minus the option's strike
price). The repurchase price with the primary dealers is typically a formula
price which is generally based on a multiple of the premium received for the
option plus the amount by which the option is "in-the-money". This policy as
to OTC options is not a fundamental policy of the Fund and may be amended by
the Directors of the Fund without the approval of the Fund's shareholders.
However, the Fund will not change or modify this policy prior to the change
or modification by the SEC staff of its position.

To trade futures contracts, the Fund is not required to deposit funds
equal to the value of the futures contract. The Fund need only make a
deposit, called an "initial margin deposit", equal to a percentage (typically
15% or less) of the value of the futures contract. As a result, a relatively
small adverse move in the price of a futures contract may result in a
substantial loss. For example, if at the time of purchase 10% of the price
of a futures contract is deposited as margin, a 10% decrease in the price of
that contract would, if the contract were then closed out, result in a total
loss of the initial margin deposit before any deduction for brokerage
commissions and other transaction costs. A decrease of more than 10% would
result in a loss of more than the total initial margin deposit. Options on
futures contracts are generally similarly or even more highly leveraged.
However, when the Fund purchases a futures contract, or writes a put option
or purchases a call option thereon, an amount of cash and cash equivalents
will be deposited in a segregated account with the Fund's custodian so that
the amount so segregated, plus the amount of initial and variation margin
held in the account of its broker, equals the market value of the futures
contract, thereby minimizing the effect of leverage from such futures
contract.

Restrictions on the Use of Futures Transactions. Regulations of the
Commodity Futures Trading Commission (the "CFTC") applicable to the Fund
permit the Fund's futures and options on futures transactions to include (i)
bona fide hedging transactions without regard to the percentage of
the Fund's assets committed to margin and option premiums, and (ii) non-
hedging transactions, provided that the Fund not enter into such non-hedging
transactions if, immediately thereafter, the sum of the amount of initial
margin and option premiums required to establish non-hedging transactions
would exceed 5% of the market value of the Fund's liquidation value, after
taking into account unrealized profits and unrealized losses on any such
transactions. However, as stated above, the Fund intends to engage in
options and futures transactions only for hedging purposes.

When the Fund purchases a futures contract or writes a put option or
purchases a call option thereon, it will maintain an amount of cash, cash
equivalents (e.g., high grade commercial paper and daily tender adjustable
notes) or short-term high grade fixed income securities in a segregated
account with the Fund's custodian so that the amount so segregated, plus the
amount of initial and variation margin held in the account of its broker,
equals the market value of the futures contract, thereby ensuring that the
use of such futures is unleveraged.

Risk Factors in Options and Futures Transactions. Utilization of
futures transactions involves the risk of imperfect correlation in movements
in the price of futures contracts and movements in the price of the
securities and currencies which are the subject of the hedge. If the price
of the futures contract moves more or less than the price of the security or
currency, the Fund will experience a gain or loss which will not be
completely offset by movements in the price of the debt securities which are
the subject of the hedge. There is also a risk of imperfect correlations
where the securities underlying futures contracts have different maturities
than the portfolio securities being hedged. Transactions in options on
futures contracts involve similar risks.

The Fund intends to enter into options and futures transactions, on an
exchange or in the OTC market, only if there appears to be a liquid secondary
market for such options or futures or, in the case of OTC transactions,
management believes the Fund can receive on each business day a bid or offer.
There can be no assurance, however, that a liquid secondary market will exist
at any specific time. Thus, it may not be possible to close an options or
futures transaction. The inability to close options and futures positions
also could have an adverse impact on the Fund's ability to effectively hedge
its portfolio. There is also the risk of loss by the Fund of margin deposits
or collateral in the event of bankruptcy of a broker with whom the Fund has
an open position in an option, a futures contract or related option.

The exchanges on which options on portfolio securities are traded have
generally established limitations governing the maximum number of call or put
options on the same underlying security (whether or not covered) which may be
written by a single investor, whether acting alone or in concert with others
(regardless of whether such options are written on the same or different
exchanges or are held or written on one or more accounts or through one or
more brokers). "Trading limits" are imposed on the maximum number of
contracts which any person may trade on a particular trading day. The
Investment Adviser does not believe that these trading and position limits
will have any adverse impact on the portfolio strategies; for hedging the
Fund's portfolio.

Interest Rate Hedging Transactions. In order to hedge the value of the
Fund's portfolio against interest rate fluctuations, the Fund may enter into
various hedging transactions, such as interest rate swaps and the purchase or
sale of interest rate caps and floors. The Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio or to protect against any increase in
the price of securities the Fund anticipates
purchasing at a later date. The Fund intends to use these transactions as a
hedge and not as a speculative investment.

The purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest rate, to
receive payments of interest on a notional principal amount from the party
selling such interest rate cap. The purchase of an interest rate floor
entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate floor.

In an interest rate swap the Fund exchanges with another party their
respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments. The net amount of the
excess, if any, of the Fund's obligations over its entitlement with respect
to each interest rate swap will be accrued on a daily basis and an amount of
cash, cash equivalents or high grade liquid debt securities having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Fund's custodian.

The Fund will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying ability of
the other party thereto is rated in one of the highest two rating categories
of at least one nationally recognized statistical rating organization at the
time of entering into such transaction or whose creditworthiness is believed
by the Investment Adviser to be equivalent to such rating. If there is a
default by the other party to such a transaction, the Fund will have
contractual remedies pursuant to the agreements related to the transaction.
The Investment Adviser believes that the swap market is relatively liquid.
Caps and floors, however, are less liquid than swaps. The Fund will not
enter into a cap or floor transaction in an amount which, together with other
illiquid investments of the Fund, exceeds 15% of the Fund's total assets (or
10% of the Fund's total assets as presently required by certain state laws).

No person has been authorized to give any
information or to make any representations, other
than those contained in this Prospectus, in
connection with the offer contained in this
Prospectus and, if given or made, such other
information or representation must not be relied
upon as having been authorized by the Fund, the
Investment Adviser or Distributor. This Prospectus
does not constitute an offering in any state in
which such offering may not lawfully be made.
BATTERY PARK(SERVICE MARK)
HIGH YIELD FUND
------------

BATTERY PARK(SERVICE MARK)
HIGH YIELD FUND

Investment NOMURA CORPORATE RESEARCH
Adviser AND ASSET MANAGEMENT INC.
2 World Financial Center
Building B, 25th Floor
New York, NY 10281-1198

Distributor NOMURA SECURITIES
INTERNATIONAL, INC.
2 World Financial Center
Building B, 25th Floor
New York, NY 10281-1198

Transfer Agent FEDERATED SHAREHOLDER
SERVICES COMPANY
Federated Investors Tower
Pittsburgh, PA 15222-3775

Custodian THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286

Independent DELOITTE & TOUCHE LLP
Auditors 2500 One PPG Place
Pittsburgh, PA 15222

Counsel BROWN & WOOD LLP
One World Trade Center
New York, NY 10048-0557

PROSPECTUS

October 10, 1996

This prospectus
should be retained
for future reference.

BATTERY PARK HIGH YIELD FUND
OF
BATTERY PARK FUNDS, INC.

Supplement to Prospectus dated October 10, 1996

From October __, 1996 through __________, 1996, Class A shares of the
Fund will be sold at net asset value, without a front-end sales charge (the
"Special Offer"). Class A shares purchased pursuant to this Special Offer
that are redeemed within one year of purchase, however, will be subject to a
contingent deferred sales charge, which will be paid to the Distributor, of
1.0% of the amount invested or the proceeds of redemption, whichever is
less. Securities dealers who sell Class A shares pursuant to this Special
Offer will be paid a fee of 1.5% of the offering price of such shares by
Nomura Corporate Research and Asset Management Inc., the Fund's Investment
Adviser.

The Fund reserves the right to terminate the Special Offer prior to
__________, 1996 if assets of the Fund aggregate $25 million or more.

STATEMENT OF ADDITIONAL INFORMATION
- -----------------------------------

BATTERY PARK(SERVICE MARK) HIGH YIELD FUND
2 WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1198, (212) 667 - 9300

Battery Park(Service Mark) High Yield Fund (the "Fund") is the only
existing series of Battery Park Funds, Inc., a newly organized, diversified,
open-end series-type investment company. The Fund's investment objective is
to provide shareholders with high total return, consisting of current income
and capital appreciation. The Fund attempts to achieve its objective by
investing principally in fixed income securities of U.S. companies which are
rated in the lower rating categories of the established rating services or
are unrated securities of comparable quality. No assurance can be given that
the Fund's investment objective will be realized.

The Fund offers two classes of shares with different fees and other
features. Shares may be purchased from securities dealers which have entered
into selected dealer agreements with Nomura Securities International, Inc.
(the "Distributor"). The minimum initial purchase for Class A shares is
$1,000 and the minimum subsequent purchase is $100. The minimum initial
purchase for Class Y shares is $1,000,000.

------------------

This Statement of Additional Information of the Fund is not a prospectus
and should be read in conjunction with the prospectus of the Fund, dated
October 10, 1996 (the "Prospectus"), which has been filed with the Securities
and Exchange Commission (the "SEC") and can be obtained, without charge, by
writing the Transfer Agent at Federated Shareholder Services Company,
Federated Investors Tower, Pittsburgh, PA 15222-3775, or by calling the
Transfer Agent toll-free at 1-888-254-2874. This Statement of Additional
Information has been incorporated by reference into the Prospectus.

------------------

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.--INVESTMENT ADVISER
NOMURA SECURITIES INTERNATIONAL, INC.--DISTRIBUTOR

------------------

The date of this Statement of Additional Information is October 10, 1996.

INVESTMENT OBJECTIVE AND POLICIES

Reference is made to "Investment Objective and Policies" in the
Prospectus for a discussion of the investment objective and policies of the
Fund.

The Fund's investment objective is to provide shareholders with high
total return, consisting of current income and capital appreciation. The
Fund attempts to achieve its objective by investing principally in fixed
income securities of U.S. companies which securities are rated in the lower
rating categories of the established rating services or are unrated
securities of comparable quality. Under normal circumstances, the Fund will
invest at least 80% of the Fund's total assets in fixed income securities
rated Ba1 or lower by Moody's Investors Service, Inc. ("Moody's") or BB+ or
lower by Standard & Poor's Ratings Group ("S&P"). The Fund is authorized to,
but does not currently intend to, engage in various portfolio strategies to
enhance income and to hedge its portfolio against investment and interest
rate risks, including the utilization of leverage and the use of options and
futures. See "Risk Factors and Special Considerations" in the Prospectus for
a discussion of these risks.

Investment in Foreign and Emerging Markets. Investment in the securities
of foreign markets involve certain risk factors and special considerations in
addition to those discussed under "Investment Objective and Policies--Risk
Factors and Special Considerations--Foreign and Emerging Market Securities"
in the Fund's Prospectus, and these risks are often amplified in connection
with investments in emerging markets. Certain emerging market countries
require prior governmental approval of foreign investors, limit the amount of
investment by foreign investors in a particular issuer, limit the investment
by foreign investors only to a specified class of securities that may have
less advantageous rights than other classes, restrict investment
opportunities in issuers in industries deemed important to national interests
and/or impose additional taxes on foreign investors. It may be difficult to
find qualified subcustodians in emerging market countries with extensive
operating experience, and the Fund may be more limited in its ability to
recover assets in the event of a subcustodian's bankruptcy than it would be
in more developed countries. Investing in local markets in emerging market
countries may require the Fund to adopt special procedures, seek local
government approvals or take other actions, each of which may involve
additional costs to the Fund. See "Investment Objective and Policies-
Investment in Foreign and Emerging Markets" in the Prospectus for additional
information regarding foreign and emerging market securities.

The securities markets of emerging market countries are not as large as
the U.S. securities markets and have substantially less trading volume,
resulting in a lack of liquidity with high price volatility. Certain markets
are in only the earliest stages of development. There is also a high
concentration of market capitalization and trading volume in a small number
of issuers representing a limited number of industries, as well as a high
concentration of investors and financial intermediaries. Many of such
markets also may be affected by developments with respect to more established
markets in the region. Brokers in emerging market countries typically are
fewer in number and less capitalized than brokers in the United States.
These factors, combined with the U.S. regulatory requirements for open-end
investment companies and the restrictions on foreign investment discussed in
the Prospectus, may result in potentially fewer investment opportunities for
the Fund and may have an adverse effect on the investment performance of the
Fund.

Rule 144A Securities. In promulgating Rule 144A under the Securities Act,
the Securities and Exchange Commission (the "SEC") stated that the ultimate
responsibility for liquidity determinations rests with a fund's board of
directors; however, the board may delegate the day-to-day function of
determining liquidity to the investment adviser provided the board retains
sufficient oversight. The Board of Directors of the Fund has adopted
policies and procedures for the purpose of determining whether securities
that are eligible for resale under Rule 144A are liquid or illiquid and has
approved guidelines under these policies and procedures pursuant to which the
Investment Adviser makes these determinations on an ongoing basis. In making
these determinations, consideration is given to, among other things, the
frequency of trades and quotes for the security, the number of dealers
willing to sell the security and the number of potential purchasers, dealer
undertakings to make a market in the security, the nature of the security and
the time needed to dispose of the security. The Board of Directors
periodically reviews Fund purchases and sales of Rule 144A securities.

To the extent that liquid Rule 144A securities become illiquid, due to
the lack of sufficient qualified institutional buyers or market or other
conditions, the percentage of the Fund's assets invested in illiquid assets
would increase. The Investment Adviser, under the supervision of the Board
of Directors, will monitor Fund investments in Rule 144A securities and will
consider appropriate measures to enable the Fund to maintain sufficient
liquidity for operating purposes and to meet redemption requests.

INVESTMENT RESTRICTIONS

In addition to the investment restrictions set forth in the Prospectus,
the Fund has adopted both fundamental and nonfundamental restrictions and
policies relating to the investment of its assets and its activities.
Fundamental restrictions and policies may not be changed without the approval
of the holders of a majority of the Fund's outstanding voting securities
(which for this purpose and under the Investment Company Act of 1940, as
amended (the "Investment Company Act") means the lesser of (a) 67% of the
shares represented at a meeting at which more than 50% of the outstanding
shares are represented or (b) more than 50% of the outstanding shares).
Under these fundamental restrictions, the Fund may not:

1. Invest more than 25% of its assets, taken at market value, in
the securities of issuers in any particular industry (excluding the
U.S. Government and its agencies and instrumentalities).

2. Make investments for the purpose of exercising control or
management.

3. Purchase or sell real estate, except that, to the extent
permitted by applicable law, the Fund may invest in securities
directly or indirectly secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein.

4. Make loans to other persons, except that the acquisition of
bonds, debentures or other corporate debt securities and investment
in government obligations, commercial paper, pass-through
instruments, certificates of deposit, bankers acceptances, repurchase
agreements or any similar instruments shall not be deemed to be the
making of a loan, and except further that the Fund may lend its
portfolio securities, provided that the lending of portfolio
securities may be made only in accordance with applicable law and the
guidelines set forth in the Fund's Prospectus and Statement of
Additional Information, as they may be amended from time to time,
provided that purchases of assignments or participations in loans
(including bridge loans) will not be prohibited by this paragraph.

5. Issue senior securities to the extent such issuance would
violate applicable law.

6. Borrow money, except that (i) the Fund may borrow from banks
(as defined in the Investment Company Act) in amounts up to 331/3% of
its total assets (including the amount borrowed), (ii) the Fund may
borrow up to an additional 5% of its total assets for temporary
purposes, (iii) the Fund may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio
securities and (iv) the Fund may purchase securities on margin to the
extent permitted by applicable law. The Fund may not pledge its
assets other than to secure such borrowings or, to the extent
permitted by the Fund's investment policies as set forth in its
Prospectus and Statement of Additional Information, as they may be
amended from time to time, in connection with hedging transactions,
short sales, when-issued and forward commitment transactions and
similar investment strategies.

7. Underwrite securities of other issuers except insofar as the
Fund technically may be deemed an underwriter under the Securities
Act of 1933, as amended (the "Securities Act"), in selling portfolio
securities.

8. Purchase or sell commodities or contracts on commodities,
except to the extent that the Fund may do so in accordance with
applicable law and the Fund's Prospectus and Statement of Additional
Information, as they may be amended from time to time, and without
registering as a commodity pool operator under the Commodity Exchange
Act.

9. Make any investment inconsistent with the Fund's
classification as a diversified investment company under the
Investment Company Act.

Non-fundamental restrictions may be amended by a majority vote of the
Board of Directors of the Fund. Under the non-fundamental investment
restrictions, the Fund may not:

a. Purchase securities of other investment companies, except to
the extent such purchases are permitted by applicable law.

b. Make short sales of securities or maintain a short position,
except to the extent permitted by applicable law. The Fund currently
does not intend to engage in short sales.

c. Invest in securities which cannot be readily resold because of
legal or contractual restrictions or which cannot otherwise be
marketed, redeemed or put to the issuer or a third party, if at the
time of acquisition more than 15% of its net assets would be invested
in such securities. This restriction shall not apply to securities
which mature within seven days or securities which the Board of
Directors of the Fund has otherwise determined to be liquid pursuant
to applicable law. Notwithstanding the 15% limitation herein, to the
extent the laws of any state in which the Fund's shares are
registered or qualified for sale require a lower limitation, the Fund
will observe such limitation. As of the date hereof, therefore, the
Fund will not invest more than 10% of its net assets in securities
which are subject to this investment restriction (c). Securities
purchased in accordance with Rule 144A under the Securities Act and
determined to be liquid by the Fund's Board of Directors are not
subject to the limitations set forth in this investment restriction
(c).

d. Invest in warrants if, at the time of acquisition, its
investments in warrants, valued at the lower of cost or market value,
would exceed 5% of the Fund's net assets; included within such
limitation, but not to exceed 2% of the Fund's net assets, are
warrants which are not listed on the New York Stock Exchange or
American Stock Exchange or a major foreign exchange. For purposes of
this restriction, warrants acquired by the Fund in units or attached
to securities may be deemed to be without value.

e. To the extent the Laws of any State in which the Fund's shares
are registered or qualified for sale so require, the Fund will not invest
in securities of companies having a record, together with
predecessors, of less than three years of continuous operation, if more
than 5% of the Fund's total assets would be invested in such securities.
This restriction shall not apply to mortgage-backed securities, asset-
backed securities or obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

f. Purchase or retain the securities of any issuer, if those
individual officers and directors of the Fund or the officers and
directors of the Investment Adviser or the officers and directors of
any subsidiary thereof each owning beneficially more than 1/2 of 1%
of the securities of such issuer own in the aggregate more than 5% of
the securities of such issuer.

g. Invest in real estate limited partnership interests or
interests in oil, gas or other mineral leases, or exploration or
development programs, except that the Fund may invest in securities
issued by companies that engage in oil, gas or other mineral
exploration or development activities.

h. Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except to the extent permitted in the Fund's
Prospectus and Statement of Additional Information, as they may be
amended from time to time.

Portfolio securities of the Fund generally may not be purchased from,
sold or loaned to the Investment Adviser or its affiliates or any of their
directors, officers or employees, acting as principal, unless pursuant to a
rule or exemptive order under the Investment Company Act.

Because of the affiliation of the Investment Adviser with the Fund and
the Distributor, the Fund is prohibited from engaging in portfolio
transactions with the Distributor or its affiliates acting as principal and
from purchasing securities in public offerings which are not registered under
the Securities Act in which the Distributor or any of its affiliates
participate as an underwriter or dealer. See "Portfolio Transactions."

MANAGEMENT OF THE FUND

DIRECTORS AND OFFICERS

The Directors and executive officers of the Fund, their dates of birth
and their principal occupations for at least the last five years are set
forth below. Unless otherwise noted, the address of each executive officer
and Director is 2 World Financial Center, New York, New York 10281-1198.

ROBERT LEVINE* (September 19, 1944)--Chairman, President, Director and
Chief Investment Officer--Founder, President and Chief Executive Officer of
the Investment Adviser and an Executive Managing Director of Nomura Holding
America Inc .

MICHAEL A. BERMAN* (October 4, 1950)--Director--Chairman and Chief
Executive Officer of the Distributor since 1996; President and Chief
Operating Officer of the Distributor from 1994 to 1996; Senior Vice President
of the Distributor prior to 1994.

JOHN FITTING, JR. (May 29, 1916)--Director--Former Chairman and Chief
Executive Officer of National Securities & Research, Inc.; Former President
of Dreyfus Asset Management, Individual Investors Accounts.

FRANCIS L. FRAENKEL (July 3, 1932)--Director--President of Delta Capital
Management Inc. from 1992 to present; Managing Director of Salomon Brothers
Inc and President of Salomon Brothers Asset Management Inc prior to 1992.

FRANK K. REILLY (December 30, 1935)--Director--Bernard J. Hank Professor
of Business Administration, University of Notre Dame College of Business
Administration.

RICHARD A. BUCH* (February 18, 1959)--Vice President and Portfolio
Manager--Managing Director of the Investment Adviser from 1993 to present;
portfolio manager for Kidder, Peabody & Co., Inc. prior to 1993.

LANCE B. FRASER* (December 2, 1960)--Treasurer--Director of the
Investment Adviser.

DEBORAH A. MONTICK* (December 10, 1957)--Secretary--Counsel to the
Investment Adviser from 1993 to present; Associate Counsel to Kemper
Financial Services, Inc. prior to 1993.

____________________________
* Interested person, as defined in the Investment Company Act, of the Fund.

Compensation of Directors. Pursuant to the terms of the Fund's
investment advisory agreement with the Investment Adviser relating to the
Fund (the "Investment Advisory Agreement"), the Investment Adviser pays all
compensation of officers and employees of the Fund as well as the fees of all
Directors of the Fund who are affiliated persons of the Distributor or its
subsidiaries. The Fund pays each unaffiliated Director $6,000 per year plus
$1,000 per meeting attended together with such Director's actual out-of-
pocket expenses for each meeting that he attends. It is anticipated that
each unaffiliated Director will receive aggregate compensation of
approximately $12,500 from the Fund during its first fiscal year. As of the
date of this Statement of Additional Information, none of the unaffiliated
Directors serves on the board of another registered investment company that
(a) holds itself out to the public as related to the Fund for purposes of
investment or investor services or (b) has as its investment adviser the
Investment Adviser or one of its affiliates.

MANAGEMENT AND ADVISORY ARRANGEMENTS

Reference is made to "Management of the Fund - Management and Advisory
Arrangements" in the Prospectus for certain information concerning the
management and advisory arrangements of the Fund.

The Investment Advisory Agreement provides that, subject to the direction
of the Board of Directors of the Fund, the Investment Adviser is responsible
for the actual management of the Fund and for the review of the Fund's
holdings in light of its own research analysis and analyses from other
relevant sources. The responsibility for making decisions to buy, sell or
hold a particular security rests with the Investment Adviser, subject to
review by the Board of Directors. The Investment Adviser supplies the
portfolio managers for the Fund, who consider analyses from various sources,
make the necessary investment decisions and place transactions accordingly.
The Investment Adviser also is obligated to perform certain administrative
and management services for the Fund and is required to provide all the
office space, facilities, equipment and personnel necessary to perform its
duties under the Investment Advisory Agreement. As compensation for its
services to the Fund, the Investment Adviser will receive from the Fund a
monthly fee based on the average daily value of the Fund's net assets at an
annual rate of 0.65%.

Securities held by the Fund also may be held by or be appropriate
investments for other funds for which the Investment Adviser or its
affiliates act as adviser or by investment advisory clients of the Investment
Adviser. Because of different investment objectives or other factors, a
particular security may be bought for one or more clients when one or more
clients are selling the same security. If purchases or sales of securities
for the Fund or other funds for which the Investment Adviser or its
affiliates act as investment adviser or for their advisory clients arise for
consideration at or about the same time, transactions in such securities will
be made, insofar as feasible, for the respective funds and clients in a
manner deemed equitable to all. To the extent that transactions on behalf of
more than one client of the Investment Adviser or its affiliates during the
same period may increase the demand for securities being purchased or the
supply of securities being sold, there may be an adverse effect on price.

The Investment Advisory Agreement obligates the Investment Adviser to
provide investment advisory services and to pay all compensation of and
furnish office space for officers and employees of the Fund connected with
investment and economic research, trading and investment management of the
Fund, as well as the fees of all Directors of the Fund who are affiliated
persons of the Investment Adviser or the Distributor or any of their
subsidiaries. The Fund pays all other expenses incurred in its operation,
including redemption expenses, expenses of portfolio transactions,
shareholder servicing costs, expenses of registering the shares under Federal
and state securities laws, pricing costs (including the daily calculation of
net asset value), interest, certain taxes, charges of the Custodian and
Transfer Agent, directors' fees, legal expenses, state franchise taxes,
auditing services, costs of printing proxies, stock certificates, shareholder
reports and prospectuses (except to the extent paid by the Distributor), SEC
fees, accounting costs and other expenses properly payable by the Fund. To
the extent accounting services are provided for the Fund by the Investment
Adviser, the Fund will reimburse the Investment Adviser for its costs in
connection with such services. As required by the Distribution Agreement,
the Distributor will pay certain of the expenses of the Fund incurred in
connection with the offering of shares of the Fund, including the expenses of
printing the prospectuses and statements of additional information used in
connection with the continuous offering of shares by the Fund.

Duration and Termination. Unless earlier terminated as described below,
the Investment Advisory Agreement for the Fund will remain in effect until
September 30, 1998 and thereafter from year to year if approved annually (a)
by the Board of Directors of the Fund or by a majority of the outstanding
shares of the Fund and (b) by a majority of the Directors who are not parties
to such contract or interested persons (as defined in the Investment Company
Act) of any such party. Such contract is not assignable and may be
terminated without penalty on 60 days' written notice by the majority vote of
the Directors or of the outstanding voting securities of the Fund or on 120
days' written notice by the Investment Adviser.

PURCHASE OF SHARES

Reference is made to "Purchase of Shares" and "Redemption of Shares" in
the Prospectus for certain information as to the purchase of shares of the
Fund.

The term "purchase," as used in the Prospectus and this Statement of
Additional Information in connection with an investment in Class A and Class
Y shares of the Fund, refers to a single purchase by an individual or to
concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his or her spouse and their children
under the age of 21 years purchasing shares for his or her own account and to
single purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or single fiduciary account although more than one
beneficiary is involved. The term "purchase" also includes purchases by any
"company," as that term is defined in the Investment Company Act, but does
not include purchases by any such company which has not been in existence for
at least six months or which has no purpose other than the purchase of shares
of the Fund or shares of other registered investment companies at a discount;
provided, however, that it shall not include purchases by any group of
individuals whose sole organizational nexus is that the participants therein
are credit cardholders of a company, policyholders of an insurance company,
customers of either a bank or broker-dealer or clients of an investment
adviser.

REDUCED INITIAL SALES CHARGES

Letter of Intention. Reduced sales charges are applicable to purchases
aggregating $50,000 or more of the Class A shares of the Fund made within a
13-month period starting with the first purchase pursuant to the Letter of
Intention in the form provided in the Prospectus. The Letter of Intention is
not a binding obligation to purchase any amount of Class A shares; however,
its execution will result in the purchaser paying a lower sales charge at the
appropriate quantity purchase level. A purchase not originally made pursuant to
a Letter of Intention may be included under a subsequent Letter of Intention
executed within 90 days of such purchase if the Transfer Agent is informed in
writing of this intent within such 90-day period. The value of Class A shares
of the Fund may be included as a credit toward the completion of such Letter,
but the reduced sales charge applicable to the amount covered by such Letter
will be applied only to new purchases. If the total amount of shares does not
equal the amount stated in the Letter of Intention (minimum of $50,000), the
investor will be notified within 20 days of the expiration of
such Letter. Class A shares equal to up to 4.5% of
the intended amount will be held in escrow during the 13-month period (while
remaining registered in the name of the purchaser) for this purpose. The
first purchase under the Letter of Intention must be at least 5.0% of the
dollar amount of such Letter. The value of any shares redeemed or otherwise
disposed of by the purchaser prior to termination or completion of the Letter
of Intention will be deducted from the total purchases made under such
Letter. If the amount specified in the Letter of Intention is not purchased,
an appropriate number of escrowed shares will be redeemed to realize the
difference between the sales charge on the Class A shares purchased at the
reduced rate and the sales charge applicable to the shares actually
purchased through the Letter.

Acquisition of Certain Investment Companies. The public offering price
of Class A shares may be reduced to the net asset value per Class A share in
connection with the acquisition of the assets of or merger or consolidation
with a personal holding company or a public or private
investment company. The issuance of Class A shares for consideration other
than cash is limited to bona fide reorganizations, statutory mergers or other
acquisitions of portfolio securities which (i) meet the investment objective
and policies of the Fund; (ii) are acquired for investment and not for resale
(subject to the understanding that the disposition of the Fund's portfolio
securities shall at all times remain within its control); and (iii) are
liquid securities, the value of which is readily ascertainable, which are not
restricted as to transfer either by law or liquidity of market (except that
the Fund may acquire through such transactions restricted or illiquid
securities to the extent the Fund does not exceed the applicable limits on
acquisition of such securities set forth under "Investment Objective and
Policies" herein).

Reductions in or exemptions from the imposition of a sales load are due
to the nature of the investors and/or the reduced sales efforts that will be
needed in obtaining such investments. Under such programs, the Fund realizes
economies of scale and reduction of sales related expenses by virtue of
familiarity with the Fund.

DISTRIBUTION PLAN

Reference is made to "Purchase of Shares--Class A Shares--Class A
Distribution Plan" in the Prospectus for certain information with respect to
the distribution plan for Class A shares pursuant to Rule 12b-1 under the
Investment Company Act (the "Distribution Plan") with respect to the
distribution fees paid by the Fund to the Distributor with respect to such
class.

Payments of the distribution fees are subject to the provisions of Rule
12b-1 under the Investment Company Act. Among other things, the Distribution
Plan provides that the Distributor shall provide and the Directors shall
review quarterly reports of the disbursement of the distribution fees paid to
the Distributor. In their consideration of the Distribution Plan, the
Directors must consider all factors they deem relevant, including information
as to the benefits of the Distribution Plan to the Fund and its shareholders.
The Distribution Plan further provides that so long as the Distribution Plan
remains in effect, the selection and nomination of Directors who are not
"interested persons" of the Fund, as defined in the Investment Company Act
(the "Independent Directors"), shall be committed to the discretion of the
Independent Directors then in office. In approving the Distribution Plan in
accordance with Rule 12b-1, the Independent Directors concluded that there is
a reasonable likelihood that such Distribution Plan will benefit the Fund and
its related class of shareholders. The Distribution Plan can be terminated
at any time, without penalty, by the vote of a majority of the Independent
Directors, or the vote of the holders of a majority of the outstanding
related class of voting securities of the Fund or by the Distributor upon 60
days' written notice to the Fund. The Distribution Plan cannot be amended to
increase materially the amount to be spent by the Fund without the approval
of the related class of shareholders, and all material amendments are
required to be approved by the vote of Directors, including a majority of the
Independent Directors who have no direct or indirect financial interest in
such Distribution Plan, cast in person at a meeting called for that purpose.
Rule 12b-1 further requires that the Fund preserve copies of the Distribution
Plan and any reports made pursuant to the plan for a period of not less than
six years from the date of such Distribution Plan or such report, the first
two years in an easily accessible place.

REDEMPTION OF SHARES

Reference is made to "Redemption of Shares" in the Prospectus for certain
information as to the redemption and repurchase of shares of the Fund.

The right to redeem shares or to receive payment with respect to any such
redemption may be suspended only for any period during which trading on the
New York Stock Exchange is restricted as determined by the SEC or such
Exchange is closed (other than customary weekend and holiday closings), for
any period during which an emergency exists as defined by the SEC as a result
of which disposal of portfolio securities or determination of the net asset
value of any Fund is not reasonably practicable, and for such other periods
as the SEC may by order permit for the protection of shareholders of the
Fund.

PORTFOLIO TRANSACTIONS

Reference is made to "Portfolio Transactions" in the Prospectus. Subject
to policies established by the Board of Directors of the Fund, the Investment
Adviser is primarily responsible for the portfolio decisions of the Fund and
the placing of the portfolio transactions for the Fund. With respect to such
transactions, the Investment Adviser seeks to obtain the best net results for
the Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), size of order, difficulty of
execution and operational facilities of the firm involved and the firm's risk
in positioning a block of securities. While the Investment Adviser generally
seeks reasonably competitive commission rates, the Fund will not necessarily
be paying the lowest commission or spread available. Transactions with
respect to the high yield securities in which the Fund invests may involve
specialized services on the part of the broker or dealer and thereby entail
higher commissions or spreads than would be the case with transactions
involving more widely traded securities. The Fund has no obligation to deal
with any broker in the execution of transactions for its portfolio
securities.

The securities in which the Fund invests are traded primarily in the
over-the-counter market. Transactions in the over-the-counter market
generally are principal transactions with dealers and the costs of such
transactions involve dealer spreads. With respect to over-the-counter
transactions, the Fund, where possible, will deal directly with the dealers
who make a market in the securities involved except in those circumstances
where better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account. On occasion, securities may
be purchased directly from the issuer. Bonds and money market securities are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes. The cost of portfolio securities transactions
of the Fund will consist primarily of dealer or underwriter spreads.

Under the Investment Company Act, persons affiliated with the Fund are
prohibited from dealing with the Fund as a principal in the purchase and sale
of securities unless an exemptive order allowing such transactions is
obtained from the SEC. Since transactions in the over-the-counter market
usually involve transactions with dealers acting as principal for their own
account, affiliated persons of the Fund, including the Distributor, may not
serve as the Fund's dealer in connection with such transactions. See
"Investment Objective and Policies - Investment Restrictions." However, with
certain limitations, an affiliated person of the Fund may serve as its broker
in over-the-counter transactions conducted on an agency basis.

The Board of Directors of the Fund has considered the possibilities of
seeking to recapture for the benefit of the Fund brokerage commissions,
dealer spreads and other expenses of possible portfolio transactions, such as
underwriting commissions and tender offer solicitation fees, by conducting
such portfolio transactions through affiliated entities, including the
Distributor. For example, brokerage commissions received by the Distributor
could be offset against the advisory fee payable by the Fund to the
Investment Adviser. The Board will reconsider this matter from time to time.
The Investment Adviser has arranged for the Fund's custodian to receive any
tender offer solicitation fees on behalf of the Fund payable with respect to
portfolio securities of the Fund.

PORTFOLIO TURNOVER

The Fund intends to comply with the various requirements of the Code so
as to qualify as a "regulated investment company" thereunder. See "Taxes."
Among such requirements is a limitation to less than 30% on the amount of
gross income which the Fund may derive from gain on the sale or other
disposition of securities held for less than three months. Accordingly, the
Fund's ability to effect certain portfolio transactions may be limited.

DETERMINATION OF NET ASSET VALUE

Reference is made to "Additional Information - Determination of Net Asset
Value" in the Prospectus concerning the determination of net asset value.
Normally, the net asset value of the shares of the Fund is determined once
daily Monday through Friday as of 4:00 p.m., New York time, on each day
during which the New York Stock Exchange is open for trading. The New York
Stock Exchange is not open on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. The Fund also will determine its net asset value on any day in which
there is sufficient trading in its portfolio securities that the net asset
value might be affected materially, but only if on any such day the Fund is
required to sell or redeem shares. The net asset value per share of the Fund
is computed by dividing the sum of the value of the securities held by the
Fund plus any cash or other assets (including interest and dividends accrued
but not yet received) minus all liabilities (including accrued expenses) by
the total number of shares outstanding at such time, rounded to the nearest
cent. Expenses, including the investment advisory fees and distribution
fees, are accrued daily. The per share net asset value of the Class A shares
of the Fund generally will be lower than the per share net asset value of the
Class Y shares of the Fund reflecting the daily expense accruals of the
distribution or shareholder service fees applicable with the respect to the
Class A shares. It is expected, however, that the per share net asset value
of the two classes will tend to converge immediately after the payment of
dividends or distributions, which will differ by approximately the amount of
the expense accrual differential between the classes.

Market and fair values of the Fund's portfolio securities are determined
as follows:

- for bonds and other fixed income securities, as determined by an
independent pricing service;
- for short-term obligations, according to the mean between bid and
asked prices as furnished by an independent pricing service, or
for short-term
obligations with remaining maturities of 60 days or less at the time
of purchase, at amortized cost;
- for equity securities, according to the last sale price on a
national securities exchange, if applicable;
- in the absence of recorded sales for listed equity securities,
according to the mean between the last closing bid and asked
prices;
- for unlisted equity securities, latest bid prices; or
- for all other securities, at fair value as determined in good
faith by the Directors.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity, type
of issue, trading characteristics and other market data.

The Fund will value futures contracts at their market value established
by the exchanges at the close of options trading on such exchanges unless the
Directors determine in good faith that another method of valuing option
positions is necessary.

Over-the-counter put options will be valued at the mean between the bid
and asked prices. Covered call options will be valued at the last sale price
on the national exchange on which such option is traded. Unlisted call
options will be valued at the latest bid price as provided by brokers.

Option Accounting Principles. When a Fund sells an option, an amount
equal to the premium received by the Fund is included in the Fund's Statement
of Assets and Liabilities as a deferred credit. The amount of such liability
will be subsequently marked to market to reflect the current market value of
the option written. If current market value exceeds the premium received
there is an unrealized loss; conversely, if the premium exceeds current
market value there is an unrealized gain. If an option expires on its
stipulated expiration date or if a Fund enters into a closing purchase
transaction, the Fund will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option will be extinguished. If an option is
exercised, the Fund will realize a gain or loss from the sale of the
underlying security and the proceeds of sale are increased by the premium
originally received.

SHAREHOLDER SERVICES

A number of shareholder services and investment plans are available which
are designed to facilitate investment in the Fund's shares. Full details as
to each of such services, copies of the various plans described below and
instructions as to how to participate in the various services or plans, or
how to change options with respect thereto, can be obtained from the Fund by
calling the telephone number on the cover page hereof or from the Transfer
Agent.

AUTOMATIC REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

All dividends and capital gains distributions of the Fund are reinvested
automatically in full and fractional shares of the Fund, at the net asset
value per share next determined on the ex-dividend date of such dividend or
distribution. A shareholder may, at any time, by written notification to the
Transfer Agent, elect to have subsequent dividends or both dividends and
capital gains distributions paid in cash and held in such shareholder's IRA
account rather than reinvested.

SYSTEMATIC REDEMPTION AND AUTOMATIC INVESTMENT PLANS

A Class A or Class Y shareholder may elect to receive systematic
redemption payments from his or her Investment Account in the form of
payments by check or through automatic payment by direct deposit to his or
her bank account on either a monthly or quarterly basis.

TAXES

The Fund intends to elect and to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Code. If it so
qualifies, the Fund (but not its shareholders) will not be subject to Federal
income tax on the part of its net ordinary income and net realized capital
gains which it distributes to Class A and Class Y shareholders (together, the
"shareholders"). The Fund intends to distribute all of such income.

Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. Not later than 60 days after the close of its
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Fund, whether from ordinary income or
capital gains, generally will not be eligible for the dividends received
deduction allowed to corporations under the Code. If the Fund pays a
dividend in January which was declared in the previous October, November or
December to shareholders of record on a specified date in one of such months,
then such dividend will be treated for tax purposes as being paid by the Fund
and received by its shareholders on December 31 of the year in which such
dividend was declared.

Ordinary income dividends paid to shareholders who are nonresident aliens
or foreign entities will be subject to a 30% United States withholding tax
under existing provisions of the Code applicable to foreign individuals and
entities unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Nonresident shareholders are urged to
consult their own tax advisers concerning the applicability of the United
States withholding tax.

To the extent the Fund invests in securities issued by issuers in foreign
countries, dividends and interest received by the Fund may give rise to
withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States
may reduce or eliminate such taxes.

Under certain provisions of the Code, some shareholders may be subject to
a 31% withholding tax on ordinary income dividends, capital gain dividends
and redemption payments ("backup withholding"). Generally, shareholders
subject to backup withholding will be those for whom no certified taxpayer
identification number is on file with the Fund or who, to the Fund's
knowledge, have furnished an incorrect number. When establishing an account,
an investor must certify under penalty of perjury that such number is correct
and that such investor is not otherwise subject to backup withholding.

If a shareholder exercises an exchange privilege within 90 days of
acquiring such shares, then the loss the shareholder can recognize on the
exchange will be reduced (or the gain increased) to the extent any sales
charge paid to the Fund on the exchanged shares reduces any sales charge the
shareholder would have owed upon the purchase of the new shares in the
absence of the exchange privilege. Instead, such sales charge will be
treated as an amount paid for the new shares.

The Code requires a RIC to pay a nondeductible 4% excise tax to the
extent the RIC does not distribute, during each calendar year, 98% of its
ordinary income, determined on a calendar year basis, and 98% of its capital
gains, determined, in general, on an October 31 year end, plus certain
undistributed amounts from previous years. While the Fund intends to
distribute its income and capital gains in the manner necessary to minimize
imposition of the 4% excise tax, there can be no assurance that sufficient
amounts of the Fund's taxable income and capital gains will be distributed to
avoid entirely the imposition of the tax. In such event, the Fund will be
liable for the tax only on the amount by which it does not meet the foregoing
distribution requirements.

The Fund will invest in securities rated in the lower rating categories
of nationally recognized rating organizations, and in unrated securities
("junk bonds" or "high yield securities"), as described in the Prospectus.
Some of these high yield securities may be purchased at a discount and may
therefore cause the Fund to accrue and distribute income before amounts due
under the obligations are paid. In addition, a portion of the interest
payments on such high yield securities may be treated as dividends for
Federal income tax purposes; in such case, if the issuer of such high yield
securities is a domestic corporation, dividend payments by the Fund will be
eligible for the dividends received deduction to the extent of the deemed
dividend portion of such interest payments.

TAX TREATMENT OF OPTIONS AND FUTURES TRANSACTIONS

The Fund may write, purchase or sell options and futures. Options and
futures contracts that are "Section 1256 contracts" will be "marked to
market" for Federal income tax purposes at the end of each taxable year,
i.e., each such option or futures contract will be treated as sold for its
fair market value on the last day of the taxable year. In general, unless an
election is available to the Fund or an exception applies, options and
futures contracts that are "Section 1256 contracts" will be "marked to
market" for Federal income tax purposes at the end of each taxable year,
i.e., each such option or futures contract will be treated as sold for its
fair market value on the last day of the taxable year, and any gain or loss
attributable to Section 1256 contracts will be 60% long-term and 40% short-
term capital gain or loss. Application of these rules to Section 1256
contracts held by the Fund may alter the timing and character of
distributions to shareholders. The mark-to-market rules outlined above,
however, may not apply to certain transactions entered into by the Fund
solely to reduce the risk of changes in price or interest or currency
exchange rates with respect to its investments.

Code Section 1092, which applies to certain "straddles," may affect the
taxation of the Fund's sales of securities and transactions in options and
futures contracts. Under Section 1092, the Fund may be required to postpone
recognition for tax purposes of losses incurred in certain sales of
securities and certain closing transactions in options and futures contracts.

One of the requirements for qualification as a RIC is that less than 30%
of the Fund's gross income be derived from gains from the sale or other
disposition of securities held for less than three months. Accordingly, the
Fund may be restricted in effecting closing transactions within three months
after entering into an options or futures contract.

The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and the Treasury regulations promulgated thereunder. The Code and the
Treasury regulations are subject to change by legislative, judicial or
administrative action either prospectively or retroactively.

Ordinary income and capital gain dividends may also be subject to state
and local taxes.

Shareholders are urged to consult their own tax advisers regarding
specific questions as to Federal, foreign, state or local taxes. Foreign
investors should consider applicable foreign taxes in their evaluation of an
investment in the Fund.

PERFORMANCE DATA

From time to time the Fund may include its average total return and other
total return data, as well as yield, in advertisements or information
furnished to present or prospective shareholders. Total return and yield
figures will be based on the Fund's historical performance and are not
intended to indicate future performance. Average annual total return and
yield are determined separately for Class A and Class Y shares of the Fund in
accordance with formulae specified by the SEC.

Average annual total return quotations for the Fund for the specified
periods will be computed by finding the average annual compounded rates of
return (based on net investment income and any realized and unrealized
capital gains or losses on portfolio investments over such periods) that
would equate the initial amount invested to the redeemable value of such
investment at the end of each period. Average annual total return will be
computed assuming all dividends and distributions are reinvested and taking
into account all applicable recurring and nonrecurring expenses, including
the maximum sales charge in the case of Class A shares.

The Fund also may quote total return and aggregate total return
performance data for various specified time periods. Such data will be
computed as described above, except that (1) the rates of return calculated
will not be average annual rates, but rather, actual annual, annualized or
aggregate rates of return and (2) the maximum applicable sales charges will
not be included with respect to annual or annualized rates of return
calculations. Aside from the impact on the performance data calculations of
including or excluding the maximum applicable sales charges, actual annual or
annualized total return data generally will be lower than average annual
total return data since the average rates of return reflect compounding of
return; aggregate total return data generally will be higher than average
annual total return since the aggregate rates of return reflect compounding
over a longer period of time. The Fund's total return may be expressed
either as a percentage or as a dollar amount in order to illustrate the
effect of such total return on a hypothetical $1,000 investment in a Fund at
the beginning of each specified period.

Yield quotations for the Fund will be computed based on a 30-day period
by dividing (a) the net income based on the yield of each security earned
during the period by (b) the average daily number of shares outstanding in
the Fund during the period that were entitled to receive dividends multiplied
by the maximum offering price/net asset value per share of the Fund on the
last day of the period.

Total return figures and yield figures are based on the Fund's historical
performance and are not intended to indicate future performance. The Fund's
total return will vary depending on market conditions, the securities
comprising the Fund's holdings, operating expenses and the amount of realized
and unrealized net capital gains or losses during the period. The value of
an investment in the Fund will fluctuate and an investor's shares, when
redeemed, may be worth more or less than their original cost.

On occasion, the Fund may compare its performance to that of the Merrill
Lynch High Yield Master Index, the Standard & Poor's 500 Composite Stock
Price Index, the Dow Jones Industrial Average, or performance data published
by Lipper Analytical Services, Inc., Morningstar Publications, Inc., Money
Magazine, U.S. News & World Report, Business Week, CDA Investment Technology,
Inc., Forbes Magazine and Fortune Magazine. As with other performance data,
performance comparisons should not be considered representative of the Fund's
relative performance for any future period.

GENERAL INFORMATION

DIVIDENDS AND DISTRIBUTIONS

Reference is made to "Additional Information - Dividends and
Distributions" in the Prospectus.

DESCRIPTION OF SHARES

The Fund is the only existing series of Battery Park Funds, Inc. (the
"Company"), a series-type investment company incorporated under Maryland law
on June 4, 1996. The Company has an authorized capital of 200,000,000 shares
of common stock, par value $0.001 per share, of which 50,000,000 shares are
initially classified as one series, namely the Fund, consisting of two
classes, designated Class A and Class Y Common Stock, each of which consists
of 25,000,000 shares, and the remainder of 150,000,000 shares are not
classified as to any class or series. Shares of Class A and Class Y Common
Stock represent interests in the same assets of the Fund and are identical in
all respects except that the Class A shares bear certain expenses related to
the distribution associated with such shares. Class A shareholders each have
exclusive voting rights with respect to matters relating to expenditures made
under that class's Rule 12b-1 plan, as applicable.

Shareholders are entitled to one vote for each share held and fractional
votes for fractional shares held and will vote on the election of Directors
and any other matter submitted to a shareholder vote. The Fund does not
intend to hold meetings of shareholders in any year in which the Investment
Company Act does not require shareholders to act upon election of Directors.
The By-laws of the Company provide that a special meeting of shareholders may
be called for any purpose on the written request of the holders of at least
10% of the outstanding shares of the Fund. Voting rights for Directors are
not cumulative. Shares issued are fully paid and non-assessable and have no
preemptive or conversion rights. Redemption rights are discussed elsewhere
herein and in the Prospectus. Each share is entitled to participate equally
in dividends and distributions declared by the Fund and in the net assets of
the Fund on liquidation or dissolution after satisfaction of outstanding
liabilities. Stock certificates are issued by the Transfer Agent only on
specific request. Certificates for fractional shares are not issued in any
case.

COMPUTATION OF OFFERING PRICE PER SHARE

An illustration of the computation of the initial offering price for Fund
shares, based on the projected value of the Fund's estimated net assets and
projected number of shares outstanding on the date its shares are first
offered for sale to public investors is as follows:

<TABLE>
<CAPTION>
Class A Class Y
------- -------
<S> <C> <C>
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000 $50,000
------- -------
------- -------
Number of Shares Outstanding . . . . . . . . . . . . . . . . . 5,000 5,000
------- -------
------- -------
Net Asset Value Per Share (net assets divided
by number of shares outstanding) . . . . . . . . . . . . . . $10.00 $10.00
Sales Charge (4.50% on Class A only; 4.71%
of amount invested) . . . . . . . . . . . . . . . . . . . . . $ .47 $ --
------- -------
Offering Price . . . . . . . . . . . . . . . . . . . . . . . . $10.47 $10.00
------- -------
------- -------

</TABLE>

INDEPENDENT AUDITORS

Deloitte & Touche LLP, 2500 One PPG Place, Pittsburgh, PA 15222, has been
selected as the independent auditors of the Fund. The selection of
independent auditors is subject to ratification by the shareholders of the
Fund. The independent auditors are responsible for auditing the annual
financial statements of the Fund.

CUSTODIAN

The Bank of New York, 48 Wall Street, New York, NY 10286, acts as
Custodian of the Fund's assets. The Custodian is responsible for
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities and collecting interest and dividends on
the Fund's investments.

TRANSFER AGENT

Federated Shareholder Services Company, Federated Investors Tower,
Pittsburgh, PA 15222-3775, acts as the Fund's transfer agent. The Transfer
Agent is responsible for the issuance, transfer and redemption of shares and
the opening, maintenance and servicing of shareholder accounts. See
"Management of the Fund - Transfer Agency Services" in the Prospectus.

LEGAL COUNSEL

Brown & Wood LLP, One World Trade Center, New York, NY 10048-0557, is
counsel for the Fund.

REPORTS TO SHAREHOLDERS

The fiscal year of the Fund ends on September 30 of each year. The Fund
will send to its shareholders at least semiannually reports showing the
Fund's portfolio and other information. An
annual report, containing financial statements audited by independent
auditors, is sent to shareholders each year. After the end of each calendar
year, shareholders will receive Federal income tax information regarding
dividends and capital gains distributions.

ADDITIONAL INFORMATION

The Prospectus and this Statement of Additional Information do not
contain all the information set forth in the Registration Statement and the
exhibits relating thereto which the Fund has filed with the SEC, Washington,
D.C., under the Securities Act of 1933 and the Investment Company Act, to
which reference is hereby made.

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of the BATTERY PARK FUNDS, INC.
and the Shareholder of BATTERY PARK(Service Mark) HIGH YIELD FUND:

We have audited the accompanying statement of assets and liabilities of
Battery Park(Service Mark) High Yield Fund as of September 19, 1996. 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 in accordance with generally accepted auditing
standards. Those standards 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.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such statement of assets and liabilities presents fairly, in
all material respects, the financial position of Battery Park(Service Mark)
High Yield Fund as of September 19, 1996, in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
October 2, 1996

BATTERY PARK(Service Mark) HIGH YIELD FUND
OF
BATTERY PARK FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 19, 1996

<TABLE>
<S> <C>
ASSETS:
Cash $ 100,100
---------
---------

LIABILITIES: --
---------
Net Assets for 10,010 shares of common stock outstanding $ 100,100
---------
---------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
CLASS Y SHARES:
$100,000 + 10,000 shares of common stock outstanding $ 10.00
---------
---------
CLASS A SHARES:
$100 (divided by) 10 shares of common stock outstanding $ 10.00
---------
---------
</TABLE>

NOTES

Battery Park(Service Mark) High Yield Fund (the "Fund") is the only existing
series of Battery Park Funds, Inc. (the "Company") which was organized as a
Maryland corporation on June 4, 1996 and has had no operations since that
date other than those relating to organizational matters, including the
issuance on September 19, 1996, of 10,010 shares of common stock @ $10.00 per
share to Nomura Corporate Research and Asset Management Inc. (the "Investment
Adviser"). The Company is registered under the Investment Company Act of
1940 as an open-end investment company. The Fund has entered into an
Investment Advisory Agreement (the "Investment Advisory Agreement") with the
Investment Adviser and a distribution agreement (the "Distribution
Agreement") with Nomura Securities International, Inc. (the "Distributor").
See "Management and Advisory Arrangements" in the Statement of Additional
Information. Prepaid registration fees are charged to income as the related
shares are issued. Expenses of organization incurred by the Fund, estimated
at $230,000, were borne initially by the Investment Adviser. Deferred
organization expenses will be amortized over a period from the date the Fund
commences operations not exceeding five years. In the event that the
Investment Adviser (or any subsequent holder) redeems any of its original
shares prior to the end of the five-year period, the proceeds of the
redemption payable in respect of such shares shall be reduced by the pro rata
share (based on the proportionate share of the original shares redeemed to
the total number of original shares outstanding at the time of redemption) of
the unamortized deferred organization expenses as of the date of such
redemption. In the event that the Fund is liquidated prior to the end of the
five-year period, the Investment Adviser (or any subsequent holder) shall
bear the unamortized deferred organization expenses. Certain officers and/or
directors of the Fund are officers and/or directors of the Investment Adviser
and/or Distributor.

TABLE OF CONTENTS
Page
----

Investment Objective and
Policies . . . . . . . . . 2
Investment Restrictions . . . 3 BATTERY PARK(SERVICE MARK)
Management of the Fund . . . . 6 HIGH YIELD FUND
Directors and Officers . . . 6
Management and Advisory
Arrangements . . . . . . . 7
Purchase of Shares . . . . . . 9
Reduced Initial Sales Charges 9
Distribution Plan . . . . . . 10
Redemption of Shares . . . . . 11
Portfolio Transactions . . . . 11
Portfolio Turnover . . . . . 12
Determination of Net Asset Value 12
Shareholder Services . . . . . 13
Automatic Reinvestment of
Dividends and Capital Gains
Distributions . . . . . . . 13
Systematic Redemption and
Automatic Investment
Plans . . . . . . . . . . . 14
Taxes . . . . . . . . . . . . . 14
Tax Treatment of Options and
Futures Transactions . . . 15
Performance Data . . . . . . . 16
General Information . . . . . . 18
Dividends and Distributions . 18
Description of Shares . . . . 18
Computation of Offering Price
Per Share . . . . . . . . . 19
Independent Auditors . . . . 19
Custodian . . . . . . . . . . 19
Transfer Agent . . . . . . . 19
Legal Counsel . . . . . . . . 19 STATEMENT OF ADDITIONAL
Reports to Shareholders . . . 19 INFORMATION
Additional Information . . . 20
Independent Auditors' Report . 21
Statement of Assets and
Liabilities . . . . . . . . . 22 OCTOBER 10, 1996

DISTRIBUTOR:

NOMURA SECURITIES
INTERNATIONAL, INC.

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements:
----------------

Included in Part B:

Independent Auditors' Report

Statement of Assets and Liabilities as of September 19, 1996

(b) Exhibits:
--------

1.(a) Articles of Incorporation of the Registrant.(c)
(b) Articles of Amendment to the Articles of Incorporation.(c)

2.(a) By-Laws of the Registrant.(b)

(b) Amended By-Laws of the Registrant.(c)

3. None.
4.(a) Portion of the Articles of Incorporation and By-Laws of the
Registrant defining the rights of shareholders.(a)

(b) Class A Specimen Share Certificate.
(c) Class Y Specimen Share Certificate.
5. Investment Advisory Agreement between the Registrant and Nomura
Corporate Research and Asset Management Inc. (the "Investment
Adviser").
6. Distribution Agreement between the Registrant and Nomura
Securities International, Inc. (the "Distributor").

7. None.

8. Custody Agreement between the Registrant and The Bank of New
York.
9.(a) Agreement For Fund Accounting Services, Administrative
Services and Transfer Agency Services between the Registrant
and Federated Services Company.
(b) License Agreement between the Registrant and the Investment
Adviser Relating to Use of Name and Use of Service Mark.
10. Opinion of Brown & Wood LLP, counsel to the Registrant.
11. Consent of Deloitte & Touche LLP, independent accountants for
the Registrant.
12. None.
13. Certificate of the Investment Adviser in connection with its
provision of the initial capital of the Registrant.
14. None.
15. Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("1940 Act").
16. None.
17. None.
18. Multiple Class Plan pursuant to Rule 18f-3 under the 1940 Act.

________________________
(a) Reference is made to Articles IV, V, VI, VII and IX of the Registrant's
Articles of Incorporation, filed herewith as Exhibit 1 to this
Registration Statement on Form N-1A and to Articles II, III, VII, XIII
and XIV of the Registrant's By-Laws, filed herewith as Exhibit 2 to this
Registration Statement on Form N-1A.
(b) Previously filed on June 19, 1996 as an exhibit to the Registration
Statement.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
REGISTRANT

Prior to the effective date of this Registration Statement, the Fund
will sell 10 Class A shares of its Common Stock and 10,000 Class Y shares of
its Common Stock to the Investment Adviser for an aggregate of $100,100.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

<TABLE>
<CAPTION>
Number of Record
Holders as of
Title of Class October 1, 1996
-------------- ---------------
<S> <C>
Class A Shares of Common Stock, par value $.001 per share 1
Class Y Shares of Common Stock, par value $.001 per share 1

</TABLE>

ITEM 27. INDEMNIFICATION

Reference is made to Article V of the Registrant's Articles of
Incorporation and to Article VI of the Registrant's By-Laws, incorporated by
reference to Exhibits 1 and 2 to this Registration Statement, and to Section
2-418 of the Maryland General Corporation Law.

Insofar as the conditional advancing of indemnification moneys for
actions based on the 1940 Act may be concerned, Article VI of the
Registrant's By-Laws provides that such payments will be made only on the
following conditions: (i) the person seeking indemnification shall provide to
the Registrant a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the Registrant has been
met and a written undertaking to repay any such advance, if it ultimately
should be determined that the standard of conduct has not been met, and (ii)
at least one of the following additional conditions is met: (a) the person
seeking indemnification shall provide a security in form and amount
acceptable to the Registrant for his or her undertaking, (b) the Registrant
is insured against losses arising by reason of the advance, or (c) a majority
of a quorum of non-party independent directors, or independent legal counsel
in a written opinion shall determine, based upon a review of facts readily
available to the Registrant at the time the advance is proposed to be made,
that there is reason to believe that the person
seeking indemnification will ultimately be found to be entitled to
indemnification.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "1933 Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 1933 Act and therefore is unenforceable. In the
event that a claim for indemnification against such liabilities (other than
for expenses paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant, unless the matter has been
settled by controlling precedent in the opinion of its counsel, will submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

The address of the Investment Adviser is 2 World Financial Center,
Building B, New York, New York 10281-1198.

Set forth below is a list of each executive officer and partner of the
Investment Adviser indicating each business, profession, vocation or
employment of a substantial nature in which each such person or entity has
been engaged since September 30, 1994, for his or its own account or in the
capacity of director, officer, partner or trustee.

<TABLE>
<CAPTION>
OTHER SUBSTANTIAL BUSINESS, PROFESSION,
NAME POSITION(S) WITH INVESTMENT ADVISER VOCATION OR EMPLOYMENT
---- ----------------------------------- ---------------------------------------
<S> <C> <C>
Robert Levine President and Chief Executive Officer Executive Managing Director,
Nomura Holding America Inc.
Richard A. Buch Managing Director None
Lance B. Fraser Director None
Steven Sorensen Director Director of Institutional Services,
Neuberger & Berman
</TABLE>

Information on the Investment Adviser is incorporated by reference to
the Prospectus included in this Registration Statement.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) The Registrant's principal underwriter, Nomura Securities
International, Inc. (the "Distributor"), also serves as principal underwriter
for Nomura Pacific Basin Fund, Inc.

(b) Set forth below is information concerning each director and officer
of the Distributor. The principal business address of each such person is 2
World Financial Center, Building B, New York, New York 10281-1198.

<TABLE>
<CAPTION>
(1) (2) (3)
Name Position(s) and Officer(s) Position(s) and Office(s)
with the Distributor with Registrant
<S> <C> <C>
Michael A. Berman Co-President and Co-Chief Director
Executive Officer

Hiroshi Tsujimura Co-President and Co-Chief None
Executive Officer

John E. Toffolon, Jr. Chief Financial Officer and None
Executive Managing Director

William Wraith, Jr. Chief Operating Officer and None
Executive Managing Director

Ira L. Sorkin Chief Legal Officer and None
Executive Managing Director

William B. Aimetti Executive Managing Director None

William T. Maitland Executive Managing Director None

Mark W. McGauley Executive Managing Director None

Ethan Penner Executive Managing Director None

Lawrence J. Pomerantz Executive Managing Director None

Joseph D. Schmuckler Executive Managing Director None

Atsuki Yoshikama Executive Managing Director None

Arthur S. Ainsberg Independent Director None

</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules thereunder are maintained at the
offices of the Registrant, 2 World Financial Center, Building B, New York,
New York 10281-1198, and its transfer agent, Federated Shareholder Services
Company, Federated Investors Tower, Pittsburgh, PA 15222-3775

ITEM 31. MANAGEMENT SERVICES

Other than as set forth under the caption "Management of the Fund--
Management and Advisory Arrangements" in the Prospectus constituting Part A
of the Registration Statement and under "Management of the Fund--Management
and Advisory Arrangements" in the Statement of Additional Information
constituting Part B of the Registration Statement, the Registrant is not a
party to any management-related service contract.

ITEM 32. UNDERTAKINGS

(a) Registrant undertakes to file a post effective amendment using
financial statements, which need not be certified, within four to six months
from the effective date of this registration statement.

(b) Registrant undertakes to furnish each person to whom a Prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT HAS DULY CAUSED THIS PRE-
EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, AND
STATE OF NEW YORK, ON THE 9TH DAY OF OCTOBER, 1996.

BATTERY PARK(Service Mark) FUNDS, INC.

(Registrant)

By: /s/ Robert Levine
--------------------------------------
(Robert Levine, President)

EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY AUTHORIZES ROBERT
LEVINE OR LANCE B. FRASER, OR EITHER OF THEM, AS ATTORNEY-IN-FACT, TO SIGN ON
HIS BEHALF, INDIVIDUALLY AND IN EACH CAPACITY STATED BELOW, ANY AMENDMENTS TO
THIS REGISTRATION STATEMENT (INCLUDING POST-EFFECTIVE AMENDMENTS) AND TO FILE
THE SAME, WITH ALL EXHIBITS THERETO, WITH THE SECURITIES AND EXCHANGE
COMMISSION.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS PRE-
EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSON IN THE CAPACITY AND ON THE DATE INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert Levine President (Principal Executive October 9, 1996
- -------------------------------- Officer) and Director
(Robert Levine)

/s/ Michael A. Berman Director October 9, 1996
- --------------------------------
(Michael A. Berman)

/s/ John Fitting, Jr. Director October 9, 1996
- --------------------------------
(John Fitting, Jr.)

/s/ Francis L. Fraenkel Director October 9, 1996
- --------------------------------
(Francis L. Fraenkel)

/s/ Frank K. Reilly Director October 9, 1996
- --------------------------------
(Frank K. Reilly)

/s/ Lance B. Fraser Treasurer (Principal Financial October 9, 1996
- -------------------------------- and Accounting Officer)
(Lance B. Fraser)

</TABLE>

EXHIBIT INDEX
-------------

EXHIBIT
NUMBER EXHIBITS
- ------- --------

4.(b) - Class A Specimen Share Certificate.
(c) - Class Y Specimen Share Certificate.
5. - Investment Advisory Agreement between the Registrant and
Nomura Corporate Research and Asset Management Inc. (the
"Investment Adviser").
6. - Distribution Agreement between the Registrant and Nomura
Securities International, Inc. (the "Distributor").
8. - Custody Agreement between the Registrant and The Bank of
New York.
9.(a) - Agreement For Fund Accounting Services, Administrative
Services and Transfer Agency Services between the
Registrant and Federated Services Company.
(b) - License Agreement between the Registrant and the
Investment Adviser Relating to the Use of Name and Use
of Service Mark.
10. - Opinion of Brown & Wood LLP, counsel to the Registrant.
11. - Consent of Deloitte & Touche LLP, independent accountants
for the Registrant.
13. - Certificate of the Investment Adviser in connection with its
provision
of the initial capital of the Registrant.
15. - Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended ("1940 Act").
18. - Multiple Class Plan pursuant to Rule 18f-3 under the 1940
Act.

APPENDIX FOR GRAPHIC AND IMAGE MATERIAL

Pursuant to Rule 304 of Regulation S-T, the following table presents
fair and accurate narrative descriptions of graphic and image material
omitted from this EDGAR Submission file due to ASCII-incompatibility and
cross-references this material to the location of each occurrence in the
text.

DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
- ---------------------- -------------------
Tree, with an image of Back cover of Prospectus and
its reflection. back cover of Statement of
Additional Information

BATTERY PARK FUNDS, INC.
BATTERY PARK HIGH YIELD FUND
(CLASS A SHARES)
NUMBER
SHARES
KC
PORTFOLIO
ACCOUNT NO.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SEE REVERSE SIDE
FOR CERTAIN DEFINITIONS
THIS IS TO certify that is the owner of
CUSIP 07132Q 10 8
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK of
the BATTERY PARK HIGH YIELD FUND (CLASS A SHARES) Portfolio of BATTERY PARK
FUNDS, INC.
hereafter called the "Company," transferable on the books of the Company by
the owner, in person or by duly authorized attorney, upon surrender
of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to the
provisions of the Articles of Incorporation and By-Laws of the
Company, and all amendments thereto, to all of which the holder by acceptance
hereof assents.
This Certificate is not valid unless countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed in
its name by its proper officers and to be sealed with its Seal.
Dated:
COUNTERSIGNED:
FEDERATED SHAREHOLDER SERVICE COMPANY
(PITTSBURGH)
TRANSFER AGENT
BY
AUTHORIZED SIGNATURE
BATTERY PARK FUNDS, INC.
CORPORATE
SEAL
MARYLAND
1996
TREASURER
PRESIDENT
G01871-A (10/96)

The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM _ as tenants in common
TEN ENT _ as tenants by the entirety
JT TEN _ as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT _ ...Custodian...
(Cust) (Minor)
under Uniform Gifts to Minors
Act
(State)
Additional abbreviations may also be used though not in the above list.
The Company will furnish to any stockholder, on request and without charge, a
full statement of designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each
class which the corporation is authorized to issue.
For value received hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
shares
of common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said shares on the books of the within named Company with
full power of substitution in the premises.
Dated
NOTICE:
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.

BATTERY PARK FUNDS, INC.
BATTERY PARK HIGH YIELD FUND
(CLASS Y SHARES)
NUMBER
SHARES
KC
PORTFOLIO

ACCOUNT NO.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SEE REVERSE SIDE
FOR CERTAIN DEFINITIONS
THIS IS TO certify that is the owner of
CUSIP 07132Q 20 7
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK of
the BATTERY PARK HIGH YIELD FUND (CLASS Y SHARES) Portfolio of BATTERY PARK
FUNDS, INC.
hereafter called the "Company," transferable on the books of the Company by
the owner, in person or by duly authorized attorney, upon surrender
of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to the
provisions of the Articles of Incorporation and By-Laws of the
Company, and all amendments thereto, to all of which the holder by acceptance
hereof assents.
This Certificate is not valid unless countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed in
its name by its proper officers and to be sealed with its Seal.
Dated:
COUNTERSIGNED:
FEDERATED SHAREHOLDER SERVICE COMPANY
(PITTSBURGH)
TRANSFER AGENT
BY
AUTHORIZED SIGNATURE
BATTERY PARK FUNDS, INC.
CORPORATE
SEAL
MARYLAND
1996
TREASURER
PRESIDENT
G01871-Y (10/96)

EXHIBIT 5

BATTERY PARK FUNDS, INC.

INVESTMENT ADVISORY AGREEMENT
-----------------------------

This Agreement is made this 1st day of October, 1996, between Nomura
Corporate Research and Asset Management Inc., a Delaware corporation, having
its principal place of business in New York, New York (the "Adviser"), and
Battery Park Funds, Inc., a Maryland Corporation having its principal place
of business in New York, New York (the "Corporation").

WHEREAS the Corporation is an open-end management investment company as
that term is defined in the Investment Company Act of 1940, as amended, and
is registered as such with the Securities and Exchange Commission;

WHEREAS Adviser is engaged in the business of rendering investment
advisory and management services and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended;

WHEREAS, the Corporation desires to retain the Adviser to render
investment advisory and management services to the Corporation in the manner
and on the terms hereinafter set forth; and

WHEREAS, the Adviser is willing to provide investment advisory and
management services to the Corporation on the terms and conditions
hereinafter set forth.

NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. The Corporation hereby employs Adviser as Investment Adviser for
each of the portfolios ("Funds") of the Corporation which executes an exhibit
to this Agreement, and Adviser accepts the employment. Subject to the
supervision, policies of, review by, and overall control of the Directors of
the Corporation, Adviser shall provide a continuous investment program for
each of the Funds, including investment research and management with respect
to all securities, investments, cash and cash equivalents in the Funds.
Adviser will determine from time-to-time what securities and other assets
will be purchased, retained or sold by the Funds and will place the daily
orders for the purchase or sale of securities. Adviser will provide services
rendered by it under this Agreement in accordance with each Fund's
objectives, policies, and restrictions as stated in the prospectus and
resolutions of the Board of Directors.

The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have
no authority to act for or represent the Corporation on any of its Funds in
any way or otherwise be deemed an agent of the Corporation or any of its Funds.

2. Adviser will be guided by each of the Fund's investment objective
and policies and restrictions contained in the Articles of Incorporation and
By-Laws of the Corporation and as set forth in the Registration Statements
and exhibits as may be on file with the Securities and Exchange Commission.

3. The Adviser shall also make decisions for each Fund as to the
manner in which voting rights, rights to consent to corporate action and any
other rights pertaining to a Fund's portfolio securities shall be exercised.
Should the Directors at any time, however, make any definite determination as
to investment policy and notify the adviser thereof in writing, the Adviser
shall be bound by such determination for the period, if any, specified in
such notice or until similarly notified that such determination has been
revoked. The Adviser shall take, on behalf of the Fund, all actions which it
deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for each Fund's account with brokers or dealers selected
by it, and to that end, the Adviser is authorized as the agent of each Fund
to give instructions to the custodian of the Fund as to deliveries of
securities and payments of cash for the account of the Fund. In connection
with the selection of such brokers or dealers and the placing of such orders
with respect to assets of each Fund, the Adviser is directed at all times to
seek to obtain execution and price within the policy guidelines determined by
the Directors as set forth in the Prospectus. Subject to this requirement
and the provisions of the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, each as amended, and other applicable provisions of
law, the Adviser may select brokers or dealers with which it or the
Corporation is affiliated.

4. Each Fund shall pay or cause to be paid all of its own expenses and
its allocable share of Corporation expenses, including, without limitation,
the expenses of organizing the Corporation and continuing its existence; fees
and expenses of Directors and officers of the Corporation; fees for
investment advisory services and administrative personnel and services;
expenses incurred in the distribution of its shares ("Shares"), including
expenses of administrative support services; fees and expenses of preparing
and printing its Registration Statements under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, and any amendments thereto;
expenses of registering and qualifying the Corporation, the Funds, and Shares
of the Funds under federal and state laws and regulations; expenses of
preparing, printing, and distributing prospectuses (and any amendments
thereto) to shareholders; interest expense, taxes, fees, and commissions of
every kind; expenses of issue (including cost of Share certificates),
purchase, repurchase, and redemption of Shares; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents, and registrars; printing and mailing costs, auditing,
accounting, and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of Directors and shareholders
and proxy solicitations therefor; actual out of pocket expenses of Directors
who are not affiliated persons of the Adviser; insurance expenses;
association membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the
Corporation and the Funds, and other expenses that may be properly paid by a
Fund. Each Fund will also pay its allocable share of such extraordinary
expenses as may arise including expenses incurred in connection with
litigation, proceedings, and claims and the legal obligations of the
Corporation to indemnify its officers and Directors and agents with respect
thereto.

5. The Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement and shall
pay all compensation of officers of each Fund and all Directors of the
Corporation who are affiliated persons of the Adviser.

6. The Distributor will pay certain of the expenses of the Funds
incurred in connection with the continuous offering of Fund shares.

7. Each of the Funds shall pay to Adviser, for all services rendered
to each Fund by Adviser hereunder, the fees set forth in the exhibits
attached hereto.

8. The net asset value of each Fund's Shares as used herein will
be calculated to the nearest 1/10th of one cent.

9. In the event the operating expenses of a Fund, including amounts
payable to the Adviser pursuant to this Agreement, for any fiscal year ending
on a date on which this Agreement is in effect exceed the expense limitations
applicable to that Fund imposed by applicable securities laws or regulations
thereunder, as such limitations may be raised or lowered from time to time,
the Adviser shall reduce its investment advisory fee by the extent of such
excess and, if required pursuant to any such laws or regulations, will
reimburse the Fund in the amount of such excess; provided, however, to the
extent permitted by law, there shall be excluded from such expenses the
amount of any interest, taxes, brokerage commissions, distribution fees and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto)
paid or payable by the Fund. Whenever the expenses of a Fund exceed a pro
rata portion of the applicable annual expense limitations, the estimated
amount of reimbursement under such limitations shall be applicable as an
offset against the monthly payment of the investment advisory fee due to the
Adviser. Should two or more such expense limitations be applicable as at the
end of the last Business Day of the month, that expense limitation which
results in the largest reduction in the Adviser's fee shall be applicable.
The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
one or more of the Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.

10. This Agreement shall begin for each Fund as of the date of
execution of the applicable exhibit and shall continue in effect with respect
to each Fund presently set forth on an exhibit (and any subsequent Funds
added pursuant to an exhibit during the initial term of this Agreement) for
two years from the date of this Agreement set forth above and thereafter for
successive periods of one year, subject to the provisions for termination and
all of the other terms and conditions hereof if: such continuation shall be
specifically approved at least annually by the vote of a majority of the
Directors of the Corporation, including a majority of the Directors who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for that purpose; provided, however, that,
notwithstanding any provision of this Agreement, the Agreement may be
terminated at any time with respect to a Fund, without payment of any
penalty, by the Adviser, on one hundred twenty (120) days' written notice to
the Corporation. If a Fund is added after the first approval by the
Directors as described above, this Agreement will be effective as to that
Fund upon execution of the applicable exhibit and will continue in effect
until the next annual approval of this Agreement by the Directors and
thereafter for successive periods of one year, subject to approval as
described above.

11. Notwithstanding any provision in this Agreement, it may be
terminated at any time with respect to any Fund, without the payment of any
penalty, by the Directors of the Corporation or by a vote of the shareholders
of that Fund on sixty (60) days' written notice to Adviser.

12. The Corporation shall deliver to the Adviser, from time-to-time as
available, copies of the Corporation's Form N-8A, N-1A, Prospectus, Statement
of Additional Information, Board resolutions approving this Agreement,
Articles of Incorporation, and By-Laws, and all amendments and supplements
thereto.

13. This Agreement may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ
or contract with such other person, persons, corporation, or corporations
(including subadvisers approved by the Board of Directors and shareholders in
accordance with the provisions of the Act) at its own cost and expense as it
shall determine in order to assist it in carrying out this Agreement. In
addition, the Adviser is authorized, subject to prior approval of the Board
of Directors, to take into account the sale of shares of the Funds in
allocating purchase and sale orders for portfolio securities to brokers and
dealers (including brokers and dealers that are affiliated with the adviser,
any subadviser or the Funds' distributor) in compliance with applicable law.
In no instance, however, will a portfolio security be purchased from or sold
to the Adviser, any subadviser or the Funds' distributor or affiliated person
thereof except to the extent permitted by the Federal or state securities
laws.

14. Adviser will place orders for purchase and sale of portfolio
securities with issuers or broker-dealers and will attempt to obtain best
price or most favorable execution with respect to such orders. In placing
such orders, Adviser will consider the experience, skill, financial
responsibility and administrative efficiency of the broker-dealer involved,
and may select a broker-dealer on a basis other than the lowest commission
rate if deemed appropriate by the Adviser.

15. The Corporation recognizes that the Adviser or its affiliates may
serve in an investment advisory capacity with respect to entities in addition
to the Fund, and the Corporation hereby agrees that nothing in the Agreement
shall be deemed to preclude the Adviser or its affiliates from serving in
such capacity.

It is understood that Directors of the Corporation and officers,
employees and shareholders of the Corporation and any of its funds are or may
become interested in the Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers,
employees and shareholders of the Adviser and its affiliates are or may
become similarly interested in Funds of the Corporation, and that the Adviser
and directors, officers, employees, partners and shareholders of the
affiliates may become interested in Funds of the Corporation as shareholder
or otherwise.

16. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties under this Agreement on
the part of Adviser, Adviser shall not be liable to the Corporation or to any
of the Funds or to any shareholder for any act or omission in the course of
or connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding, or sale of any security.

17. This Agreement may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of the Directors of the Corporation, including a majority of the
Directors who are not parties to this Agreement or interested persons of any
such party to this Agreement (other than as Directors of the Corporation)
cast in person at a meeting called for that purpose, and, where required by
Section 15(a)(2) of the Act, on behalf of a Fund by a majority of the
outstanding voting securities of such Fund as defined in Section 2(a)(42) of
the Act.

18. The Adviser acknowledges that all sales literature for
investment companies (such as the Corporation) are subject to strict
regulatory oversight. The Adviser agrees to submit any proposed sales
literature for the Corporation (or any Fund) or for itself or its affiliates
which mentions the Corporation (or any Fund) to the Corporation's distributor
for review and filing with the appropriate regulatory authorities prior to
the public release of any such sales literature, provided, however, that
nothing herein shall be construed so as to create any obligation or duty on
the part of the Adviser to produce sales literature for the Corporation (or
any Fund). The Corporation agrees to cause its distributor to promptly
review all such sales literature to ensure compliance with relevant
requirements, to promptly advise Adviser of any deficiencies contained in
such sales literature, to promptly file complying sales literature with the
relevant authorities, and to cause such sales literature to be distributed to
prospective investors in the Corporation.

19. This Agreement shall be construed in accordance with and governed
by the laws of the State of New York.

20. In the event that any portion of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.

21. This Agreement will become binding on the parties hereto upon their
execution of the attached exhibits to this Agreement.

EXHIBIT A
to the
Investment Advisory Agreement

BATTERY PARK HIGH YIELD FUND

The following provisions are hereby incorporated and made part of the
Investment Advisory Agreement dated October 1, 1996 between Battery Park
Funds, Inc. and Nomura Corporate Research and Asset Management Inc.

For all services rendered by Adviser hereunder, the above-named Fund of
the Corporation shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to 0.65 of 1% of the average daily net assets of the Fund.

The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of 0.65 of 1% applied to
the daily net assets of the Fund. The advisory fee so accrued shall be paid
to Adviser monthly.

If this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last of a month, compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fee as set forth above. Payment of
the Adviser's compensation for the preceding month shall be made as promptly
as possible after completion of the calculation of the fee as set forth
above. During any period when the determination of net asset value is
suspended by the Directors, the average daily net asset value of a share as
of the last day prior to such suspension shall for this purpose be deemed to
be the average daily net asset value at the close of each succeeding day
until it is again determined.

In consideration of the mutual covenants set forth in the Investment
Advisory Agreement dated October 1, 1996 between Battery Park Funds, Inc. and
Nomura Corporate Research and Asset Management Inc., Battery Park Funds, Inc.
executes and delivers this Exhibit on behalf of the Fund set forth above.

Witness the due execution hereof this 1st day of October, 1996.

Attest: NOMURA CORPORATE RESEARCH
AND ASSET MANAGEMENT INC.

By:
- --------------------------- ---------------------------
Deborah A. Montick Robert Levine
Assistant Secretary President

Attest: BATTERY PARK FUNDS, INC.

By:
- --------------------------- ---------------------------
Deborah A. Montick Lance Fraser
Secretary Treasurer

EXHIBIT 6
DISTRIBUTION AGREEMENT

AGREEMENT made as of the 1st day of October, 1996 between BATTERY PARK
FUNDS, INC., a Maryland corporation (the "Corporation"), and NOMURA
SECURITIES INTERNATIONAL, INC., a New York corporation (the "Distributor").

W I T N E S S E T H :
- - - - - - - - - -

WHEREAS, the Corporation is registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), as an open-end investment
company, and it is affirmatively in the interest of the Corporation to offer
its shares for sale continuously; and

WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to purchasers or
through other securities dealers; and

WHEREAS, the Corporation and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the
shares of common stock of the Corporation which may be offered in one or more
series (each a "Fund") consisting of one or more classes (the "Classes") of
shares (the "Shares").

NOW, THEREFORE, the parties agree as follows:

Section 1. Appointment of the Distributor. The Corporation hereby
------------------------------
appoints the Distributor as its agent to offer to the public Shares of the
Corporation, as described and set forth in one or more exhibits to this
Agreement.

Section 2. Offering of Shares of the Corporation.
-------------------------------------

a. After the Corporation commences operations, the Corporation will
commence an offering of its Shares, and thereafter the Distributor shall
offer those Shares of the Corporation necessary to fill unconditional orders
for such Shares placed with the Distributor by eligible investors or
securities dealers. Investors eligible to purchase Shares shall be those
persons so identified in the currently effective prospectus and statement of
additional information of each Fund (the "prospectus" and "statement of
additional information", respectively) under the Securities Act of 1933, as
amended (the "Securities Act"), relating to such Shares.

b. The Shares are to be offered by the Distributor to investors at the
public offering price, as set forth in Section 2(c) hereof, and by securities
dealers having agreements with the
Distributor (the "selected dealers") upon the terms and conditions set forth
in Section 6 hereof.

c. The public offering price(s) of the Shares, i.e., the price per
- -
Share at which the Distributor or selected dealers may offer Shares to the
public, shall be the public offering price as set forth in the prospectus and
statement of additional information relating to such Shares, but not to
exceed the net asset value, plus any sales charge which may be approved by
the Board of Directors of Corporation and set forth in the prospectus.
Shares may be sold to certain Directors, officers and employees of the
Corporation and its affiliates, and to certain other persons described in the
prospectus and statement of additional information, without a sales charge or
at a reduced sales charge, upon terms and conditions set forth in the
prospectus and statement of additional information relating to such Shares.
If the public offering price does not equal an even cent, the public offering
price may be adjusted to the nearest cent. All payments to the Corporation
hereunder shall be made in the manner set forth in Section 2(f).

d. The net asset value of Shares shall be determined by the Corporation
or any agent of the Corporation in accordance with the method set forth in
the prospectus and statement of additional information of the Corporation and
guidelines established by the Directors.

e. The Corporation shall have the right to suspend the sale of its
Shares at times when redemption is suspended pursuant to the conditions set
forth in Section 3(b) hereof. The Corporation shall also have the right to
suspend the sale of its Shares if trading on the New York Stock Exchange
shall have been suspended, if a banking moratorium shall have been declared
by Federal or New York authorities, or if there shall have been some other
event, which, in the judgment of the Corporation, makes it impracticable or
inadvisable to sell the Shares.

f. The Corporation, or any agent of the Corporation designated in
writing by the Corporation, shall be promptly advised of all purchase orders
for Shares received by the Distributor. Any order may be rejected by the
Corporation; provided, however, that the Corporation will not arbitrarily or
without reasonable cause refuse to accept or confirm orders for the purchase
of Shares. The Corporation (or its agent) will confirm orders upon their
receipt, will make appropriate book entries and, upon receipt by the
Corporation (or its agent) of payment therefor, will deliver deposit receipts
or certificates for such Shares pursuant to the instructions of the Dis-
tributor. Payment shall be made to the Corporation in New York Clearing
House funds. The Distributor agrees to use its commercially reasonable best
efforts to cause such payment and such instructions to be delivered promptly
to the Corporation (or its
agent). In the event that payment is not received after an order is accepted
and Shares have been issued, and payment has not been received from the
selected dealer that placed the order, the Distributor agrees that it will be
responsible for any resulting loss suffered by the Corporation. Unless the
Distributor and the Corporation agree otherwise in writing, no securities
dealer may serve as a selected dealer for the Corporation unless such dealer
is a member in good standing of the National Securities Clearing Corporation
(the "NSCC").

Section 3. Repurchase or Redemption of Shares by the Corporation.
-----------------------------------------------------

a. Any of the outstanding Shares may be tendered for redemption at any
time, and the Corporation agrees to repurchase or redeem the Shares so
tendered in accordance with its obligations as set forth in its Articles of
Incorporation, as amended from time to time, and in accordance with the
applicable provisions set forth in the prospectus and statement of additional
information. The price to be paid to redeem or repurchase the Shares shall
be equal to the net asset value calculated in accordance with the provisions
of Section 3(e) hereof, less any contingent deferred sales charge ("CDSC"),
redemption fee or other charge(s), if any, set forth in the prospectus and
statement of additional information relating to such Shares. All payments by
the Corporation hereunder shall be made in the manner set forth below. The
redemption or repurchase by the Corporation of any of the Shares purchased
through the Distributor will not affect the sales charge secured by the
Distributor or any selected dealer in the course of the original sale except
that, consistent with the requirements of Section 2830(h) of the Conduct
Rules of the National Association of Securities Dealers, Inc. (the "NASD"),
if (i) any Shares sold by the Distributor are tendered for redemption or
repurchase within seven business days after the date of the confirmation of
the original purchase, or (ii) the Distributor is notified that shares sold
by a selected dealer have been tendered for redemption or repurchased within
seven business days after the date of the confirmation of the original
purchase, the Distributor shall forthwith refund to the applicable Fund the
Distributor's share of the sales charges on the original sale plus the full
concession, if any, allowed to the selected dealer on the original sale and
refunded to the Distributor.

The Corporation shall pay the total amount of the redemption price as
defined in the above paragraph in New York Clearing House funds on or before
the seventh business day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of shares shall be
paid by the Corporation as follows: (i) any applicable CDSC shall be paid to
the Distributor, and (ii) the balance shall be paid to or for the account of
the shareholder, in each case in accordance with the
applicable provisions of the prospectus and statement of additional
information.

b. Redemption of Shares or payment may be suspended at times when the
New York Stock Exchange is closed, when trading on said Exchange is
suspended, when trading on said Exchange is restricted, when an emergency
exists as a result of which disposal by the Corporation of securities owned
by it is not reasonably practicable or it is not reasonably practicable for
the Corporation fairly to determine the value of its net assets, or during
any other period when the Securities and Exchange Commission, by order, so
permits.

Section 4. Duties of the Corporation.
-------------------------

a. The Corporation shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares of
the Corporation, and this information shall include, upon request by the
Distributor, one certified copy of all financial statements prepared for the
Corporation by independent public accountants. The Corporation shall make
available to the Distributor such number of copies of the prospectus and
statement of additional information as the Distributor shall reasonably
request.

b. The Corporation shall take, from time to time, but subject to any
necessary approval of the shareholders, all necessary action to fix the
number of authorized Shares and such steps as may be necessary to register
the same under the Securities Act, to the end that there will be available
for sale such number of Shares as reasonably may be expected to be offered
through the Distributor.

c. The Corporation shall use its best efforts to qualify and maintain
the qualification of an appropriate number of its Shares for sale under the
securities laws of such states as the Distributor and the Corporation may
approve. Any such qualification may be withheld, terminated or withdrawn by
the Corporation at any time in its discretion. As provided in Section 8(c)
hereof, the expense of qualification and maintenance of qualification shall
be borne by the Corporation. The Distributor shall furnish such information
and other material relating to its affairs and activities as may be required
by the Corporation in connection with such qualification.

d. The Corporation will furnish, in reasonable quantities upon request
by the Distributor, copies of annual and interim reports of the Corporation.

Section 5. Duties of the Distributor.
-------------------------

a. The services of the Distributor to the Corporation hereunder are not
to be deemed exclusive, and nothing herein contained shall prevent the
Distributor from entering into like arrangements with other investment
companies so long as the performance of its obligations hereunder is not
impaired thereby. It is understood and agreed that the Distributor shall act
as agent of the Corporation under this Agreement, and that the Distributor is
in no way responsible for the Corporation's conduct or for any of its acts or
omissions in connection therewith.

b. It is understood and agreed that Federated Services Company or one
of its subsidiaries ("FSC", which term shall include any successor performing
such duties) may undertake the responsibilities of the Distributor described
in this Agreement. To the extent obligations are assumed by FSC, and
incorporated in a contractual arrangement between the Corporation and FSC, or
between the Distributor and FSC, the Distributor shall not be responsible for
such obligations or the performance of any duties in connection therewith.

c. Neither the Distributor nor any selected dealer, as defined in
Section 6 hereof, nor any other person is authorized by the Corporation to
give any information or to make any representations, other than those
contained in the registration statement or related prospectus and statement
of additional information and any sales literature specifically approved by
the Corporation (including, without limitation, information provided by the
Corporation under Section 4(a) of this Agreement).

d. The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales, and the
cancellation of unsettled transactions, as may be necessary to comply with
the requirements of the NASD, as such requirements may from time to time
exist.

Section 6. Selected Dealer Agreements. The Distributor shall have the
--------------------------
right to enter into dealer agreements with selected dealers of its choice
(providing that they are members in good standing of the NSCC) for the sale
of Shares and fix therein the portion of the sales charge which may be
allocated to the selected dealers; provided that the Corporation shall
approve the forms of agreements with selected dealers and the dealer
compensation set forth therein. The form of agreement with selected dealers
to be used in the continuous offering of the Shares is attached hereto as
Exhibit A.

Section 7. Payment of Expenses.
-------------------

a. The Corporation shall bear all costs and expenses of the
Corporation, including fees and disbursements of its counsel
and auditors, in connection with the preparation and filing of any required
registration statements and/or prospectuses and statements of additional
information under the Investment Company Act, the Securities Act, and all
amendments and supplements thereto, and preparing and mailing annual and
interim reports and proxy materials to shareholders (including, but not
limited to, the expense of setting in type any such registration statements,
prospectuses, statements of additional information, annual or interim reports
or proxy materials).

b. The Distributor shall be responsible for any payments made to
selected dealers as reimbursement for their expenses associated with payments
of sales commissions to financial consultants. In addition, after the
prospectuses, statements of additional information and annual and interim
reports have been prepared and set in type, the Distributor shall bear the
costs and expenses of printing and distributing any copies thereof which are
to be used in connection with the offering of Shares to selected dealers or
investors pursuant to this Agreement. The Distributor shall bear the costs
and expenses of preparing, printing and distributing any other literature
used by the Distributor or furnished by it for use by selected dealers in
connection with the offering of the Shares to the public and any expenses of
advertising incurred by the Distributor in connection with such offering. It
is understood and agreed that so long as a Distribution Plan pursuant to Rule
12b-1 under the Investment Company Act relating to a Class of Shares remains
in effect, any expenses incurred by the Distributor hereunder in connection
with account maintenance activities relating to such Shares may be paid from
amounts recovered by the Distributor from the Corporation under such plan.

c. The Corporation shall bear the cost and expenses of qualification
of the Shares for sale pursuant to this Agreement and, if necessary or
advisable in connection therewith, of qualifying the Corporation as a broker
or dealer in such states of the United States or other jurisdictions as shall
be selected by the Corporation and the Distributor pursuant to Section 4(c)
hereof and the cost and expenses payable to each such state or jurisdiction
for continuing qualification therein until the Corporation decides to
discontinue such qualification pursuant to Section 4(c) hereof.

Section 8. Indemnification and Contribution.
--------------------------------

a. The Corporation shall indemnify and hold harmless the Distributor
and each person, if any, who controls the Distributor against any loss,
liability, claim, damage or expense (including the cost of investigating or
defending any alleged loss, liability, claim, damage or expense and counsel
fees incurred in connection therewith), as incurred, which may be based upon
the Securities Act, or on any other statute or at common law, on the
ground that the registration statement or related prospectus and statement of
additional information, as from time to time amended and supplemented, or an
annual or interim report to shareholders of the Corporation, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Corporation in writing in connection therewith by the Distributor
specifically for use therein; provided, however, that in no case (i) is the
indemnity of the Corporation in favor of the Distributor and any such
controlling persons to be deemed to protect such Distributor or any such con-
trolling persons thereof against any liability to the Corporation or its
security holders to which the Distributor or any such controlling persons
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of their duties or by reason of the
reckless disregard of their obligations and duties under this Agreement; or
(ii) is the Corporation to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against the Distributor or
any such controlling persons, unless the Distributor or such controlling
persons, as the case may be, shall have notified the Corporation in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any desig-
nated agent), but failure to notify the Corporation of any such claim shall
not relieve it from any liability which it may have to the person against
whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Corporation will be entitled to
participate at its own expense in the defense or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the
Corporation elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to, and in the sole discretion of, the
Distributor or such controlling person or persons, defendant or defendants in
the suit. In the event the Corporation elects to assume the defense of any
such suit and retain such counsel, the Distributor or such controlling person
or persons, defendant or defendants in the suit shall bear the fees and
expenses of any additional counsel retained by them (other than local
counsel), but in case the Corporation does not elect to assume the defense of
any such suit, it will reimburse the Distributor or such controlling person
or persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Corporation shall promptly
notify the Distributor of the commencement of any litigation or proceedings
against the Corporation, any Fund or Class or any of the Corporation's
officers or Directors in connection with the issuance or sale of any of the
Shares.

b. The Distributor shall indemnify and hold harmless the Corporation
and each of its Directors and officers and each person, if any, who controls
the Corporation against any loss, liability, claim, damage or expense
described in the foregoing indemnity contained in subsection (a) of this
Section, but only with respect to statements or omissions made in reliance
upon, and in conformity with, information furnished to the Corporation in
writing by the Distributor specifically for use in the registration statement
or related prospectus and statement of additional information, as from time
to time amended, or the annual or interim reports to shareholders. In case
any action shall be brought against the Corporation or any person so
indemnified, in respect of which indemnity may be sought against the
Distributor, the Distributor shall have the rights and duties given to the
Corporation, and the Corporation and each person so indemnified shall have
the rights and duties given to the Distributor, by the provisions of subsec-
tion (a) of this Section 8.

c. If the indemnification provided for in this Section 8 is unavailable
to, or insufficient to, hold harmless an indemnified party under subsection
(a) or (b) of this Section 8 in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by each indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Corporation on the one hand and the Distributor on the other hand from the
offering of the Shares. The relative benefits received by the Corporation on
the one hand and the Distributor on the other hand shall be deemed to be in
the same proportion as the total proceeds from the offering of the Shares to
which the losses, claims, damages, liabilities or expenses relate received by
the Corporation bear to the sales charges retained by the Distributor in
connection with the sale of such Shares. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in subsections (a) and (b) of this Section 8, any legal or other fees
or expenses reasonably incurred by such party in connection with
investigating or defending any such action or claim. Notwithstanding the
foregoing, in no event will the Distributor be liable for an amount in excess
of the portion of the front-end sales charge retained by the Distributor on
the sale of the Shares which gave rise to the action.

Section 9. Standard of Care. Except to the extent a more stringent
----------------
standard is required by the Investment Company Act or the rules, regulations
or interpretations thereunder, the Distributor shall not be liable to the
Corporation for any act or
omission by the Distributor except for acts or omissions involving willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
imposed by this Agreement. In addition, the Distributor shall not be liable
to the Corporation for any losses, claims, damages, liabilities or expenses
incurred as a result of the selection of FSC as contemplated by Section 5(b)
hereof or any act or omission of FSC.

Section 10. Duration and Termination of this Agreement. This Agreement
------------------------------------------
shall become effective as of the date first above written and shall remain in
force for two years from such date and thereafter, but only for so long as
such continuance is specifically approved at least annually by (i) the
Directors or by the vote of a majority of the outstanding voting securities
of the Corporation and (ii) by the vote of a majority of those Directors who
are not parties to this Agreement or interested persons of any such party
cast in person at a meeting called for the purpose of voting on such
approval.

This Agreement may be terminated at any time, without the payment of any
penalty, by the Directors or by vote of a majority of the outstanding voting
securities of the Corporation, or by the Distributor, on sixty (60) days'
written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment.

The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.

Section 11. Amendments of this Agreement. This Agreement may be
----------------------------
amended by the parties only if such amendment is specifically approved by (i)
the Directors or by the vote of a majority of outstanding voting securities
of the Corporation and (ii) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons
of any such party cast in person at a meeting called for the purpose of
voting on such approval.

Section 12. Governing Law. The provisions of this Agreement shall be
-------------
construed and interpreted in accordance with the laws of the State of New
York as at the time in effect and the applicable provisions of the Investment
Company Act. To the extent that the applicable law of the State of New York,
or any of the provisions herein, conflict with the applicable provisions of
the Investment Company Act, the latter shall control.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

BATTERY PARK FUNDS, INC.

By
-----------------------------------
Title:

NOMURA SECURITIES INTERNATIONAL, INC.

By
-----------------------------------
Title:

Exhibit A

NOMURA SECURITIES INTERNATIONAL, INC.
2 WORLD FINANCIAL CENTER
NEW YORK, NY 10281-1198

DEALER AGREEMENT
----------------

Ladies and Gentlemen:

We act or will act as Distributor for the open-end investment companies
(hereinafter referred to collectively as the "Funds" and individually as a
"Fund") that are or will be series of BATTERY PARK FUNDS, INC. (the
"Corporation"), and act as principal underwriter, as defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
for such Funds. We hereby invite you to act as dealer to distribute shares
of the Funds, as a member of the Corporation's selling group (the "Selling
Group"), on the following terms:

1. NASD Membership and Broker-Dealer Registration. This agreement
----------------------------------------------
(the "Agreement") is conditioned upon your representation and warranty that
you are a member of the National Association of Securities Dealers, Inc. (the
"NASD") and that you will continue to maintain membership in the NASD, and
that you are registered as a broker-dealer under the Securities Exchange Act
of 1934, as amended. You agree to abide by the rules and regulations of the
Securities and Exchange Commission and the NASD, including, without
limitation, Section 2830 of the NASD's Conduct Rules, all of which are
incorporated herein as if set forth in full. You and we further understand
and agree that you will not be entitled to any compensation during any period
in which you have been suspended or expelled from membership in the NASD.

2. Offering Procedures. You and we understand and agree that you
-------------------
will offer and sell shares of a Fund only in accordance with the terms and
conditions of that Fund's then current prospectus, statement of additional
information and any authorized supplemental material supplied by us, and no
person is authorized to make any representation relating to the shares of any
Fund, except those contained in the Fund's then current prospectus, statement
of additional information or any authorized supplemental material supplied by
us. Additional copies of a Fund's then current prospectus and statement of
additional information are and will be available on written request. You and
we further understand and agree that you will use your best efforts in the
development and promotion of sales of shares of a
Fund or Funds, and you will be responsible for the proper instruction and
training of all sales personnel employed by you in order that the shares of
the Funds will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations.

3. Order Procedures. Orders received from you will be accepted only
----------------
at the public offering price applicable to each order, as described in the
current Fund prospectus at the time of the acceptance of the order.
Procedures relating to the handling of orders will be subject to instructions
which we shall forward from time to time to you. All orders are subject to
acceptance or rejection by the Corporation in its sole discretion. No
conditional order will be accepted on any basis other than a definite price.
You and we understand and agree that you are acting as agent of the
Corporation and the Funds under this Agreement and you are in no way
responsible for the manner of our performance or for any of our acts or
omissions in connection therewith.

You agree to place orders received from your customers as soon as
practicable after your receipt of such orders. You further agree that you
will not withhold placement of orders in order to profit from such
withholding; e.g., by a change in the net asset value from that used in
determining the public offering price to your customers.

4. Sales Charges and Dealer Concessions. You and we agree that the
------------------------------------
applicable sales charge (whether assessed on a front-end or deferred
basis) and dealer concession pertaining to any sale of Fund shares will be in
an amount as set forth in the then current prospectus of that Fund.
Additionally, you and we agree that the applicable sales charge and dealer
concession pertaining to sales of any Fund shares pursuant to a right of
accumulation, a letter of intention, or other circumstance permitting a
reduction or waiver of any applicable sales charge or dealer concession will
be in an amount as set forth in the then current prospectus of such Fund.

5. Rule 12b-1 Plan Payments. The provisions of this Paragraph 5 are
------------------------
applicable to each of the Funds which have adopted or which may, in the
future, adopt a plan or plans pursuant to Rule 12b-1 under the Investment
Company Act (each a "Plan"). With respect to each such Fund whose shares are
sold pursuant to this Agreement:

a. The provisions of this Paragraph 5 have been approved by a
majority of the Directors of the Fund, including a majority of the
Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of any Plan or
any of its related agreements (the "non-interested Directors"),
cast in person at a meeting called for the purpose of voting
thereon. Such approval included a determination that in the
exercise of reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders whose shares are subject
to that Plan.

b. The Plan has been approved by a vote of at least a majority of
the Fund's outstanding voting securities, as defined in the Investment
Company Act, which securities are subject to that Plan.

c. As agent of each such Fund, we agree to pay you, or to arrange
for payment to you, pursuant to the Fund's applicable Plan.

d. You shall furnish us (or our designee) and the relevant Fund
with such information as shall reasonably be requested by the Directors
of the Fund with respect to the fees paid to you pursuant to this
Paragraph 5.

e. You understand and agree that a written report of the amounts
expended under the Plan by us, including any payments made to you, and
the purposes for which such expenditures were made, will be furnished to
the Directors of the Fund, for their review, on a quarterly basis.

f. The provisions of this Paragraph 5 may be terminated by the vote
of a majority of the non-interested Directors, or by a vote of a
majority of the Fund's outstanding shares, on sixty (60) days' written
notice without payment of any penalty. Such provisions will be
terminated by any act which terminates either the Corporation's
Distribution Agreement with us or this Dealer Agreement and shall
terminate immediately in the event of the assignment, as that term is
defined in the Investment Company Act, of this Dealer Agreement.

g. The provisions of the Distribution Agreement between the
Corporation, on behalf of the Funds, and us, insofar as they relate to
any Plan, are incorporated herein by reference. The provisions of this
Paragraph 5 shall continue in full force and effect only so long as the
continuance of the relevant Plan and these provisions are approved at
least annually by a vote of the Directors, including a majority of the
non-interested Directors, cast in person at a meeting called for the
purpose of voting thereon.

6. Required Payment for Shares. Payment for shares of a Fund sold
---------------------------
through you shall be made on or before the settlement date specified in
our confirmation by federal funds wire or by check
payable to Federated Shareholder Services Company, Federated Investors
Tower, Pittsburgh, PA 15222-3775, telephone number
1-800-356-2805, transfer agent for the Corporation (the "Transfer Agent").
The Corporation has reserved the right to delay payment of redemption
proceeds until the earlier of (i) seven (7) days from the date of payment by
wire or check of the purchase price of the Shares being redeemed or (ii) the
date the Corporation receives notification from the Transfer Agent such wire
is received or such check has cleared. If such payment for Shares is not
received, we and the Corporation reserve the right, without notice, forthwith
either to cancel the sale, or, at our option, to sell the shares ordered back
to that Fund, and in either case, we may hold you responsible for any loss,
including loss of profit, suffered by us or by that Fund resulting from your
failure to make payment as aforesaid.

7. Redemption of Shares Within Seven Days of Purchase. If any
--------------------------------------------------
shares sold through you under the terms of this Agreement are repurchased
or liquidated by a Fund, or are tendered for liquidation by a Fund, within
seven (7) business days after confirmation of the original order, then,
consistent with the requirements of Section 2830(h) of the NASD's Conduct
Rules, you will forthwith refund to the applicable Fund your share of the
sales charges on the original sale, and we will forthwith refund to that Fund
our share of the full concession allowed to us on the original sale. You
will notify us of such repurchase or liquidation within ten (10) days from
the day on which written redemption requests and, if applicable, share
certificates are delivered to us or to the Fund.

8. Limitation on Authority as Selected Dealer. You and we
------------------------------------------
understand and agree that, except as expressly provided in this Agreement,
in no transaction will you have any authority to take any action or make any
representation binding upon the Corporation, any Fund, us or any other member
of the Selling Group.

9. Funds Offering Multiple Classes of Shares. With respect to
-----------------------------------------
Funds offering multiple classes of shares subject to differing sales
charges, you and we understand and agree that you are solely responsible for
the recommendation by your sales personnel to your customers of the purchase
or sale of shares of any class of shares of any Fund and the suitability of
such purchase or sale for the customer involved.

10. State Securities Qualification. You will not offer shares of
------------------------------
any Fund for sale in any state where such Fund is not qualified for sale
under the blue sky laws and regulations of such state or where you are not
qualified to act as a dealer, except for states in which the Fund or you are
exempt from qualification.

11. Taxpayer Identification Numbers. In order to enable the
-------------------------------
implementation of any required backup withholding, you agree to obtain any
taxpayer identification number certification from your customers required by
the Internal Revenue Code and to provide the Transfer Agent with timely
written notice of any failure to obtain such certification.

12. Amendments. The Corporation reserves the right in its discretion
----------
and we reserve the right, in our discretion and without notice to you or
to any members of the Selling Group, to suspend sales of any Fund, to
withdraw the offering of any Fund, to change the offering price of any Fund,
or to amend, modify or cancel this Agreement and concessions, discounts or
commissions at any time payable or allowable hereunder (including, without
limitation, concessions or commissions on future periodic investments or
reinvestments). This Agreement supersedes any prior agreement between us
regarding these shares.

13. Termination. This Agreement may be terminated by either of us,
-----------
at any time, upon 30 days' written notice.

14. Communications. All communications will be sent to us at our
--------------
offices at Two World Financial Center, New York, New York 10281-1198,
Attn: Steven P. Sorenson, Director. Any notice to you will be duly given if
mailed or telegraphed to you at the address shown on this Agreement.

15. Effectiveness. This Agreement will become effective as of the
-------------
date it is executed and dated by you below.

16. Governing Law. This Agreement and all the rights and obligations
-------------
of the parties hereunder will be governed by and construed under the laws
of the State of New York.

NOMURA SECURITIES INTERNATIONAL, INC.

Dated: _____________ By:_________________________________

Agreed and Accepted:

Dated: _____________ By: Firm Name__________________________

Authorized Signature_______________

Print Name_________________________

Title______________________________

Address____________________________

Insurance Company? ____________________________
City State Zip Code
/ /yes / /no
____________________________
Phone

____________________________
NASD Broker/Dealer No.

____________________________
Clear Trades through
Broker/Dealer

Exhibit B

BATTERY PARK FUNDS, INC.

BATTERY PARK(SERVICE MARK) HIGH YIELD FUND
CLASS A SHARES

The following provisions are hereby incorporated and made part of the
Distribution Agreement dated October __, 1996, between Battery Park Funds,
Inc. (the "Corporation") and Nomura Securities International, Inc. (the
"Distributor") with respect to the above-designated class of shares (the
"Class"):

1. The Corporation hereby appoints the Distributor to engage in activities
principally intended to result in the sale of shares of the Class (the
"Shares"). Pursuant to this appointment, the Distributor is authorized
to select a group of dealers (the "selected dealers") to offer Shares at
the current offering price thereof as described and set forth in the
prospectus and statement of additional information of the Corporation
relating to such Shares.

2. During the term of this Agreement, the Corporation will pay the
Distributor for services pursuant to this Agreement, a monthly fee
computed at the annual rate of 0.25% of 1% of the average daily net
asset value of the Shares held during the month. For the month in which
this Agreement becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the number of
days that the Agreement is in effect during the month.

3. The Distributor may from time to time and for such periods as it deems
appropriate reduce its compensation to the extent the Class expenses
exceed such lower expense limitation as the Distributor may, by notice
to the Corporation, voluntarily declare to be effective.

4. The Distributor will enter into separate written agreements with various
selected dealers, a form of which is attached to the Distribution
Agreement as Exhibit A, to provide certain of the services set forth in
Paragraph 1 herein. The Distributor, in its sole discretion, may pay
selected dealers a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time to
time by the Distributor in its sole discretion.

5. The Distributor will prepare and deliver, or arrange for the preparation
and delivery of, reports to the Board of Directors of the Corporation on
a quarterly basis showing amounts expended hereunder, including amounts
paid to selected dealers, if any, and the purpose for such expenditures.

In consideration of the mutual covenants set forth in the Distribution
Agreement, each party executes and delivers this Exhibit with respect to the
above-designated Class as of the __ day of October, 1996.

BATTERY PARK FUNDS, INC.

______________________________________
By:

NOMURA SECURITIES INTERNATIONAL, INC.

_______________________________________
By:

Exhibit C

BATTERY PARK FUNDS, INC.

BATTERY PARK(SERVICE MARK) HIGH YIELD FUND
CLASS Y SHARES

2. The Distributor will enter into separate written agreements with various
selected dealers, a form of which is attached to the Distribution
Agreement as Exhibit A, to provide certain of the services set forth in
Paragraph 1 herein. The Distributor, in it sole discretion, may pay
selected dealers a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time to
time by the Distributor in its sole discretion.

BATTERY PARK FUNDS, INC.

______________________________________
By:

NOMURA SECURITIES INTERNATIONAL, INC.

_______________________________________
By:

EXHIBIT 8

CUSTODY AGREEMENT

BETWEEN

BATTERY PARK FUNDS, INC.

AND

THE BANK OF NEW YORK

Agreement made as of this first day of October, 1996, between BATTERY PARK
FUNDS, INC., a Maryland Corporation organized and existing under the laws of
the State of Maryland, having its principal office and place of business at 2
World Financial Center, Building B, 25th Floor, New York, NY, 10281-1198
(hereinafter called the "Corporation"), and THE BANK OF NEW YORK, a New York
corporation authorized to do a banking business, having its principal office
and place of business at 48 Wall Street, New York, New York 10286
(hereinafter called the "Custodian").

W I T N E S S E T H :

That for and in consideration of the mutual promises hereinafter set forth,
the Corporation and the Custodian agree as follows:

ARTICLE I

DEFINITIONS

Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:

1. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.

2. "Call Option" shall mean an over the counter or exchange traded option
with respect to Securities other than Stock Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon
timely exercise and payment of the exercise price, as specified therein,
to purchase from the writer thereof the specified underlying Securities.

3. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment
company, or any broker-dealer reasonably believed by the Custodian to be
such a clearing member.

4. "Collateral Account" shall mean an account maintained and specifically
allocated to a Series under the terms of this Agreement as a segregated
account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Corporation
specifically allocated to such Series shall be deposited and withdrawn
from time to time in
accordance with Proper Instructions received by the Custodian in
connection with such transactions as the Corporation may from time to
time determine.

5. "Covered Call Option" shall mean an exchange traded option entitling the
holder, upon timely exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof the specified
underlying Securities (excluding Futures Contracts) which are owned by
the writer thereof and subject to appropriate restrictions.

6. "Depository" shall mean The Depository Corporation Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission,
its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized
to act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Corporation's
Board of Directors specifically approving deposits therein by the
Custodian and those book-entry systems approved pursuant to Rule 17f-4
under the Investment Company Act of 1940, by the Corporation's Board of
Directors.

7. "Derivative" shall mean puts, calls, straddles, futures, forwards,
interest rate swaps, caps, collars, ceilings and floors and other
interest rate protection instruments and any related options, and
currency swaps.

8. "Financial Futures Contract" shall mean the firm commitment to buy or
sell fixed income securities including, without limitation, U.S.
Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic
bank certificates of deposit, and Eurodollar certificates of deposit,
during a specified month at an agreed upon price.

9. "Futures Contract" shall mean a Financial Futures Contract and/or Stock
Index Futures Contracts.

10. "Futures Contract Option" shall mean an option with respect to a Futures
Contract.

11. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in
the name of the Corporation for the benefit of a broker, dealer, futures
commission merchant, or Clearing Member, or otherwise, in accordance
with an agreement between the Corporation, the Custodian and a broker,
dealer, futures commission merchant or a Clearing Member (a "Margin
Account Agreement"), separate and distinct from the custody account, in
which certain Securities and/or money of the Corporation shall be
deposited and withdrawn from time to time in connection with such
transactions as the Corporation may from time to time determine.
Securities held in the Book-Entry System or the Depository shall be
deemed to have been deposited in, or withdrawn from, a Margin Account
upon the Custodian's effecting an appropriate entry in its books and
records.

12. "Money Market Security" shall be deemed to include, without limitation,
certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United
States or agencies or instrumentalities thereof, any tax, bond or
revenue anticipation note issued by any state or municipal government or
public authority, commercial paper, certificates of deposit and bankers'
acceptances, repurchase agreements with respect to the same and bank
time deposits, and such other instruments and agreements where the
purchase and sale of such securities and instruments normally requires
settlement in federal funds on the same day as such purchase or sale.

13. "O.C.C." shall mean the Options Clearing Corporation, a clearing agency
registered under Section17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.

14. "Officers" shall be deemed to include the President, any Vice President,
the Secretary, the Treasurer, the Controller, any Assistant Secretary,
any Assistant Treasurer, and any other person or persons, whether or not
any such other person is an officer of the Corporation, duly authorized
by the Board of Directors of the Corporation to execute any Proper
Instruction, instruction, notice or other instrument on behalf of the
Corporation and listed in the Authorized and Proper Instructions annexed
hereto as Appendix A or such other Proper Instruction as may be received
by the Custodian from time to time.

15. "Option" shall mean a Call Option, Covered Call Option, Stock Index
Option and/or a Put Option.

16. "Proper Instruction" shall mean any oral or written notice, instruction,
or other instrument, authorized or required by this Agreement to be
given to the Custodian which is actually received by the Custodian and,
authorized on behalf of the Corporation by the kind and number of
Officers designated in the Corporation's Authorized and Proper
Instructions, and the term Proper Instruction shall also include
instructions by the Corporation to the Custodian communicated by a
Terminal Link.

17. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and
Futures Contract Options entitling the holder, upon timely exercise and
tender of the specified underlying Securities, to sell such Securities
to the writer thereof for the exercise price.

18. "Reverse Repurchase Agreement" shall mean an agreement pursuant to which
the Corporation sells Securities and agrees to repurchase such
Securities at a described or specified date and price.

19. "Security" shall be deemed to include, without limitation, Money Market
Securities, Derivatives, Call Options, Put Options, Stock Index Options,
Stock Index Futures Contracts, Stock Index Futures Contract Options,
Financial Futures Contracts, Financial Futures Contract Options, Reverse
Repurchase Agreements, common stocks and other securities having
characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development bonds),
asset-backed securities and obligations, bonds, debentures, notes,
mortgages or other obligations, and any combination of any of the
foregoing to create "synthetic" securities or
otherwise and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe for the
same, or evidencing or representing any other rights or interest
therein, or any property or assets.

20. "Series" shall mean the various portfolios, if any, of the Corporation
as described from time to time in the current and effective prospectus
for the Corporation.

21. "Shares" shall mean the shares of capital stock of the Corporation, each
of which is, in the case of a Corporation having Series, allocated to a
particular Series.

22. "Stock Index Futures Contract" shall mean a bilateral agreement pursuant
to which the parties agree to take or make delivery of an amount of cash
equal to a specified dollar amount times the difference between the
value of a particular stock index at the close of the last business day
of the contract and the price at which the futures contract is
originally struck.

23. "Stock Index Option" shall mean an exchange traded option entitling the
holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of
the index on the date of exercise.

24. "Terminal Link" shall mean an electronic data transmission link between
the Corporation and the Custodian requiring in connection with each use
of the Terminal Link by or on behalf of the Corporation use of an
authorization code provided by the Custodian and at least two access
codes established by the Corporation.

ARTICLE II

APPOINTMENT OF CUSTODIAN

1. The Corporation hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned by the
Corporation during the period of this Agreement.

2. The Custodian hereby accepts appointment as such custodian and agrees to
perform the duties thereof as hereinafter set forth.

ARTICLE III

CUSTODY OF CASH AND SECURITIES

1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Corporation will deliver or cause to be delivered to
the Custodian all Securities and all moneys owned by it, at any time
during the period of this Agreement, and shall specify with respect to
such Securities and money the Series to which the same are specifically
allocated. The Custodian shall segregate, keep and maintain the assets
of each Series separate and apart from the other Series and from the
Custodian's own assets and assets it holds for others, regardless
of capacity, and shall maintain books and records adequate to reflect
the ownership of Securities and moneys held hereunder. The Custodian
will not be responsible for any Securities and moneys not actually
received by it. The Custodian will be entitled to reverse any credits
made to the Corporation's cash balance on the Corporation's behalf where
such credits have been previously made and moneys are not finally
collected. The Corporation shall deliver to the Custodian a certified
resolution of the Board of Directors of the Corporation, substantially
in the form of Exhibit A hereto, approving, authorizing and instructing
the Custodian on a continuous and on-going basis to deposit in the
Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically allocated
and to utilize the Book-Entry System to the extent possible in
connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of
Securities, loans of Securities and deliveries and returns of Securities
collateral. Prior to a deposit of Securities specifically allocated to
a Series in the Depository, the Corporation shall deliver to the
Custodian a certified resolution of the Board of Directors of the
Corporation, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing
basis until instructed to the contrary by a Proper Instruction actually
received by the Custodian to deposit in the Depository all Securities
specifically allocated to such Series eligible for deposit therein, and
to utilize the Depository to the extent possible with respect to such
Securities in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
Securities collateral. Securities and moneys deposited in either the
Book-Entry System or the Depository will be represented in accounts
which include only assets held by the Custodian for customers,
including, but not limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and will be specifically allocated
on the Custodian's books to the separate account for the applicable
Series. Recognizing that only a confirmation and not an actual security
is received when dealing with Options and Derivatives, prior to the
Custodian's accepting, utilizing and acting with respect to Clearing
Member confirmations for Options and Derivatives and transactions in
Options and Derivatives for a Series as provided in this Agreement, the
Custodian shall have received a Proper Instruction, substantially in the
form of Exhibit C hereto, approving, authorizing and instructing the
Custodian on a continuous and on-going basis, until instructed to the
contrary by a Proper Instruction actually received by the Custodian, to
accept, utilize and act in accordance with such confirmations as
provided in this Agreement with respect to such Series.

2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each
Series all moneys received by it for the account of the Corporation with
respect to such Series. Money credited to a separate account for a
Series shall be disbursed by the Custodian only:

(a) As hereinafter provided;

(b) Pursuant to Proper Instructions setting forth the name and address
of the person to whom the payment is to be made, the Series account
from which payment is to be made and the purpose for which payment
is to be made; or

(c) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to such Series upon
invoice and instruction to pay.

3. Promptly after the close of business on each day, the Custodian shall
furnish the Corporation with confirmations and a summary, on a per
Series basis, of all transfers to or from the account of the Corporation
for a Series during said day, either hereunder or with any co-custodian
or sub-custodian appointed in accordance with this Agreement. Where
Securities are transferred to the account of the Corporation for a
Series, the Custodian shall also by book-entry or otherwise identify as
belonging to such Series a quantity of Securities in a fungible bulk of
Securities registered in the name of the Custodian (or its nominee) as
Custodian for the Corporation or shown on the Custodian's account on the
books of the Book-Entry System or the Depository. At least monthly and
from time to time, the Custodian shall furnish the Corporation with a
detailed statement, on a per Series basis, of the Securities and moneys
held by the Custodian for the Corporation.

4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are
held in the Book-Entry System, shall be held by the Custodian in that
form; all other Securities held hereunder may be registered in the name
of the Corporation or its nominee, in the name of any duly appointed
registered nominee of the Custodian, as Custodian for the Corporation,
as the Custodian may from time to time determine, or in the name of the
Book-Entry System or the Depository or their successor or successors, or
their nominee or nominees. The Corporation agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the
Depository any Securities which it may hold hereunder and which may from
time to time be registered in the name of the Corporation or its
nominee. The Custodian shall hold all such Securities specifically
allocated to a Series which are not held in the Book-Entry System or in
the Depository in a separate account in the name of such Series
physically segregated at all times from those of any other person or
persons.

5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Proper Instruction, the Custodian by
itself, or through the use of the Book-Entry System or the Depository
with respect to Securities held hereunder and therein deposited, shall
with respect to all Securities held for the Corporation hereunder in
accordance with preceding paragraph 4:

(a) Collect all income due or payable;

(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian
receives a written notice of such call, or (ii) notice of such call
appears in one or more of the publications listed in Appendix B
annexed hereto, which may be amended at any time by the Custodian
without the prior notification or consent of the Corporation,
although the Custodian will give the Corporation notice as soon as
practical;

(d) Surrender Securities in temporary form for definitive Securities;

(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and

(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to
any Securities held by the Custodian for such Series hereunder.

6. Upon receipt of a Proper Instruction and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository,
shall:

(a) Execute and deliver to such persons as may be designated in such
Proper Instruction proxies, consents, authorizations, and any other
instruments whereby the authority of the Corporation as owner of
any Securities held by the Custodian hereunder for the Series
specified in such Proper Instruction may be exercised;

(b) Deliver any Securities held by the Custodian hereunder for the
Series specified in such Proper Instruction in exchange for other
Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any
conversion privilege and receive and hold hereunder specifically
allocated to such Series any cash or other Securities received in
exchange;

(c) Deliver any Securities held by the Custodian hereunder for the
Series specified in such Proper Instruction to any protective
committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and receive
and hold hereunder specifically allocated to such Series such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;

(d) Make such transfers or exchanges of the assets of the Series
specified in such Proper Instruction, and take such other steps as
shall be stated in such Proper Instruction to be for the purpose of
effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Corporation; and

(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Proper Instruction.

7. Notwithstanding any provision elsewhere contained herein, the Custodian
shall not be required to obtain possession of any instrument or
certificate representing any Derivative, Futures Contract, any Option,
or any Futures Contract Option until after it shall have determined, or
shall have received a Proper Instruction from the Corporation stating,
that any such instruments or certificates are available. The
Corporation shall deliver to the Custodian such a Proper Instruction no
later than the business day preceding the availability of any such
instrument or certificate. Prior to such availability, the Custodian
shall comply with Section 17(f) of the Investment Company Act of 1940,
as amended, in connection with the purchase, sale, settlement, closing
out or writing of Derivatives, Futures Contracts, Options, or Futures
Contract Options by making payments or deliveries specified in Proper
Instructions received by the Custodian in connection with any such
purchase, sale, writing, settlement or closing out upon its receipt from
a broker, dealer, or futures commission merchant of a statement or
confirmation reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or future commission merchants
with respect to such Derivatives, Futures Contracts, Options, or Futures
Contract Options, as the case may be, confirming that such Security is
held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of the Custodian (or any
nominee of the Custodian) as custodian for the Corporation, provided,
however, that notwithstanding the foregoing, payments to or deliveries
from the Margin Account, and payments with respect to Securities to
which a Margin Account relates, shall be made in accordance with the
terms and conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make
payment for any Derivative, Futures Contract, Option, or Futures
Contract Option for which such instruments or such certificates are
available only against the delivery to the Custodian of such instrument
or such certificate, and deliver any Derivative, Futures Contract,
Option or Futures Contract Option for which such instruments or such
certificates are available only against receipt by the Custodian of
payment therefor. Any such instrument or certificate delivered to the
Custodian shall be held by the Custodian hereunder in accordance with,
and subject to, the provisions of this Agreement.

ARTICLE IV

PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS

1. Promptly after each purchase of Securities by the Corporation, other
than a purchase of an Option, a Futures Contract, or a Futures Contract
Option, the Corporation shall deliver to the Custodian (a) the Series to
which such Securities are to be specifically allocated; (b) the name of
the issuer and the title of the Securities; (c) the number of shares or
the principal amount purchased and accrued interest, if any; (d) the
date of purchase and settlement; (e) the purchase price per unit; (f)
the total amount payable upon such purchase; (g) the name of the person
from whom or the broker through whom the purchase was made, and the name
of the clearing broker, if any; and (h) the name of the broker to whom
payment is to be made. The Custodian shall, upon receipt of Securities
purchased by or for the Corporation, pay to the broker specified in the
Proper Instruction out of the moneys held for the account of such Series
the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Proper
Instruction.

2. Promptly after each sale of Securities by the Corporation, other than a
sale of any Option, Futures Contract, Futures Contract Option, or any
Reverse Repurchase Agreement, the Corporation shall deliver to the
Custodian (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c)
the number of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale; (e) the sale price per unit; (f) the total
amount payable to the Corporation upon such sale; (g) the name of the
broker through whom or the person to whom the sale was made, and the
name of the clearing broker, if any; and (h) the name of the broker to
whom the Securities are to be delivered. The Custodian shall deliver
the Securities specifically allocated to such Series to the broker
specified in the Proper Instruction against payment of the total amount
payable to the Corporation upon such sale, provided that the same
conforms to the total amount payable as set forth in such Proper
Instruction.

ARTICLE V

OPTIONS

1. Promptly after the purchase of any Option by the Corporation, the
Corporation shall deliver to the Custodian a Proper Instruction
specifying with respect to each Option purchased: (a) the Series to
which such Option is specifically allocated; (b) the type of Option (put
or call); (c) the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Stock Index Option, the
stock index to which such Option relates and the number of Stock Index
Options purchased; (d) the expiration date; (e) the exercise price; (f)
the dates of purchase and settlement; (g) the total amount payable by
the Corporation in connection with such purchase; (h) the name of the
Clearing Member through whom such Option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian shall pay,
upon receipt of a Clearing Member's statement confirming the purchase of
such Option held by such Clearing Member for the account of the
Custodian (or any duly appointed and registered nominee of the
Custodian) as custodian for the Corporation, out of moneys held for the
account of the Series to which such Option is to be specifically
allocated, the total amount payable upon such purchase to the Clearing
Member through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Proper
Instruction.

2. Promptly after the sale of any Option purchased by the Corporation
pursuant to paragraph 1 hereof, the Corporation shall deliver to the
Custodian a Proper Instruction specifying with respect to each such
sale: (a) the Series to which such Option was specifically allocated;
(b) the type of Option (put or call); (c) the name of the issuer and the
title and number of shares subject to such Option or, in the case of a
Stock Index Option, the stock index to which such Option relates and the
number of Stock Index Options sold; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the
Corporation upon such sale; and (h) the name of the Clearing Member
through whom the sale was made. The Custodian shall consent to the
delivery of the Option sold by the Clearing Member which previously
supplied the confirmation described in preceding paragraph 1 of this
Article with
respect to such Option against payment to the Custodian of the total
amount payable to the Corporation, provided that the same conforms to
the total amount payable as set forth in such Proper Instruction.

3. Promptly after the exercise by the Corporation of any Call Option
purchased by the Corporation pursuant to paragraph 1 hereof, the
Corporation shall deliver to the Custodian a Proper Instruction
specifying with respect to such Call Option: (a) the Series to which
such Call Option was specifically allocated; (b) the name of the issuer
and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid by the
Corporation upon such exercise; and (g) the name of the Clearing Member
through whom such Call Option was exercised. The Custodian shall, upon
receipt of the Securities underlying the Call Option which was
exercised, pay out of the moneys held for the account of the Series to
which such Call Option was specifically allocated the total amount
payable to the Clearing Member through whom the Call Option was
exercised, provided that the same conforms to the total amount payable
as set forth in such Proper Instruction.

4. Promptly after the exercise by the Corporation of any Put Option
purchased by the Corporation pursuant to paragraph 1 hereof, the
Corporation shall deliver to the Custodian a Proper Instruction
specifying with respect to such Put Option: (a) the Series to which such
Put Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid to the
Corporation upon such exercise; and (g) the name of the Clearing Member
through whom such Put Option was exercised. The Custodian shall, upon
receipt of the amount payable upon the exercise of the Put Option,
deliver or direct the Depository to deliver the Securities specifically
allocated to such Series, provided the same conforms to the amount
payable to the Corporation as set forth in such Proper Instruction.

5. Promptly after the exercise by the Corporation of any Stock Index Option
purchased by the Corporation pursuant to paragraph 1 hereof, the
Corporation shall deliver to the Custodian a Proper Instruction
specifying with respect to such Stock Index Option: (a) the Series to
which such Stock Index Option was specifically allocated; (b) the type
of Stock Index Option (put or call); (c) the number of Options being
exercised; (d) the stock index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the total amount to be
received by the Corporation in connection with such exercise; and (h)
the Clearing Member from whom such payment is to be received. The
Custodian shall remove such Stock Index Option from the Corporation's
listing of assets and credit the Corporation's cash account timely upon
receipt of such amount by the Custodian.

6. Whenever the Corporation writes a Covered Call Option, the Corporation
shall promptly deliver to the Custodian a Proper Instruction specifying
with respect to such Covered Call Option: (a) the Series for which such
Covered Call Option was written; (b) the name of the issuer and the
title and number of shares for which the Covered Call Option was written
and which underlie the same; (c) the expiration date; (d) the exercise
price; (e) the premium to be received by the Corporation; (f) the date
such Covered Call Option was written; and (g) the
name of the Clearing Member through whom the premium is to be received.
The Custodian shall deliver or cause to be delivered, in exchange for
receipt of the premium specified in the Proper Instruction with respect
to such Covered Call Option, such receipts as are required in accordance
with the customs prevailing among Clearing Members dealing in Covered
Call Options and shall impose, or direct the Depository to impose, upon
the underlying Securities specified in the Proper Instruction
specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the Custodian
has the right, upon prior written notification to the Corporation and in
order to maintain compliance with O.C.C. Rules limiting the amount of
receipts a bank can issue in relation to its capital, at any time to
refuse to issue any receipts for Securities in the possession of the
Custodian and not deposited with the Depository underlying a Covered
Call Option.

7. Whenever a Covered Call Option written by the Corporation and described
in the preceding paragraph of this Article is exercised, the Corporation
shall promptly deliver to the Custodian a Proper Instruction instructing
the Custodian to deliver, or to direct the Depository to deliver, the
Securities subject to such Covered Call Option and specifying: (a) the
Series for which such Covered Call Option was written; (b) the name of
the issuer and the title and number of shares subject to the Covered
Call Option; (c) the Clearing Member to whom the underlying Securities
are to be delivered; and (d) the total amount payable to the Corporation
upon such delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian shall
deliver, or direct the Depository to deliver, the underlying Securities
as specified in the Proper Instruction against payment of the amount to
be received as set forth in such Proper Instruction.

8. Whenever the Corporation writes a Put Option, the Corporation shall
promptly deliver to the Custodian a Proper Instruction specifying with
respect to such Put Option: (a) the Series for which such Put Option was
written; (b) the name of the issuer and the title and number of shares
for which the Put Option is written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received
by the Corporation; (f) the date such Put Option is written; (g) the
name of the Clearing Member through whom the premium is to be received
and to whom a Put Option guarantee letter is to be delivered; (h) the
amount of cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; and (i) the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to
be deposited into the Collateral Account for such Series. The Custodian
shall, after making the deposits into the Collateral Account specified
in the Proper Instruction, issue a Put Option guarantee letter
substantially in the form utilized by the Custodian on the date hereof,
and deliver the same to the Clearing Member specified in the Proper
Instruction against receipt of the premium specified in said Proper
Instruction. Notwithstanding the foregoing, the Custodian shall be
under no obligation to issue any Put Option guarantee letter or similar
document if it is unable to make any of the representations contained
therein.

9. Whenever a Put Option written by the Corporation and described in the
preceding paragraph is exercised, the Corporation shall promptly deliver
to the Custodian a Proper Instruction specifying: (a) the Series to
which such Put Option was written; (b) the name of the issuer and title
and number of shares subject to the Put Option; (c) the Clearing Member
from whom the
underlying Securities are to be received; (d) the total amount payable
by the Corporation upon such delivery; (e) the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to
be withdrawn from the Collateral Account for such Series and (f) the
amount of cash and/or the amount and kind of Securities, specifically
allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in
connection with such Put Option, the Custodian shall pay out of the
moneys held for the account of the Series to which such Put Option was
specifically allocated the total amount payable to the Clearing Member
specified in the Proper Instruction as set forth in such Proper
Instruction against delivery of such Securities, and shall make the
withdrawals specified in such Proper Instruction.

10. Whenever the Corporation writes a Stock Index Option, the Corporation
shall promptly deliver to the Custodian a Proper Instruction specifying
with respect to such Stock Index Option: (a) the Series for which such
Stock Index Option was written; (b) whether such Stock Index Option is a
put or a call; (c) the number of options written; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such Option was written; (h)
the premium to be received by the Corporation; (i) the amount of cash
and/or the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in the Collateral Account for such
Series; and (j) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be
deposited in a Margin Account, and the name in which such account is to
be or has been established. The Custodian shall, upon receipt of the
premium specified in the Proper Instruction, make the deposits, if any,
into the Collateral Account specified in the Proper Instruction, and
either (1) deliver such receipts, if any, which the Custodian has
specifically agreed to issue, which are in accordance with the customs
prevailing among Clearing Members in Stock Index Options and make the
deposits into the Collateral Account specified in the Proper
Instruction, or (2) make the deposits into the Margin Account specified
in the Proper Instruction.

11. Whenever a Stock Index Option written by the Corporation and described
in the preceding paragraph of this Article is exercised, the Corporation
shall promptly deliver to the Custodian a Proper Instruction specifying
with respect to such Stock Index Option: (a) the Series for which such
Stock Index Option was written; (b) such information as may be necessary
to identify the Stock Index Option being exercised; (c) the Clearing
Member through whom such Stock Index Option is being exercised; (d) the
total amount payable upon such exercise, and whether such amount is to
be paid by or to the Corporation; (e) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Margin Account;
and (f) the amount of cash and/or amount and kind of Securities, if any,
to be withdrawn from the Collateral Account for such Series. Upon the
return and/or cancellation of the receipt, if any, delivered pursuant to
the preceding paragraph of this Article, the Custodian shall pay out of
the moneys held for the account of the Series to which such Stock Index
Option was specifically allocated to the Clearing Member specified in
the Proper Instruction the total amount payable, if any, as specified
therein.

12. Whenever the Corporation purchases any Option identical to a previously
written Option described in paragraphs, 6, 8 or 10 of this Article in a
transaction expressly designated by the Corporation's adviser as
a"'Closing Purchase Transaction" in order to liquidate its position as a
writer of an Option, the Corporation shall promptly deliver to the
Custodian a Proper Instruction specifying with respect to the Option
being purchased: (a) that the transaction is a Closing Purchase
Transaction; (b) the Series for which the Option was written; (c) the
name of the issuer and the title and number of shares subject to the
Option, or, in the case of a Stock Index Option, the stock index to
which such Option relates and the number of Options held; (d) the
exercise price; (e) the premium to be paid by the Corporation; (f) the
expiration date; (g) the type of Option (put or call); (h) the date of
such purchase; (i) the name of the Clearing Member to whom the premium
is to be paid; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account, or a
specified Margin Account, for such Series. Upon the Custodian's payment
of the premium and the return and/or cancellation of any receipt issued
pursuant to paragraphs 6, 8 or 10 of this Article with respect to the
Option being liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the
previously imposed restrictions on the Securities underlying the Call
Option.

13. Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the
Corporation and described in this Article, the Custodian shall delete
such Option from the statements delivered to the Corporation pursuant to
paragraph 3 Article III herein, and upon the return and/or cancellation
of any receipts issued by the Custodian, shall make such withdrawals
from the Collateral Account, and the Margin Account as may be specified
in a Proper Instruction received in connection with such expiration,
exercise, or consummation.

ARTICLE VI

FUTURES CONTRACTS

1. Whenever the Corporation shall enter into a Futures Contract, the
Corporation shall deliver to the Custodian a Proper Instruction
specifying with respect to such Futures Contract, (or with respect to
any number of identical Futures Contract(s)): (a) the Series for which
the Futures Contract is being entered; (b) the category of Futures
Contract (the name of the underlying stock index or financial
instrument); (c) the number of identical Futures Contracts entered into;
(d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity
date; (f) whether the Corporation is buying (going long) or selling
(going short) on such Futures Contract(s); (g) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in the
Collateral Account for such Series; (h) the name of the broker, dealer,
or futures commission merchant through whom the Futures Contract was
entered into; and (i) the amount of fee or commission, if any, to be
paid and the name of the broker, dealer, or futures commission merchant
to whom such amount is to be paid. The Custodian shall make the
deposits, if any, to the Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The Custodian shall make
payment out of the moneys specifically allocated to
such Series of the fee or commission, if any, specified in the Proper
Instruction and deposit in the Collateral Account for such Series the
amount of cash and/or the amount and kind of Securities specified in
said Proper Instruction.

2. (a) Any variation margin payment or similar payment required to be made
by the Corporation to a broker, dealer, or futures commission
merchant with respect to an outstanding Futures Contract, shall be
made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.

(b) Any variation margin payment or similar payment from a broker,
dealer, or futures commission merchant to the Corporation with
respect to an outstanding Futures Contract, shall be received and
dealt with by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

3. Whenever a Futures Contract held by the Custodian hereunder is retained
by the Corporation until delivery or settlement is made on such Futures
Contract, the Corporation shall deliver to the Custodian a Proper
Instruction specifying: (a) the Futures Contract and the Series to which
the same relates; (b) with respect to a Stock Index Futures Contract,
the total cash settlement amount to be paid or received, and with
respect to a Financial Futures Contract, the Securities and/or amount of
cash to be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn
from the Collateral Account for such Series. The Custodian shall make
the payment or delivery specified in the Proper Instruction, and delete
such Futures Contract from the statements delivered to the Corporation
pursuant to paragraph 3 of Article III herein.

4. Whenever the Corporation shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Corporation shall
deliver to the Custodian a Proper Instruction specifying: (a) the items
of information required in a Proper Instruction described in paragraph 1
of this Article, and (b) the Futures Contract being offset. The
Custodian shall make payment out of the money specifically allocated to
such Series of the fee or commission, if any, specified in the Proper
Instruction and delete the Futures Contract being offset from the
statements delivered to the Corporation pursuant to paragraph 3 of
Article III herein, and make such withdrawals from the Senior Security
Account for such Series as may be specified in such Proper Instruction.
The withdrawals, if any, to be made from the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.

ARTICLE VII

FUTURES CONTRACT OPTIONS

1. Promptly after the purchase of any Futures Contract Option by the
Corporation, the Corporation shall promptly deliver to the Custodian a
Proper Instruction specifying with respect to such Futures Contract
Option: (a) the Series to which such Option is specifically
allocated; (b) the type of Futures Contract Option (put or call); (c)
the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option purchased; (d) the expiration date; (e) the exercise
price; (f) the dates of purchase and settlement; (g) the amount of
premium to be paid by the Corporation upon such purchase; (h) the name
of the broker or futures commission merchant through whom such option
was purchased; and (i) the name of the broker, or futures commission
merchant, to whom payment is to be made. The Custodian shall pay out of
the moneys specifically allocated to such Series, the total amount to be
paid upon such purchase to the broker or futures commissions merchant
through whom the purchase was made, provided that the same conforms to
the amount set forth in such Proper Instruction.

2. Promptly after the sale of any Futures Contract Option purchased by the
Corporation pursuant to paragraph 1 hereof, the Corporation shall
promptly deliver to the Custodian a Proper Instruction specifying with
respect to each such sale: (a) Series to which such Futures Contract
Option was specifically allocated; (b) the type of Future Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the
sale price; (f) the date of settlement; (g) the total amount payable to
the Corporation upon such sale; and (h) the name of the broker of
futures commission merchant through whom the sale was made. The
Custodian shall consent to the cancellation of the Futures Contract
Option being closed against payment to the Custodian of the total amount
payable to the Corporation, provided the same conforms to the total
amount payable as set forth in such Proper Instruction.

3. Whenever a Futures Contract Option purchased by the Corporation pursuant
to paragraph 1 is exercised by the Corporation, the Corporation shall
promptly deliver to the Custodian a Proper Instruction specifying: (a)
the Series to which such Futures Contract Option was specifically
allocated; (b) the particular Futures Contract Option (put or call)
being exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the date of exercise; (e) the name of the broker or
futures commission merchant through whom the Futures Contract Option is
exercised; (f) the net total amount, if any, payable by the Corporation;
(g) the amount, if any, to be received by the Corporation; and (h) the
amount of cash and/or the amount and kind of Securities to be deposited
in the Collateral Account for such Series. The Custodian shall make,
out of the moneys and Securities specifically allocated to such Series,
the payments, if any, and the deposits, if any, into the Collateral
Accounts specified in the Proper Instruction. The deposits, if any, to
be made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.

4. Whenever the Corporation writes a Futures Contract Option, the
Corporation shall promptly deliver to the Custodian a Proper Instruction
specifying with respect to such Futures Contract Option: (a) the Series
for which such Futures Contract Option was written; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the
Corporation; (g) the name of the broker or futures commission merchant
through whom the premium is to be received; and (h) the amount of cash
and/or the amount and kind of
Securities, if any, to be deposited in the Collateral Account for such
Series. The Custodian shall, upon receipt of the premium specified in
the Proper Instruction, make out of the moneys and Securities
specifically allocated to such Series the deposits into the Collateral
Account, if any, as specified in the Proper Instruction. The deposits,
if any, to be made to the Margin Account shall be made by the Custodian
in accordance with the terms and conditions of the Margin Account
Agreement.

5. Whenever a Futures Contract Option written by the Corporation which is a
call is exercised, the Corporation shall promptly deliver to the
Custodian a Proper Instruction specifying: (a) the Series to which such
Futures Contract Option was specifically allocated; (b) the particular
Futures Contract Option exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the name of the broker or
futures commission merchant through whom such Futures Contract Option
was exercised; (e) the net total amount, if any, payable to the
Corporation upon such exercise; (f) the net total amount, if any,
payable by the Corporation upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited in the
Collateral Account for such Series. The Custodian shall, upon its
receipt of the net total amount payable to the Corporation, if any,
specified in such Proper Instruction make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Proper Instruction. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

6. Whenever a Futures Contract Option which is written by the Corporation
and which is a put is exercised, the Corporation shall promptly deliver
to the Custodian a Proper Instruction specifying: (a) the Series to
which such Option was specifically allocated; (b) the particular Futures
Contract Option exercised; (c) the type of Futures Contract underlying
such Futures Contract Option; (d) the name of the broker or futures
commission merchant through whom such Futures Contract Option is
exercised; (e) the net total amount, if any, payable to the Corporation
upon such exercise; (f) the net total amount, if any, payable by the
Corporation upon such exercise; and (g) the amount and kind of
Securities and/or cash to be withdrawn from or deposited in, the
Collateral Account for such Series, if any. The Custodian shall, upon
its receipt of the net total amount payable to the Corporation, if any,
specified in the Proper Instruction, make out of the moneys and
Securities specifically allocated to such Series, the payments, if any,
and the deposits, if any, into the Senior Security Account as specified
in the Proper Instruction. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.

7. Whenever the Corporation purchases any Futures Contract Option identical
to a previously written Futures Contract Option described in this
Article in order to liquidate its position as a writer of such Futures
Contract Option, the Corporation shall promptly deliver to the Custodian
a Proper Instruction specifying with respect to the Futures Contract
Option being purchased: (a) the Series to which such Option is
specifically allocated; (b) that the transaction is a closing
transaction; (c) the type of Future Contract and such other information
as may be necessary to identify the Futures Contract underlying the
Futures Option Contract; (d) the exercise price; (e) the premium to be
paid by the Corporation; (f) the expiration date; (g) the
name of the broker or futures commission merchant to whom the premium is
to be paid; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account for such
Series. The Custodian shall effect the withdrawals from the Collateral
Account specified in the Proper Instruction. The withdrawals, if any,
to be made from the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.

8. Upon the expiration, exercise, or consummation of a closing transaction
with respect to, any Futures Contract Option written or purchased by the
Corporation and described in this Article, the Custodian shall (a)
delete such Futures Contract Option from the statements delivered to the
Corporation pursuant to paragraph 3 of Article III herein and, (b) make
such withdrawals from and/or in the case of an exercise such deposits
into the Collateral Account as may be specified in a Proper Instruction.
The deposits to and/or withdrawals from the Margin Account, if any,
shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

9. Futures Contracts acquired by the Corporation through the exercise of a
Futures Contract Option described in this Article shall be subject to
Article VI hereof.

ARTICLE VIII

SHORT SALES

1. Promptly after any short sales by any Series of the Corporation, the
Corporation shall promptly deliver to the Custodian a Proper Instruction
specifying: (a) the Series for which such short sale was made; (b) the
name of the issuer and the title of the Security; (c) the number of
shares or principal amount sold, and accrued interest or dividends, if
any; (d) the dates of the sale and settlement; (e) the sale price per
unit; (f) the total amount credited to the Corporation upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h) the
amount of cash and/or the amount and kind of Securities, if any, to be
deposited in a Collateral Account, and (i) the name of the broker
through whom such short sale was made. The Custodian shall upon its
receipt of a statement from such broker confirming such sale and that
the total amount credited to the Corporation upon such sale, if any, as
specified in the Proper Instruction is held by such broker for the
account of the Custodian (or any nominee of the Custodian) as custodian
of the Corporation, issue a receipt or make the deposits into the Margin
Account and the Collateral Account specified in the Proper Instruction.

2. In connection with the closing-out of any short sale, the Corporation
shall promptly deliver to the Custodian a Proper Instruction specifying
with respect to each such closing out: (a) the Series for which such
transaction is being made; (b) the name of the issuer and the title of
the Security; (c) the number of shares or the principal amount, and
accrued interest or dividends, if any, required to effect such
closing-out to be delivered to the broker; (d) the dates of closing-out
and settlement; (e) the purchase price per unit; (f) the net total
amount payable to
the Corporation upon such closing-out; (g) the net total amount payable
to the broker upon such closing-out; (h) the amount of cash and the
amount and kind of Securities to be withdrawn, if any, from the Margin
Account; (i) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account; and (j)
the name of the broker through whom the Corporation is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Corporation upon such closing-out, and the return and/or
cancellation of the receipts, if any, issued by the Custodian with
respect to the short sale being closed-out, pay out of the moneys held
for the account of the Corporation to the broker the net total amount
payable to the broker, and make the withdrawals from the Margin Account
and the Collateral Account, as the same are specified in the Proper
Instruction.

ARTICLE IX

REVERSE REPURCHASE AGREEMENTS

1. Promptly after the Corporation enters a Reverse Repurchase Agreement
with respect to Securities held by the Custodian hereunder, the
Corporation shall deliver to the Custodian a Proper Instruction, or in
the event such Reverse Repurchase Agreement is a Money Market Security,
a Proper Instruction specifying: (a) the Series for which the Reverse
Repurchase Agreement is entered; (b) the total amount payable to the
Corporation in connection with such Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the names of the counterparty
and of the broker or dealer through or with whom the Reverse Repurchase
Agreement is entered; (d) the amount and kind of Securities to be
delivered by the Corporation to such broker or dealer; (e) the date of
such Reverse Repurchase Agreement; and (f) the amount of cash and/or the
amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in a Senior Security Account for such Series in
connection with such Reverse Repurchase Agreement. The Custodian shall,
upon receipt of the total amount payable to the Corporation specified in
the Proper Instruction, make the delivery to the broker or dealer, and
the deposits, if any, to the Collateral Account, specified in such
Proper Instruction.

2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Corporation shall promptly
deliver a Proper Instruction or, in the event such Reverse Repurchase
Agreement is a Money Market Security, a Proper Instruction to the
Custodian specifying: (a) the Reverse Repurchase Agreement being
terminated and the Series for which same was entered; (b) the total
amount payable by the Corporation in connection with such termination;
(c) the amount and kind of Securities to be received by the Corporation
and specifically allocated to such Series in connection with such
termination; (d) the date of termination; (e) the names of the
counterparty and of the broker or dealer with or through whom the
Reverse Repurchase Agreement is to be terminated; and (f) the amount of
cash and/or the amount and kind of Securities to be withdrawn from the
Collateral Account for such Series. The Custodian shall, upon receipt
of the amount and kind of Securities to be received by the Corporation
specified in the Proper Instruction, make the payment to the
broker or dealer, and the withdrawals, if any, from the Collateral
Account, specified in such Proper Instruction.

ARTICLE X

LOAN OF PORTFOLIO SECURITIES OF THE FUND

1. Promptly after each loan of portfolio Securities specifically allocated
to a Series held by the Custodian hereunder, the Corporation shall
deliver or cause to be delivered to the Custodian a Proper Instruction
specifying with respect to each such loan: (a) the Series to which the
loaned Securities are specifically allocated; (b) the name of the issuer
and the title of the Securities, (c) the number of shares or the
principal amount loaned, (d) the date of loan and delivery, (e) the
total amount to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the premium, if
any, separately identified, and (f) the name of the broker, dealer, or
financial institution to which the loan was made. The Custodian shall
deliver the Securities thus designated to the broker, dealer or
financial institution to which the loan was made upon receipt of the
total amount designated as to be delivered against the loan of
Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only
in the form of a certified or bank cashier's check payable to the order
of the Corporation or the Custodian drawn on New York Clearing House
funds and may deliver Securities in accordance with the customs
prevailing among dealers in securities.

2. Promptly after each termination of the loan of Securities by the
Corporation, the Corporation shall deliver or cause to be delivered to
the Custodian a Proper Instruction specifying with respect to each such
loan termination and return of Securities: (a) the Series to which the
loaned Securities are specifically allocated; (b) the name of the issuer
and the title of the Securities to be returned, (c) the number of shares
or the principal amount to be returned, (d) the date of termination, (e)
the total amount to be delivered by the Custodian (including the cash
collateral for such Securities minus any offsetting credits as described
in said Proper Instruction), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The
Custodian shall receive all Securities returned from the broker, dealer,
or financial institution to which such Securities were loaned and upon
receipt thereof shall pay, out of the moneys held for the account of the
Corporation, the total amount payable upon such return of Securities as
set forth in the Proper Instruction.

ARTICLE XI

CONCERNING MARGIN ACCOUNTS AND COLLATERAL ACCOUNTS

1. The Custodian shall make deliveries or payments from a Margin Account to
the broker, dealer, futures commission merchant or Clearing Member in
whose name, or for whose benefit, the account was established as
specified in the Margin Account Agreement.

2. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt
with in accordance with the terms and conditions of the related Margin
Account Agreement.

3. The Custodian shall have a continuing lien and security interest in and
to any property at any time held by the Custodian in any Collateral
Account described herein. In accordance with applicable law, including
limitations under the 1940 Act and the Corporation's Prospectus, the
Custodian may enforce its lien and realize on any such property whenever
the Custodian has made payment or delivery pursuant to any Put Option
guarantee letter or similar document or any receipt issued hereunder by
the Custodian. In the event the Custodian should realize on any such
property net proceeds which are less than the Custodian's obligations
under any Put Option guarantee letter or similar document or any
receipt, such deficiency shall be a debt owed the Custodian by the
Corporation within the scope of Article XIV herein.

4. On each business day the Custodian shall furnish the Corporation with a
statement with respect to each Margin Account in which money or
Securities are held specifying as of the close of business on the
previous business day: (a) the name of the Margin Account; (b) the
amount and kind of Securities held therein; and (c) the amount of money
held therein. The Custodian shall make available upon request to any
broker, dealer, or futures commission merchant specified in the name of
a Margin Account a copy of the statement furnished the Corporation with
respect to such Margin Account.

5. Promptly after the close of business on each business day in which cash
and/or Securities are maintained in a Collateral Account for any Series,
the Custodian shall furnish the Corporation with a statement with
respect to such Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No later than the close
of business next succeeding the delivery to the Corporation of such
statement, the Corporation shall furnish to the Custodian a Proper
Instruction or Written Instructions specifying the then market value of
the Securities described in such statement. In the event such then
market value is indicated to be less than the Custodian's obligation
with respect to any outstanding Put Option guarantee letter or similar
document, the Corporation shall promptly specify in a Proper Instruction
the additional cash and/or Securities to be deposited in such Collateral
Account to eliminate such deficiency.

ARTICLE XII

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. The Corporation shall furnish to the Custodian a copy of the resolution
of the Board of Directors of the Corporation, certified by the Secretary
or any Assistant Secretary, either (i) setting forth with respect to the
Series specified therein the date of the declaration of a dividend or
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date
and the total amount payable to the Dividend Agent and any sub-dividend
agent or co-dividend agent of the Corporation on the payment date, or (ii)
authorizing with respect to the Series specified therein the declaration
of dividends and distributions on a daily basis and authorizing the
Custodian to rely on a Proper Instruction setting forth the date of the
declaration of such dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment
shall be determined, the amount payable per Share of such Series to the
shareholders of record as of that date and the total amount payable to
the Dividend Agent on the payment date.

2. Upon the payment date specified in such resolution, Proper Instruction,
as the case may be, the Custodian shall pay out of the moneys held for
the account of each Series the total amount payable to the Dividend
Agent and any sub-dividend agent or co-dividend agent of the Corporation
with respect to such Series.

ARTICLE XIII

SALE AND REDEMPTION OF SHARES

1. Whenever the Corporation shall sell any Shares, it shall deliver to the
Custodian a Proper Instruction duly specifying the amount of money to be
received by the Custodian for the sale of such Shares and specifically
allocated to the separate account in the name of such Series.

2. Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the separate account in the name of the Series for
which such money was received.

3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money
held for the account of such Series, all original issue or other taxes
required to be paid by the Corporation in connection with such issuance
upon the receipt of a Proper Instruction specifying the amount to be
paid.

4. Except as provided hereinafter, whenever the Corporation desires the
Custodian to make payment out of the money held by the Custodian
hereunder in connection with a redemption of any Shares, it shall
furnish to the Custodian a Proper Instruction specifying:

(a) The number and Series of Shares redeemed; and

(b) The amount to be paid for such Shares.

5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for
redemption and that such Shares are in good form for redemption, the
Custodian shall make payment to the Transfer Agent or to another account
of the Corporation at the Custodian out of the moneys held in the
separate account in the name of the Series the total amount specified in
the Proper Instruction issued pursuant to the foregoing paragraph 4 of
this Article.

6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check
redemption privilege which may from time to time
be offered by the Corporation, the Custodian, unless otherwise
instructed by a Proper Instruction, shall, upon receipt of an advice
from the Corporation or its agent setting forth that the redemption is
in good form for redemption in accordance with the check redemption
procedure, honor the check presented as part of such check redemption
privilege out of the moneys held in the separate account of the Series
of the Shares being redeemed.

ARTICLE XIV

OVERDRAFTS OR INDEBTEDNESS

1. If the Custodian, should in its sole discretion advance funds on behalf
of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be
insufficient to pay the total amount payable upon a purchase of
Securities specifically allocated to such Series, as set forth in a
Proper Instruction, or which results in an overdraft in the separate
account of such Series for some other reason, or if the Corporation is
for any other reason indebted to the Custodian with respect to a Series
(except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement
and subject to the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Corporation for such Series 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 one-half
percent over Custodian's prime commercial lending rate, or
alternatively, such other rate, if any, as the Custodian and the
Corporation may agree to from time to time. In addition, the
Corporation hereby agrees that the Custodian shall have a continuing
lien and security interest in and to up to 5% of the net assets
specifically allocated to such Series, at any time held by it for the
benefit of such Series or in which the Corporation may have an interest
which is then in the Custodian's possession or control or in possession
or control of any third party acting in the Custodian's behalf. The
Corporation authorizes the 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 such Series'
credit on the Custodian's books. In addition, the Corporation hereby
agrees that on each Business Day on which either it intends to enter a
Reverse Repurchase Agreement and/or otherwise borrow from a third party,
or which next succeeds a Business Day on which at the close of business
the Corporation had outstanding a Reverse Repurchase Agreement or such a
borrowing, it shall attempt prior to 9 a.m., New York City time, or as
soon as practicable, advise the Custodian, in writing, of each such
borrowing, shall specify the Series to which the same relates, and shall
not incur any indebtedness not so specified other than from the
Custodian.

2. The Corporation will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary
or emergency purposes using Securities held by the Custodian hereunder
as collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Corporation against delivery of a stated amount of
collateral. The Corporation shall promptly deliver to the Custodian a
Proper Instruction specifying with respect to each such borrowing:
(a) the Series to which such borrowing relates; (b) the name of the
bank, (c) the amount and terms of the borrowing, which may be set forth
by incorporating by reference an attached promissory note, duly endorsed
by the Corporation, or other loan agreement, (d) the time and date, if
known, on which the loan is to be entered into, (e) the date on which
the loan becomes due and payable, (f) the total amount payable to the
Corporation on the borrowing date, (g) the market value of Securities to
be delivered as collateral for such loan, including the name of the
issuer, the title and the number of shares or the principal amount of
any particular Securities, and (h) a statement specifying whether such
loan is for investment purposes or for temporary or emergency purposes
and that such loan is in conformance with the Investment Company Act of
1940 and the Corporation's prospectus. The Custodian shall deliver on
the borrowing date specified in a Proper Instruction the specified
collateral and the executed promissory note, if any, against delivery by
the lending bank of the total amount of the loan payable, provided that
the same conforms to the total amount payable as set forth in the Proper
Instruction. The Custodian may, at the option of the lending bank, keep
such collateral in its possession, but such collateral shall be subject
to all rights therein given the lending bank by virtue of any promissory
note or loan agreement. The Custodian shall deliver such Securities as
additional collateral as may be specified in a Proper Instruction to
collateralize further any transaction described in this paragraph. The
Corporation shall cause all Securities released from collateral status
to be returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may be tendered
to it. In the event that the Corporation fails to specify in a Proper
Instruction the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, the Custodian shall not be
under any obligation to deliver any Securities.

ARTICLE XV

TERMINAL LINK

1. At no time and under no circumstances shall the Corporation be obligated
to have or utilize the Terminal Link, and the provisions of this Article
shall apply if, but only if, the Corporation in its sole and absolute
discretion elects to utilize the Terminal Link to transmit Proper
Instructions to the Custodian.

2. The Terminal Link shall be utilized by the Corporation only for the
purpose of the Corporation providing Proper Instructions to the
Custodian with respect to transactions involving Securities or for the
transfer of money to be applied to the payment of dividends,
distributions or redemptions of Corporation Shares, and shall be
utilized by the Custodian only for the purpose of providing notices to
the Corporation. Such use shall commence only after the Corporation
shall have delivered to the Custodian a Proper Instruction substantially
in the form of Exhibit D and shall have established access codes. Each
use of the Terminal Link by the Corporation shall constitute a
representation and warranty that the Terminal Link is being used only
for the purposes permitted hereby, that at least two Officers have each
utilized an access code, that such safekeeping procedures have been
established by the Corporation, and
that such use does not contravene the Investment Company Act of 1940, as
amended, or the rules or regulations thereunder.

3. The Corporation shall obtain and maintain at its own cost and expense
all equipment and services, including, but not limited to communications
services, necessary for it to utilize the Terminal Link, and the
Custodian shall not be responsible for the reliability or availability
of any such equipment or services.

4. The Corporation acknowledges that any data bases made available as part
of, or through the Terminal Link and any proprietary data, software,
processes, information and documentation (other than any such which are
or become part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"), are the
exclusive and confidential property of the Custodian. The Corporation
shall, and shall cause others to which it discloses the Information, to
keep the Information confidential by using the same care and discretion
it uses with respect to its own confidential property and trade secrets,
and shall neither make nor permit any disclosure without the express
prior written consent of the Custodian.

5. Upon termination of this Agreement for any reason, the Corporation shall
return to the Custodian any and all copies of the Information which are
in the Corporation's possession or under its control, or which the
Corporation distributed to third parties. The provisions of this
Article shall not affect the copyright status of any of the Information
which may be copyrighted and shall apply to all Information whether or
not copyrighted.

6. The Custodian reserves the right to modify the Terminal Link from time
to time without notice to the Corporation except that the Custodian
shall give the Corporation notice not less than 75 days in advance of
any modification which would materially adversely affect the
Corporation's operation, and the Corporation agrees that the Corporation
shall not modify or attempt to modify the Terminal Link without the
Custodian's prior written consent. The Corporation acknowledges that
any software or procedures provided the Corporation as part of the
Terminal Link are the property of the Custodian and, accordingly, the
Corporation agrees that any modifications to the Terminal Link, whether
by the Corporation, or by the Custodian and whether with or without the
Custodian's consent, shall become the property of the Custodian.

7. Neither the Custodian nor any manufacturers and suppliers it utilizes or
the Corporation utilizes in connection with the Terminal Link makes any
warranties or representations, express or implied, in fact or in law,
including but not limited to warranties of merchantability and fitness
for a particular purpose.

8. The Corporation will cause its Officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link
with extreme care, and irrevocably authorizes the Custodian to act in
accordance with and rely on Proper Instructions received by it through
the Terminal Link. The Corporation acknowledges that it is its
responsibility to assure that only its Officers use the Terminal Link on
its behalf, and that a Custodian shall not be responsible nor liable for
use of the Terminal Link on the Corporation's behalf by persons other
than such
persons or Officers, or by only a single Officer, nor for any
alteration, omission, or failure to promptly forward.

9. (a) Except as otherwise specifically provided in Section 9(b) of this
Article, the Custodian shall have no liability for any losses,
damages, injuries, claims, costs or expenses arising out of or in
connection with any failure, malfunction or other problem relating
to the Terminal Link except for money damages suffered as the
direct result of the negligence of the Custodian in an amount not
exceeding for any incident $100,000 provided, however, that the
Custodian shall have no liability under this Section 9 if the
Corporation fails to comply with the provisions of Section 11.

(b) The Custodian shall be liable for any loss or damage arising out of
its own negligence or willful misconduct in executing or failing to
execute in accordance with a duly acknowledged Proper Instruction
received through Terminal Link.

10. Without limiting the generality of the foregoing, in no event shall the
Custodian or any manufacturer or supplier of its computer equipment,
software or services relating to the Terminal Link be responsible for
any special, indirect, incidental or consequential damages which the
Corporation may incur or experience by reason of its use of the Terminal
Link even if the Custodian or any manufacturer or supplier has been
advised of the possibility of such damages, nor with respect to the use
of the Terminal Link shall the Custodian or any such manufacturer or
supplier be liable for acts of God, or with respect to the following to
the extent beyond such person's reasonable control: machine or computer
breakdown or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar cause.

11. The Corporation shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as
promptly as practicable, and in any event within 24 hours after the
earliest of (i) discovery thereof, (ii) the Business Day on which
discovery should have occurred as a result of the need to use such
Terminal Link, and where, through the exercise of reasonable care such
omission, interruption, delay or unavailability, such problem would have
been discovered, and (iii) in the case of any error, the date of actual
receipt of the earliest notice which reflects such error, it being
agreed that discovery and receipt of notice may only occur on a business
day. The Custodian shall promptly advise the Corporation whenever the
Custodian learns of any errors, omissions or interruption in, or delay
or unavailability of, the Terminal Link.

12. The Custodian shall verify to the Corporation, by use of the Terminal
Link, receipt of each Proper Instruction the Custodian receives through
the Terminal Link. If the Custodian cannot, for some reason, verify
through Terminal Link, then it will verify by facsimile. In the absence
of such verification the Custodian shall not be liable for any failure
to act in accordance with such Certificate and the Corporation may not
claim that such Certificate was received by the Custodian. Such
verification, which may occur after the Custodian has acted upon such
Proper Instruction, shall be accomplished on the same day on which such
Proper Instruction is received.

ARTICLE XVI

RESERVED

ARTICLE XVII

CONCERNING THE CUSTODIAN

1. The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Agreement. Except as hereinafter provided,
or as provided in Article XVI, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, either
hereunder or under any Margin Account Agreement, except for any such
loss or damage arising out of its own negligence or willful misconduct.
In no event shall the Custodian be liable to the Corporation or any
third party for special, indirect or consequential damages or lost
profits or loss of business, arising under or in connection with this
Agreement, even if previously informed of the possibility of such
damages and regardless of the form of action, unless such loss resulted
from the Custodian's willful misconduct. Negligence includes the
failure of the Custodian to comply with any law or regulation applicable
to the Custodian. The Custodian may, with respect to questions of law
arising hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Corporation or of its
own counsel, and the Corporation shall pay the reasonable expenses
thereof, and the Custodian shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such
advice or opinion. The Custodian shall be liable to the Corporation for
any loss or damage resulting from the use of the Book-Entry System or
any Depository arising by reason of any negligence or willful misconduct
on the part of the Custodian or any of its employees or agents.

2. Without limiting the generality of the foregoing, the Custodian shall be
under no obligation to inquire into, and shall not be liable for:

(a) The validity of the issue of any Securities purchased, sold, or
written by or for the Corporation, the legality of the purchase,
sale or writing thereof, or the propriety of the amount paid or
received therefor;

(b) The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor;

(d) The legality of any borrowing by the Corporation using Securities
as collateral;

(e) The legality of any loan of portfolio Securities, nor shall the
Custodian be under any duty or obligation to determine that any
cash collateral delivered to it by a broker,
dealer, or financial institution or held by it at any time as a
result of such loan of portfolio Securities of the Corporation is
adequate collateral for the Corporation against any loss it might
sustain as a result of such loan. The Custodian specifically, but
not by way of limitation, shall not be under any duty or obligation
periodically to check or notify the Corporation that the amount of
such cash collateral held by it for the Corporation is sufficient
collateral for the Corporation, but such duty or obligation shall
be the sole responsibility of the Corporation. In addition, the
Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio
Securities of the Corporation are lent pursuant to Article XIV of
this Agreement makes payment to it of any dividends or interest
which are payable to or for the account of the Corporation during
the period of such loan or at the termination of such loan,
provided, however, that the Custodian shall promptly notify the
Corporation in the event that such dividends or interest are not
paid and received when due and to fully cooperate (at the
Corporation's expense) with the Corporation in obtaining any such
dividends and/or interest; or

(f) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Corporation. In
addition, the Custodian shall be under no duty or obligation to see
that any broker, dealer, futures commission merchant or Clearing
Member makes payment to the Corporation of any variation margin
payment or similar payment which the Corporation may be entitled to
receive from such broker, dealer, futures commission merchant or
Clearing Member, to see that any payment received by the Custodian
from any broker, dealer, futures commission merchant or Clearing
Member is the amount the Corporation is entitled to receive, or to
notify the Corporation of the Custodian's receipt or non-receipt of
any such payment.

3. The Custodian shall not be liable for, or considered to be the Custodian
of, any money, whether or not represented by any check, draft, or other
instrument for the payment of money, received by it on behalf of the
Corporation until the Custodian actually receives and collects such
money directly or by the final crediting of the account representing the
Corporation's interest at the Book-Entry System or the Depository.

4. The Custodian shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange offers,
tenders, interest rate changes or similar matters relating to Securities
held in the Depository, unless the Custodian shall have actually
received timely notice thereof from. In no event shall the Custodian
have any responsibility or liability for the failure of the Depository
to collect, or for the late collection or late crediting by the
Depository or any other payor or issuer of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed,
retired, called or otherwise become payable. However, upon receipt of a
Proper Instruction from the Corporation of an overdue amount on
Securities held in the Depository the Custodian shall make a claim
against the Depository on behalf of the Corporation, except that the
Custodian shall not be under any obligation to appear in, prosecute or
defend any action suit or proceeding in respect to any Securities held
by the Depository which in its opinion may involve it in expense or
liability,
unless indemnity satisfactory to it against all expense and liability be
furnished as often as may be required.

5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Corporation from the
Transfer Agent of the Corporation nor to take any action to effect
payment or distribution by the Transfer Agent of the Corporation of any
amount paid by the Custodian to the Transfer Agent of the Corporation in
accordance with this Agreement.

6. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due
demand or presentation, unless and until (i) it shall be directed to
take such action by a Proper Instruction and (ii) it shall be assured to
its satisfaction of reimbursement of its costs and expenses in
connection with any such action.

7. The Custodian may appoint one or more banking institutions as Depository
or Depositories, as Sub-Custodian or Sub-Custodians, or as Co-Custodian
or Co-Custodians, of Securities and moneys at any time owned by the
Corporation, upon such terms and conditions as may be approved in a
Proper Instruction or contained in an agreement executed by the
Custodian, the Corporation and the appointed institution.

8. The Custodian shall not be under any duty or obligation (a) to ascertain
whether any Securities at any time delivered to, or held by it or by any
Foreign Sub-Custodian, for the account of the Corporation and
specifically allocated to a Series are such as properly may be held by
the Corporation or such Series under the provisions of its then current
prospectus, or (b) to ascertain whether any transactions by the
Corporation, whether or not involving the Custodian, are such
transactions as may properly be engaged in by the Corporation.

9. The Custodian shall be entitled to receive and the Corporation agrees to
pay to the Custodian all reasonable out-of-pocket expenses and such
compensation as may be agreed upon from time to time between the
Custodian and the Corporation. The Custodian may charge such
compensation and any such reasonable expenses with respect to a Series
incurred by the Custodian in the performance of its duties pursuant to
such agreement against any money specifically allocated to such Series.
Unless and until the Corporation instructs the Custodian by a Proper
Instruction to apportion any loss, damage, liability or expense among
the Series in a specified manner, the Custodian shall also be entitled
to invoice a Series such Series' pro rata share (based on such Series
net asset value at the time of the charge to the aggregate net asset
value of all Series at that time) of the amount of any loss, damage,
liability or expense, including reasonable fees of counsel not of
salaried employees of the Custodian, for which it shall be entitled to
reimbursement under the provisions of this Agreement.

10. The Custodian shall be entitled to rely upon any Proper Instruction,
notice or other instrument in writing received by the Custodian and
reasonably believed by the Custodian to be a Proper Instruction. The
Custodian shall be entitled to rely upon any Proper Instruction orally
given and actually received by the Custodian hereinabove provided for,
provided such instructions reasonably appear to have been received from
an Officer. The Corporation agrees to confirm
to the Custodian such a Proper Instruction by facsimile or otherwise, by
the close of business of the same day that such Instructions are given
to the Custodian. The Corporation agrees that the fact that such
confirming instructions are not received by the Custodian shall in no
way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Corporation. The Corporation
agrees that the Custodian shall incur no liability to the Corporation in
acting upon Proper Instructions orally given to the Custodian hereunder
concerning such transactions provided such instructions reasonably
appear to have been received from an Officer.

11. The Custodian shall be entitled to rely upon any instrument, instruction
or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any
Margin Account Agreement. Without limiting the generality of the
foregoing, the Custodian shall be under no duty to inquire into, and
shall not be liable for, the accuracy of any statements or
representations contained in any such instrument or other notice
including, without limitation, any specification of any amount to be
paid to a broker, dealer, futures commission merchant or Clearing
Member.

12. The books and records pertaining to the Corporation which are in the
possession of the Custodian shall be the property of the Corporation.
Such books and records shall be prepared and maintained as required by
the 1940 Act, as amended, and other applicable securities laws and rules
and regulations. The Corporation, or the Corporation's authorized
representatives, shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable request of the
Corporation, copies of any such books and records shall be provided by
the Custodian to the Corporation or the Corporation's authorized
representative, and the Corporation shall reimburse the Custodian its
reasonable expenses of providing such copies. Upon reasonable request
of the Corporation, the Custodian shall provide in hard copy or on
microfilm computer disc or other electronic means, whichever the
Custodian elects, any records included in any such delivery which are
maintained by the Custodian on a computer disc, or are similarly
maintained, and the Corporation shall reimburse the Custodian for its
reasonable expenses of providing such hard copy or microfilm.

13. The Custodian shall provide the Corporation with any report obtained by
the Custodian on the system of internal accounting control of the
Book-Entry System, the Depository or O.C.C., including any report of
such entities the Custodian receives from any banking regulator, and
with such reports on its own systems of internal accounting control as
the Corporation may reasonably request from time to time.

14. The Corporation agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands
whatsoever, including reasonable attorneys' fees, howsoever arising or
incurred because of or in connection with this Agreement, including the
Custodian's payment or non-payment of checks pursuant to paragraph 6 of
Article XIII as part of any check redemption privilege program of the
Corporation, except for any such liability, claim, loss and demand
arising out of the Custodian's own or its agents negligence or willful
misconduct or breach of the terms of this Agreement.

15. Subject to the foregoing provisions of this Agreement, including,
without limitation, those contained in Article XVI, the Custodian may
deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the
Custodian in accordance with the rules of any Depository or Book-Entry
System or O.C.C. and with respect to physicals not delivered to one of
the foregoing, in accordance with the customs and practices prevailing
among brokers and dealers in such securities on the date of execution of
this Agreement, or in accordance with such lesser customs, if any, as
may be approved by the Corporation in Proper Instructions. The
Custodian will immediately inform the Corporation and await a specific
Proper Instruction and/or a resolution of the Executive Committee of the
Board of Directors before permitting the release of securities or cash
which is not against delivery of the counteritem, except for deliveries
described in the preceding sentence. The Corporation assumes all
responsibility and liability for all credit risks involved in connection
with the Custodian's delivery of Securities pursuant to such Proper
Instructions or Executive Committee Resolution of the Corporation, which
responsibility and liability shall continue until final payment in full
has been received by the Custodian.

16. The Custodian shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this
Agreement against the Custodian.

ARTICLE XVIII

TERMINATION

1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the
date of giving of such notice. In the event such notice is given by the
Corporation, it shall be accompanied by a copy of a resolution of the
Board of Directors of the Corporation, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be
a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event such notice is
given by the Custodian, the Corporation shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the
Board of Directors of the Corporation, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians.
In the absence of such designation by the Corporation, the Custodian may
designate a successor custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and undivided
profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and moneys then owned by the
Corporation and held by it as Custodian, after deducting all fees,
reasonable expenses and other amounts for the payment or reimbursement
of which it shall then be entitled.

2. If a successor custodian is not designated by the Corporation or the
Custodian in accordance with the preceding paragraph, the Corporation
shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the Custodian of
all Securities (other than Securities held in the Book-Entry System
which cannot be delivered to the Corporation) and moneys then owned by
the Corporation be deemed to be its own custodian and the Custodian
shall thereby be relieved of all duties and responsibilities pursuant to
this Agreement, other than the duty with respect to Securities held in
the Book Entry System which cannot be delivered to the Corporation to
hold such Securities hereunder in accordance with this Agreement.

ARTICLE XIX

MISCELLANEOUS

1. Annexed hereto as Appendix A are the Authorized and Proper Instructions
signed by present Officers of the Corporation under its corporate seal,
setting forth the names and the signatures of the present Officers of
the Corporation. The Corporation agrees to furnish to the Custodian a
new Authorized and Proper Instructions in similar form in the event any
such present Officer ceases to be an Officer of the Corporation, or in
the event that other or additional Officers are elected or appointed.
Until such new Authorized and Proper Instructions shall be received, the
Custodian shall be fully protected in acting under the provisions of
this Agreement upon the signatures of the Officers as set forth in the
last delivered Authorized and Proper Instructions.

2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given
if addressed to the Custodian and mailed, sent by reliable overnight
delivery service or delivered to it at its offices at 110 Washington
Street, 15th Floor, New York, New York 10286, or sent by facsimile to
(212) 693-5274 or at such other place as the Custodian may from time to
time designate in writing.

3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Corporation shall be sufficiently
given if addressed to the Corporation and mailed, sent by reliable
overnight delivery service or delivered to it at its office at the
address for the Corporation first above written, or at such other place
or facsimile number as the Corporation may from time to time designate
in writing.

4. This Agreement may not be amended except by a written agreement executed
by both parties with the same formality as this Agreement and approved
by a resolution of the Board of Directors of the Corporation. However,
in connection with the operation of the Agreement, the Custodian and the
Corporation may from time to time agree in writing on such provisions
interpretive of or in addition to the provisions of this Agreement as
may in their joint opinion be consistent with the general tenor of this
Agreement, which provisions will not be deemed to be amendments.

5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Corporation without
the written consent of the Custodian, or by the
Custodian without the written consent of the Corporation, authorized or
approved by a resolution of the Corporation's Board of Directors.

6. This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles
thereof. Each party hereby consents to the jurisdiction of a state or
federal court situated in New York City, New York in connection with any
dispute arising hereunder and hereby waives its right to trial by jury.

7. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one and the same instrument.

8. A copy of the Articles of Incorporation of the Corporation is on file
with the office of the State Department of Assessments and Taxation of
the State of Maryland, and notice is hereby given that this instrument
is executed on behalf of the Board of Directors of the Corporation and
not individually and that the obligations of this instrument are not
binding upon any of the Directors or shareholders individually but are
binding only upon the assets and property of the Corporation; provided,
however, that the Articles of Incorporation provide that the assets of a
particular Series of the Corporation shall under no circumstances be
charged with liabilities attributable to any other Series of the
Corporation and that all persons extending credit to, or contracting
with or having any claim against a particular Series of the Corporation
shall look only to the assets of that particular Series for payment of
such credit, contract or claim. The Custodian acknowledges that it has
read and understands the exculpation and limitation of liability
provisions of the Corporation, Article XI, Section3.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate Officers, thereunto duly authorized
and their respective corporate seals to be hereunto affixed, as of the day
and year first above written.

Attest: BATTERY PARK FUNDS, INC.

____________________ ____________________
Deborah A. Montick Robert Levine
Secretary President

Attest THE BANK OF NEW YORK

____________________ ____________________
Ira R. Rosner Stephen E. Grunston
Vice President Vice President

APPENDIX A

Custodian Contract
Authorization and Proper Instructions

I. Pursuant to Article III, Section3; Article XI, Section5, Section6;
Article XVII, Section1, Section2, Section3, Section4, Section5,
Section6, Section12, Section14; Article XVIII, Section1, Section6; and
Article XIV, Section1, of the Custodian Contract (the "Contract")
between Battery Park Corporations, Inc. (the "Corporation") and The
Bank of New York (the "Custodian"), this shall constitute the
authorization of the persons named herein to issue Proper Instructions
on behalf of the Corporation, in the form and on the basis set forth in
the Authorizations and Proper Instructions. The meaning of all terms
used herein shall be the same as the meaning of those respective terms
in the Contract.

II. Oral instructions shall be authorized only as specified herein and shall
be subject to any security measures as shall hereafter be directed by
each Corporation in writing.

III. The following Corporation officers, INSERT OFFICERS' NAMES, shall be
authorized to sign Proper Instructions issued under SectionII, 1;
SectionIII, 1 and 5(e) of the Contract, and to perform all functions set
forth hereafter.

IV. Standing instructions, which shall be in writing, shall be authorized
only as specified herein and shall continue until such instructions are
revoked directly or by the transmittal of new instructions by the
Corporation. Standing instructions may be issued with respect to the
following subsections of the Contract by persons as designated in the
subsequent sections of this API:

A. Article III, Section5(b), (c), (d), Section6(b), (c), (d), (e);
Article V, Section7, Section9, Section11; Article VI, Section1,
Section3, Section4; Article VII, Section3, Section4, Section5,
Section6, Section8; Article VIII, Section1, Section2; Article X,
Section1; and Article XI, Section1, Section2 of the Contract.

B. Article III, Section2(b), (c); Article V, Section8, Section10,
Section11; Article VI, Section1; Article VII, Section4, Section5,
Section8; Article VIII, Section1, Section2; Article XI, Section1,
Section2; Article XII, Section2; Article XIII, Section5; and
Article XIV, Section2 of the Contract.

V. Proper Instructions issued under the following Sections of the Contract
as described in this Article V shall be given orally, electronically, by
telefacsimile or in writing by any one of the persons designated in
Attachment A under SECTION 4. TRADING, TRADING SUPPORT STAFF OR
RESEARCH PERSONNEL:

A. With regard to the Delivery of Securities, Article III,
Section5(b), (c) (d), Section6(b), (c), (d), (e); Article IV,
Section2; Article V, Section2, Section4, Section7, Section8,
Section9, Section10, Section11; Article VI, Section1, Section3,
Section4; Article VII, Section3, Section4, Section5, Section6,
Section8; Article VIII, Section2; Article IX, Section1; Article XI,
Section1, Section2; and Article XVII, Section15.

B. With regard to the Payment of Corporation Moneys, Article IV,
Section1; Article V, Section1, Section3, Section9; Article VI,
Section1, 2, Section3, Section4; Article VII, Section1, Section3,
Section6, Section8; Article IX, Section1; and Article XI, Section1,
Section2.

C. With regard to Article IX of the Contract: Reverse Repurchase
Agreements.

D. With regard to Article XIV, Section1 and Article XVII, Section1,
Section2, Section3, Section4, Section5, Section6 and Section14 of
the Contract:

1. Designations of Corporation securities subject to a security
interest of the Custodian made pursuant to this Section of the
Contract;

2. These designations shall be standing.

Confirmation of such oral or fax Proper Instructions shall be given in
writing by any two of the persons designated in Attachment A under SECTION 2.
CORPORATE RECORDS OR SECTION 4. TRADING, TRADING SUPPORT STAFF OR RESEARCH
PERSONNEL.

VI. Article VIII, Section1 and Article XI of the Contract:
Proper Instructions issued under the above subsections of the Contract
as described in this Article shall be signed by CHIEF INVESTMENT OFFICER
OF NOMURA.

VII. Article III, Section2 and Section4 of the Contract (Segregated Account):

Proper Instructions issued under the above subsections of the Contract as
described in this Article shall be signed by any one of the persons
designated in Attachment A under SECTION 4. TRADING, TRADING SUPPORT STAFF
OR RESEARCH PERSONNEL.

VIII. Article V, Section8, Section10, Section11; VII, Section4, Section5,
Section8; Article VIII, Section1 and Section2; Article XI, Section1
and Section2; Article XII, Section2; and Article XIV, Section2 of
the Contract:

Proper Instructions issued under the above subsections of the
Contract as described in this Article VIII shall be signed by any
one of the persons designated in Attachment A under SECTION 3. FINANCE.

IX. Article III, Section2(c); and Article IV, Section1 of the Contract:

Proper Instructions issued under the above Subsection of the Contract as
described in this Article IX shall be signed by any one of the persons
designated in Attachment A under SECTIONS 1. PRODUCT ADMINISTRATION OR 3.
FINANCE.

X. With regard to Article XVII of the Contract: Concerning the Custodian:

A. The Custodian is hereby directed to keep the books of account of
this Corporation and to compute the net asset value per share,
based upon portfolio securities prices to be obtained from the
authorized Corporation pricing agent, subject to price corrections
or accounting entries which shall be furnished orally by those
persons designated in Attachment A under SECTION 3. FINANCE.

B. The Custodian is hereby directed to calculate daily the net income
of this Corporation and to advise the Corporation's Transfer Agent
of the division of net income among its various components.

C. The Corporate Calendar serves as the standing instruction to
release dividends.

ATTACHMENT A
to the
Authorization & Proper Instructions
to the Custodian Contract
for BATTERY PARK FUNDS, INC.

SECTION 1 SECTION 3
--------- ---------
PRODUCT ADMINISTRATION FINANCE
(authorized to sign for (authorized to perform
operating expenses) accounting entries, etc.)

James J. Dolan Keith A. Antle
R. Jeffrey Niss Timothy K. Biedrzycki
Robert J. Wagner Joseph A. Del Vecchio
Ronald J. Ecoff, Jr.
Anna B. Germ
Douglas L. Hein
Craig E. Hellier
Sharon W. Huckestein
Lisa J. Ling
SECTION 2 Mary Beth Marchionda
--------- Deborah M. Molini
CORPORATE RECORDS Barbara A. Moritz
(authorized to co-sign Beverly L. Nonamaker
confirmations) Richard N. Paddock
Jennifer A. Pophal
Larry Kreger David M. Taylor
Christine A. Nettorur April Winklmann

SECTION 4
--------- SECTION 6
TRADING ---------
(authorized to give oral RESEARCH PERSONNEL
and FAX instructions) (authorized to sign
instructions and issue
standing instructions)
Richard Buch
Seth Chadbourne
Yahyin Chang Richard Buch
David Crall Seth Chadbourne
Nate Hudson Yahyin Chang
Robert Levine David Crall
Andy Toburen Nate Hudson
Robert Levine
Andy Toburen
SECTION 5
---------
TRADING SUPPORT STAFF
(authorized to co-sign
confirmation of oral
instructions)

Richard Buch
Seth Chadbourne
Yahyin Chang
David Crall
Nate Hudson
Robert Levine
Andy Toburen

SECTION 6
---------
RESEARCH PERSONNEL
(authorized to sign
instructions and issue
standing instructions)

APPENDIX B

I, Ira R. Rosner, a Vice President with THE BANK OF NEW YORK do hereby
designate the following publications:

The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal

EXHIBIT A

BATTERY PARK FUNDS, INC.

C E R T I F I C A T I O N
-------------------------

The undersigned, Assistant Secretary of Battery Park Funds, Inc. (the
"Corporation"), hereby certifies that the following resolutions were duly
adopted by the Board of Directors of the Corporation on September 30, 1996,
substantially and materially as follows and that said resolutions have not
been amended or rescinded:

RESOLVED, that the Board hereby approves the use of the following
book-entry systems for the Corporation, as specified in the
Custodian Contract between the Custodian and the Corporation:

The Bank of New York;
Bankers Trust Company;
The Chase Manhattan Corporation;
Morgan Guaranty Trust Company of New York;
NationsBank of North Carolina;
NationsBank of Virginia; and
PNC Bank

WITNESS the due execution hereof this 1st day of October, 1996.

---------------------------------------
Gail Cagney
Assistant Secretary

EXHIBIT B
BATTERY PARK FUNDS, INC.

C E R T I F I C A T I O N
-------------------------

The undersigned, Assistant Secretary of Battery Park Funds, Inc. (the
"Corporation"), hereby certifies that the following resolution was duly
adopted by the Board of Directors of the Corporation on September 30, 1996,
substantially and materially as follows and that said resolution has not been
amended or rescinded:

RESOLVED, that the Board hereby authorizes and approves the use by the
Custodian of Depository Trust Company the Federal Reserve
Book-Entry System as securities depositories for the
Corporation and the use of Participants Trust Company as a
securities depository for the Corporation, as specified in the
Custodian Contract between the Custodian and the Corporation.

WITNESS the due execution hereof this 1st day of October, 1996.

---------------------------------------
Gail Cagney
Assistant Secretary

EXHIBIT C

BATTERY PARK FUNDS, INC.

C E R T I F I C A T I O N
-------------------------

RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the
Corporation dated as of September 1, 1996, (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis until such time as it receives a Proper
Instruction, as defined in the Custody Agreement, to the
contrary, to accept, utilize and act with respect to Clearing
Member confirmations for Derivatives and Options and
transactions in Derivations and Options, regardless of the
Series to which the same are specifically allocated, as such
terms are defined in the Custody Agreement, as provided in the
Custody Agreement.

WITNESS the due execution hereof this 1st day of October, 1996.

----------------------------------
Gail Cagney
Assistant Secretary

EXHIBIT D
BATTERY PARK FUNDS, INC.

C E R T I F I C A T I O N
-------------------------

The undersigned, Assistant Secretary of Battery Park Funds, Inc. (the
"Corporation"), hereby certifies that the following resolutions were duly
adopted by the Board of Directors of the Corporation on, September 30, 1996,
substantially and materially as follows and that said resolutions have not
been amended or rescinded:

RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the
Corporation dated as of October 1, 1996, (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis to act in accordance with, and to rely on Proper
Instructions (as defined in the Custody Agreement) given by
the Corporation to the Custodian by a Terminal Link (as
defined in the Custody Agreement).

RESOLVED, that the Corporation shall establish access codes and grant
use of such access codes only to Officers of the Corporation
as defined in the Custody Agreement, shall establish internal
safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes, shall
limit its use of the Terminal Link to those purposes permitted
by the Custody Agreement, shall require at least two such
Officers to utilize their respective access codes in
connection with each such Proper Instruction, and shall use
the Terminal Link only in a manner that does not contravene
the Investment Company Act of 1940, as amended, or the rules
and regulations thereunder.

RESOLVED, that Officers of the Corporation shall, following the
establishment of such access codes and such internal
safekeeping procedures, advise the Custodian that the same
have been established by delivering a Proper Instruction, as
defined in the Custody Agreement, and the Custodian shall be
entitled to rely upon such advice.

WITNESS the due execution hereof this 1st day of October, 1996.

----------------------------------
Gail Cagney
Assistant Secretary

EXHIBIT 9(A)

AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
AND
TRANSFER AGENCY SERVICES

AGREEMENT made as of October 1, 1996, by and between Battery Park Funds,
Inc., a Maryland corporation, having its principal office and place of
business at 2 World Financial Center, New York, New York 10281-1198 (the
"Corporation"), on behalf of the portfolios listed on Exhibit 1 as may be
amended from time to time (individually referred to herein as a "Fund" and
collectively as "Funds") of the Corporation, and FEDERATED SERVICES COMPANY,
a Pennsylvania corporation, having its principal office and place of business
at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 on behalf
of itself and its subsidiaries (the "Company").

WHEREAS, the Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), with authorized and issued shares of capital stock ("Shares");

WHEREAS, the Corporation desires to retain the Company as fund
accountant to provide fund accounting services (as herein defined) including
certain pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes"), and the
Company desires to accept such appointment;

WHEREAS, the Corporation desires to appoint the Company as its
administrator to provide it with administrative services (as herein defined),
and the Company desires to accept such appointment;

WHEREAS, the Corporation desires to appoint the Company as its transfer
agent and dividend disbursing agent to provide it with transfer agency
services (as herein defined), and agent in connection with certain other
activities, and the Company desires to accept such appointment; and

NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:

SECTION ONE: FUND ACCOUNTING.

ARTICLE 1. APPOINTMENT.

The Corporation hereby appoints the Company to provide certain pricing
and accounting services to the Funds, and/or the Classes, for the period and
on the terms set forth
in this Agreement. The Company accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as
provided in Article 3 of this Section One.

ARTICLE 2. THE COMPANY'S DUTIES.

Subject to the supervision and control of the Corporation's Directors
("Board"), the Company will assist the Corporation with regard to fund
accounting for the Corporation, and/or the Funds, and/or the Classes, and in
connection therewith undertakes to perform the following specific services;

A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not
provide a price for a security which the Company believes should be
available by market quotation, the Company may obtain a price by
calling brokers designated by the investment adviser of the fund
holding the security, or if the adviser does not supply the names
of such brokers, the Company will attempt on its own to find
brokers to price those securities; thirdly, for securities for
which no market price is available, the Pricing Committee of the
Board will determine a fair value in good faith. Consistent with
Rule 2a-4 of the 1940 Act, estimates may be used where necessary or
appropriate. The Company's obligations with regard to the prices
received from outside pricing services and designated brokers or
other outside sources, is to exercise reasonable care in the
supervision of the pricing agent. The Company is not the guarantor
of the securities prices received from such agents and the Company
is not liable to the Fund for potential errors in valuing a Fund's
assets or calculating the net asset value per share of such Fund or
Class when the calculations are based upon such prices. All of the
above sources of prices used as described are deemed by the Company
to be authorized sources of security prices. The Company provides
daily to the adviser the securities prices used in calculating the
net asset value of the Fund, for its use in preparing exception
reports for those prices on which the adviser has comment.
Further, upon receipt of the exception reports generated by the
adviser, the Company diligently pursues communication regarding
exception reports with the designated pricing agents;

B. Determine the net asset value per share of each Fund and/or Class,
at the time and in the manner from time to time determined by the
Board and as set forth in the Prospectus and Statement of
Additional Information ("Prospectus") of each Fund;

C. Calculate the net income of each of the Funds, if any;

D. Calculate realized capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;

E. Maintain the general ledger and other accounts, books and financial
records of the Corporation, including for each Fund, and/or Class,
as required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;

F. Preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records to be maintained by Rule 31a-1 under the 1940 Act
in connection with the services provided by the Company. The
Company further agrees that all such records it maintains for the
Corporation are the property of the Corporation and further agrees
to surrender promptly to the Corporation such records upon the
Corporation's request;

G. At the request of the Corporation, prepare various reports or other
financial documents in accordance with generally accepted
accounting principles as required by federal, state and other
applicable laws and regulations;

H. Prepare and file with the Securities and Exchange Commission
filings required under Rule 24f-2 and Section 24(e) of the 1940
Act, as applicable; and

I. Such other similar services as may be reasonably requested by the
Corporation.

The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Corporation under this Section One, shall
hereafter be referred to as "Fund Accounting Services."

ARTICLE 3. COMPENSATION AND ALLOCATION OF EXPENSES.

A. The Funds will compensate the Company for Fund Accounting Services
in accordance with the fees agreed upon from time to time between
the parties hereto. Such fees do not include out-of-pocket
disbursements of the Company for which the Funds shall reimburse
the Company. Out-of-pocket disbursements shall consist of the
items set forth on Schedule A attached hereto.

B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory
expenses; costs of printing and mailing stock certificates,
Prospectuses, reports and notices; administrative expenses;
interest on borrowed money; brokerage commissions; taxes and fees
payable to federal, state and other governmental agencies; fees of
Directors of the Corporation; independent auditors expenses; law
firm expenses; organizational expenses; or other expenses not
specified in this Article 3 which may be properly payable by the
Funds and/or Classes.

C. The compensation and out-of-pocket expenses attributable to the
Fund shall be accrued by the Fund and shall be paid to the Company
no less frequently than monthly. The Company will maintain
detailed information about the compensation and out-of-pocket
expenses by Fund and Class.

D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a duly
authorized officer of the Corporation and/or the Funds and a duly
authorized officer of the Company.

E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period
bears to the full month period. Upon any termination of this
Agreement before the end of any month, the fee for such period
shall be prorated according to the proportion which such period
bears to the full month period. For purposes of determining fees
payable to the Company, the value of the Fund's net assets shall be
computed at the time and in the manner specified in the Fund's
Prospectus.

F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing Fund Accounting Services. Such person or
persons may be affiliates of the Company, third-party service
providers, or they may be officers and employees who are employed
by both the Company and the Corporation; provided, however, that
the Company shall be as fully responsible to each Fund for the acts
and omissions of any such subcontractor as it is for its own acts
and omissions. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf
of the Corporation, the Funds, or the Classes in such respect.

SECTION TWO: ADMINISTRATIVE SERVICES.

ARTICLE 4. APPOINTMENT.

The Corporation hereby appoints the Company as Administrator for the
period on the terms and conditions set forth in this Agreement. The Company
hereby accepts such appointment and agrees to furnish the services set forth
in Article 5 of this Section Two in return for the compensation set forth in
Article 8 of this Section Two.

ARTICLE 5. THE COMPANY'S DUTIES.

As Administrator, and subject to the supervision and control of the
Board and in accordance with Proper Instructions (as defined hereafter) from
the Corporation, the Company will provide facilities, equipment, and
personnel to carry out the following administrative services for operation of
the business and affairs of the Corporation and each of its portfolios:

A. prepare, file, and maintain the Corporation's governing documents
and any amendments thereto, including the Charter (which has
already been prepared and filed), the By-laws and minutes of
meetings of the Board and Shareholders;

B. prepare and file with the Securities and Exchange Commission and
the appropriate state securities authorities the registration
statements for the Corporation and the Corporation's shares and all
amendments thereto, reports to regulatory authorities and
shareholders, prospectuses, proxy statements, filings on Form
N-SAR, and such other documents as may be necessary to enable the
Corporation to make a continuous offering of its shares;

C. prepare, negotiate, and administer contracts on behalf of the
Corporation with, among others, the Corporation's investment
advisers and distributors, subject to any applicable restrictions
of the Board or the 1940 Act;

D. calculate performance data of the Corporation for dissemination to
information services covering the investment company industry;

E. prepare and file the Corporation's tax returns;

F. coordinate the layout and printing of publicly disseminated
prospectuses and reports;

G. perform internal audit examinations in accordance with a charter to
be adopted by the Company and the Corporation;

H. assist with the design, development, and operation of the
Corporation and the Funds;

I. provide individuals reasonably acceptable to the Board for
nomination, appointment, or election as officers of the
Corporation, who will be responsible for the management of certain
of the Corporation's affairs as determined by the Corporation's
Board; and

J. consult with the Corporation and its Board on matters concerning
the Corporation and its affairs.

The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Corporation under this Section Two, shall
hereafter be referred to as "Administrative Services."

ARTICLE 6. RECORDS.

The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act and the rules
thereunder, as the same may be amended from time to time, pertaining to the
Administrative Services performed by it and not otherwise created and
maintained by another party pursuant to contract with the Corporation. Where
applicable, such records shall be maintained by the Company for the periods
and in the places required by Rule 31a-2 under the 1940 Act. The books and
records pertaining to the Corporation which are in the possession of the
Company shall be the property of the Corporation. The Corporation, or the
Corporation's authorized representatives, shall have access to such books and
records at all times during the Company's normal business hours. Upon the
reasonable request of the Corporation, copies of any such books and records
shall be provided promptly by the Company to the Corporation or the
Corporation's authorized representatives.

ARTICLE 7. EXPENSES.

The Company shall be responsible for expenses incurred in providing
office space, equipment, and personnel as may be necessary or convenient to
provide the Administrative Services to the Corporation, including the
compensation of the Company employees who serve as trustees or directors or
officers of the Corporation. The Corporation shall be responsible for all
other expenses incurred by the Company on behalf of the Corporation,
including without limitation postage and courier expenses, printing expenses,
travel expenses, registration fees, filing fees, fees of outside counsel and
independent auditors, or other professional services, organizational
expenses, insurance premiums, fees payable to persons who are not the
Company's employees, trade association dues, and other expenses properly
payable by the Funds and/or the Classes.

ARTICLE 8. COMPENSATION.

For the Administrative Services provided, the Corporation hereby agrees
to pay and the Company hereby agrees to accept as full compensation for its
services rendered hereunder fees as set forth in Schedule B attached hereto.
The compensation and out of pocket expenses attributable to the Fund shall be
accrued by the Fund and paid to the Company no less frequently than monthly.
The Company will maintain detailed information about the compensation and out
of pocket expenses by Fund and Class.

ARTICLE 9. RESPONSIBILITY OF ADMINISTRATOR.

A. The Company shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Corporation in
connection with performing Administrative Services, 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 Section
Two. The Company shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Corporation) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Any person, even though
also an officer, director, trustee, partner, employee or agent of
the Company, who may be or become an officer, director, trustee,
partner, employee or agent of the Corporation, shall be deemed,
when rendering services to the Corporation or acting on any
business of the Corporation (other than services or business in
connection with the duties of the Company hereunder) to be
rendering such services to or acting solely for the Corporation and
not as an officer, director, trustee, partner, employee or agent or
one under the control or direction of the Company even though paid
by the Company.

B. The Company shall be kept indemnified by the Corporation and be
without liability for any action taken by it in performing
Administrative Services 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. In order that the
indemnification provisions contained in this Article 9 shall apply,
however, it is understood that if in any case the Corporation may
be asked to indemnify or hold the Company harmless, the Corporation
shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further understood
that the Company will use all reasonable care to identify and
notify the Corporation promptly concerning any situation which
presents or appears likely to present the probability of such a
claim for indemnification against the Corporation. The Corporation
shall have the option to defend the Company against any claim which
may be the subject of this indemnification. In the event that the
Corporation so elects, it will so notify the Company and thereupon
the Corporation shall take over complete defense of the claim, and
the Company shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
Article 9. The Company shall in no case confess any claim or make
any compromise in any case in which the Corporation will be asked
to indemnify the Company except with the Corporation's written
consent.

SECTION THREE: TRANSFER AGENCY SERVICES.

ARTICLE 10. TERMS OF APPOINTMENT.

Subject to the terms and conditions set forth in this Agreement, the
Corporation hereby appoints the Company to act as, and the Company agrees to
act as, transfer agent and dividend disbursing agent for each Fund's Shares,
and agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of any Fund ("Shareholder(s)"), including
without limitation any periodic investment plan or periodic withdrawal
program.

ARTICLE 11. DUTIES OF THE COMPANY.

The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Corporation
as to any Fund:

A. Purchases

(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefor to the custodian of the relevant Fund
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.

(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and
hold such Shares in the appropriate Shareholder accounts.

(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.

(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund's distributor will reimburse the Company
on the amount of such excess.

B. Distribution

(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile
the amounts so requested and the amounts actually received
with the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall be made to
the Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and

(2) The Company shall maintain records of account for each Fund
and Class and advise the Corporation, each Fund and Class and
its Shareholders as to the foregoing.

C. Redemptions and Transfers

(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the
total amount of redemption requests processed and monies paid
to the Company by the Custodian for redemptions.

(2) At the appropriate time upon receiving redemption proceeds
from the Custodian with respect to any redemption, the Company
shall pay or cause to be paid the redemption proceeds in the
manner instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.

(3) If any certificate returned for redemption or other request
for redemption does not comply with the procedures for
redemption approved by the Fund, the Company shall promptly
notify the Shareholder of such fact, together with the reason
therefor, and shall effect such redemption at the price
applicable to the date and time of receipt of documents
complying with said procedures.

(4) The Company shall effect transfers of Shares by the registered
owners thereof.

(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.

D. Recordkeeping

(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the
total number of Shares of the Fund and/or Class which are
authorized under the Corporation's Articles of Incorporation
and are issued and outstanding. The Company shall also
provide the Fund on a regular basis or upon reasonable request
with the total number of Shares which are authorized and
issued and outstanding, but shall have no obligation when
recording the issuance of Shares, except as otherwise set
forth herein, to monitor the issuance of such Shares or to
take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility
of the Fund.

(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Corporation or
the Fund to include a record for each Shareholder's account of
the following:

(a) Name, address and tax identification number (and whether
such number has been certified);

(b) Number of Shares held;

(d) Any stop or restraining order placed against the account;

(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;

(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;

(g) Certificate numbers and denominations for any Shareholder
holding certificates;

(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.

(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the Fund and
cease to retain in the Company's files, records and documents
created and maintained by the Company pursuant to this
Agreement, which are no longer needed by the Company in
performance of its services or for its protection. If not so
turned over to the Fund, such records and documents will be
retained by the Company for six years from the year of
creation, during the first two of which such documents will be
in readily accessible form. At the end of the six year
period, such records and documents will either be turned over
to the Fund or destroyed in accordance with Proper
Instructions.

E. Confirmations/Reports

(1) The Company shall furnish to the Fund periodically the
following information:

(a) A copy of the transaction register;

(b) Dividend and reinvestment blotters;

(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;

(d) Shareholder lists and statistical information;

(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;

(f) Such other information as may be agreed upon from time to
time.

(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.

(3) In addition to and not in lieu of the services set forth
above, the Company shall:

(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant, agent
in connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program),
including but not limited to: maintaining all
Shareholder accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding taxes
on accounts subject to back-up or other withholding
(including
non-resident alien accounts), preparing and filing
reports on U.S. Treasury Department Form 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms
and statements of account to Shareholders for all
purchases and redemptions of Shares and other conformable
transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and
providing Shareholder account information; and

(b) provide a system which will enable the Fund to monitor
the total number of Shares of each Fund (and/or Class)
sold in each state ("blue sky reporting"). The Fund
shall by Proper Instructions (i) identify to the Company
those transactions and assets to be treated as exempt
from the blue sky reporting for each state and (ii)
verify the classification of transactions for each state
on the system prior to activation and thereafter monitor
the daily activity for each state. The responsibility of
the Company for each Fund's (and/or Class's) state blue
sky registration status is limited solely to the
recording of the initial classification of transactions
or accounts with regard to blue sky compliance and the
reporting of such transactions and accounts to the Fund
as provided above.

F. Other Duties

(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;

(2) The Company shall prepare Shareholder meeting lists, mail
proxy cards and other material supplied to it by the Fund in
connection with Shareholder meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;

(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.

ARTICLE 12. DUTIES OF THE CORPORATION.

A. Share Certificates

The Corporation shall supply the Company with a sufficient supply
of blank Share certificates and from time to time shall renew such
supply upon request of the Company. Such blank Share certificates
shall be properly signed, manually or by facsimile, if authorized
by the Corporation and shall bear the seal of the Corporation or
facsimile thereof; and notwithstanding the death, resignation or
removal of any officer of the Corporation authorized to sign
certificates, the Company may continue to countersign certificates
which bear the manual or facsimile signature of such officer until
otherwise directed by the Corporation.

B. Distributions

The Fund shall promptly inform the Company of the declaration of
any dividend or distribution on account of any Fund's shares.

ARTICLE 13. COMPENSATION AND EXPENSES.

A. Annual Fee

For performance by the Company pursuant to Section Three of this
Agreement, the Corporation and/or the Fund agree to pay the Company
an annual maintenance fee for each Shareholder account as agreed
upon between the parties and as may be added to or amended from
time to time. Such fees may be changed from time to time subject
to written agreement between the Corporation and the Company.
Pursuant to information in the Fund Prospectus or other information
or instructions from the Fund, the Company may sub-divide any Fund
into Classes or other sub-components for recordkeeping purposes.
The Company will charge the Fund the same fees for each such Class
or sub-component the same as if each were a Fund.

B. Reimbursements

In addition to the fee paid under Article 13A above, the
Corporation and/or Fund agree to reimburse the Company for
out-of-pocket expenses or advances incurred by the Company for the
items agreed upon between the parties, as may be added to or
amended from time to time. In addition, any other expenses
incurred by the Company at the request or with the consent of the
Corporation and/or the Fund, will be reimbursed by the appropriate
Fund.

C. Payment

The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.

SECTION FOUR: GENERAL PROVISIONS.

ARTICLE 14. DUTIES OF THE FUND.

The Fund assumes ultimate responsibility for the preparation, contents
and distribution of its own offering document and for complying with all
applicable requirements of the 1940 Act, the Internal Revenue Code, and any
other laws, rules and regulations of government authorities having
jurisdiction.

ARTICLE 15. PROPER INSTRUCTIONS.

As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set forth
the specific transaction or type of transaction involved. Oral instructions
will be deemed to be Proper Instructions if (a) the Company reasonably
believes them to have been given by a person previously authorized in Proper
Instructions to give such instructions with respect to the transaction
involved, and (b) the Corporation, or the Fund, and the Company promptly
cause such oral instructions to be confirmed in writing. Proper Instructions
may include communications effected directly between electro-mechanical or
electronic devices provided that the Corporation, or the Fund, and the
Company are satisfied that such procedures afford adequate safeguards for the
Fund's assets. Proper Instructions may only be amended in writing.

ARTICLE 16. ASSIGNMENT.

Except as provided below, neither this Agreement nor any of the rights
or obligations under this Agreement may be assigned by either party without
the written consent of the other party.

A. This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.

B. With regard to Transfer Agency Services, the Company may, in
consultation with the Corporation, subcontract for the performance
of Transfer Agency Services with

(1) its subsidiary, Federated Shareholder Service Company, a
Delaware business trust, which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934, as amended, or any succeeding statute
("Section 17A(c)(1)"); or

(2) such other provider of services duly registered as a transfer
agent under Section 17A(c)(1) as Company shall select.

The Company shall be as fully responsible to the Corporation for
the acts and omissions of any subcontractor as it is for its own
acts and omissions.

C. With regard to Fund Accounting Services and Administrative
Services, the Company may without further consent on the part of
the Corporation subcontract for the performance of such services
with Federated Administrative Services, a wholly-owned subsidiary
of the Company.

D. The Company shall upon instruction from the Corporation subcontract
for the performance of services under this Agreement with an Agent
selected by the Corporation, other than as described in B. and C.
above; provided, however, that the Company shall in no way be
responsible to the Corporation for the acts and omissions of the
Agent.

ARTICLE 17. DOCUMENTS.

A. In connection with the appointment of the Company under this
Agreement, the Corporation shall file with the Company the
following documents:

(1) A copy of the Charter and By-Laws of the Corporation and all
amendments thereto;

(2) A copy of the resolution of the Board of the Corporation
authorizing this Agreement;

(3) Specimens of all forms of outstanding Share certificates of
the Corporation or the Funds in the forms approved by the
Board of the
Corporation with a certificate of the Secretary of the
Corporation as to such approval;

(4) All account application forms and other documents relating to
a Shareholder's account; and

(5) A copy of the current Prospectus for each Fund.

B. The Fund will also furnish from time to time the following
documents:

(1) Each resolution of the Board of the Corporation authorizing
the original issuance of each Fund's, and/or Class's Shares;

(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund and/or Class;

(3) A certified copy of each amendment to the governing document
and the By-Laws of the Corporation;

(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Custodian and
agents for fund accountant, custody services procurement, and
shareholder recordkeeping or transfer agency services;

(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;

(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and

(7) Revisions to the Prospectus of each Fund.

ARTICLE 18. REPRESENTATIONS AND WARRANTIES.

A. Representations and Warranties of the Company

The Company represents and warrants to the Fund that:

(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;

(2) it is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the Commonwealth of Pennsylvania;

(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;

(4) all requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement;

(5) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and

(6) it is in compliance with federal securities law requirements
and in good standing as an administrator and fund accountant.

B. Representations and Warranties of the Corporation

The Corporation represents and warrants to the Company that:

(1) It is an investment company duly organized and existing and in
good standing under the laws of the State of Maryland;

(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;

(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;

(4) The Corporation is an open-end investment company registered
under the 1940 Act; and

(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of
each Fund being offered for sale.

ARTICLE 19. STANDARD OF CARE AND INDEMNIFICATION.

A. Standard of Care

With regard to Sections One and Three, the Company shall be held to
a standard of reasonable care in carrying out the provisions of
this Contract. The Company shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Corporation)
on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or state laws
or regulations, and is in good faith and without negligence.

B. Indemnification by Corporation

The Company shall not be responsible for and the Corporation or
Fund shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents, employees and affiliates,
harmless against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of or
attributable to:

(1) The acts or omissions of any Custodian, Adviser, Sub-adviser
or other party contracted by or approved by the Corporation or
Fund,

(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which

(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of the
Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information;

(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds;

(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other third
parties contracted by or approved by the Corporation or
Fund for use in the performance of services under this
Agreement; or

(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Corporation.

(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Corporation or the Fund.

(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations.

Provided, however, that the Company shall not be protected by
this Article 19.B. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties or failure to
meet the standard of care set forth in 19.A. above.

C. Reliance

At any time the Company may apply to any officer of the Corporation
or Fund for instructions, and may consult with legal counsel with
respect to any matter arising in connection with the services to be
performed by the Company under this Agreement, and the Company and
its agents or subcontractors shall not be liable and shall be
indemnified by the Corporation or the appropriate Fund for any
action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Corporation or the Fund, and the
proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.

D. Notification

In order that the indemnification provisions contained in this
Article 19 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior
written consent.

ARTICLE 20. TERM AND TERMINATION OF AGREEMENT.

This Agreement shall be effective from October 1, 1996 and shall
continue until August 31, 1999 ("Initial Term"). Thereafter, the Agreement
will continue for one year terms. After the expiration of the Initial Term,
the Agreement can be terminated by either party upon one hundred twenty (120)
days written notice to be effective as of the end of such one hundred twenty
(10) day period. In the event, however, of willful misfeasance, bad faith,
negligence or reckless disregard of its duties by the Company, the
Corporation has the right to terminate the Agreement upon sixty (60) days
written notice, if Company has not cured such willful misfeasance, bad faith,
negligence or reckless disregard of its duties within 60 days. The
termination date for all original or after-added Funds which are, or become,
a party to this Agreement shall be coterminous. Funds that merge or dissolve
during the Term, shall cease to be a party on the effective date of such
merger or dissolution.

Should the Corporation exercise its rights to terminate other than as a
result of willful misfeasance, bad faith, negligence or reckless disregard of
its duties by the Company, all out-of-pocket expenses associated with the
movement of records and materials will be borne by the Corporation or the
appropriate Fund and the Company reserves the right to charge for any other
reasonable expenses associated with such termination. The provisions of
Articles 9, 19 and 20 shall survive the termination of this Agreement.

ARTICLE 21. AMENDMENT.

This Agreement may be amended or modified by a written agreement
executed by both parties.

ARTICLE 22. INTERPRETIVE AND ADDITIONAL PROVISIONS.

In connection with the operation of this Agreement, the Company and the
Corporation may from time to time agree on such provisions interpretive of 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 in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Charter. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be
an amendment of this Agreement.

ARTICLE 23. GOVERNING LAW.

This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Pennsylvania.

ARTICLE 24. NOTICES.

Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Corporation at 2 World
Financial Center, Building B, 25th Floor, New York, New York, 10281-1198, or
to the Company at Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, or to such other address as the Corporation or the Company may
hereafter specify, shall be deemed to have been properly delivered or given
hereunder to the respective address.

ARTICLE 25. COUNTERPARTS.

This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.

ARTICLE 26. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE
COMPANY.

The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any of
the Trustees or Shareholders of the Company, but bind only the appropriate
property of the Fund, or Class, as provided in the Declaration of Trust.

ARTICLE 27. MERGER OF AGREEMENT.

This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.

ARTICLE 28. SUCCESSOR AGENT.

If a successor agent for the Corporation shall be appointed by the
Corporation, the Company shall upon termination of this Agreement deliver to
such successor agent at the office of the Company all properties of the
Corporation held by it hereunder. If no such successor agent shall be
appointed, the Company shall at its office upon receipt of Proper
Instructions deliver such properties in accordance with such instructions.

In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before the
date when such termination shall become effective, then the Company shall
have the right to deliver to a bank or trust company, which is a "bank" as
defined in the 1940 Act, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $2,000,000, all properties held by the Company under this
Agreement. Thereafter, such bank or trust company shall be the successor of
the Company under this Agreement.

ARTICLE 29. FORCE MAJEURE.

The Company shall have no liability for cessation of services hereunder
or any damages resulting therefrom to the Fund as a result of work stoppage,
power or other mechanical failure, that in each case is not under the
Company's direct control, or natural disaster, governmental action,
communication disruption or other impossibility of performance.

ARTICLE 30. ASSIGNMENT; SUCCESSORS.

This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign all
of or a substantial portion of its business to a successor, or to a party
controlling, controlled by, or under common control with such party. Nothing
in this Article 30 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.

ARTICLE 31. SEVERABILITY.

In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.

ARTICLE 32. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE
CORPORATION.

The execution and delivery of this Agreement have been authorized by the
Trustees of the Corporation and signed by an authorized officer of the
Corporation, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any of
the Trustees or Shareholders of the Corporation, but bind only the property
of the Fund, or Class, as provided in the Declaration of Trust.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.

BATTERY PARK FUNDS, INC.

By:____________________________________
Robert Levine
President

FEDERATED SERVICES COMPANY

By:____________________________________
Thomas J. Ward
Secretary

EXHIBIT 1
TO THE
AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
AND
TRANSFER AGENCY SERVICES

BATTERY PARK FUNDS, INC.
BATTERY PARK HIGH YIELD FUND
CLASS A SHARES
CLASS Y SHARES

SCHEDULE A
TO THE
AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
AND
TRANSFER AGENCY SERVICES

BATTERY PARK FUNDS, INC.
FUND ACCOUNTING
FEE SCHEDULE

Max. Annual Fee Average Daily Net Assets of the Funds

.03 of 1% on the first $100 million
.02 of 1% on the next $100 to $300 million
.01 of 1% on the next $300 to $500 million
.005 of 1% on assets in excess of $500 million

Minimum fee per fund $39,000
Additional per class charge $12,000

Plus pricing charges and out-of-pocket expenses

Out-of-pocket expenses include the following: postage (including
overnight courier service), statement stock, envelopes, telephones,
telecommunication charges (including FAX), travel, duplicating, forms,
supplies, microfiche, computer access charges, client specific system
enhancements, access to the shareholder recordkeeping system, variable rate
change notification services, and paydown factor notification services.

SCHEDULE B
TO THE
AGREEMENT
FOR
ADMINISTRATIVE SERVICES,
AND
TRANSFER AGENCY SERVICES

BATTERY PARK FUNDS, INC.
ADMINISTRATIVE SERVICES
FEE SCHEDULE

Maximum Average Aggregate Daily
Administrative Fee Net Assets of the Trust
------------------ -----------------------

.100 of 1% on the first $150 million
.075 of 1% on assets in excess of $150 million

Annual minimum fee per Fund: $50,000

SCHEDULE C
TO THE
AGREEMENT
FOR
ADMINISTRATIVE SERVICES,
AND
TRANSFER AGENCY SERVICES

BATTERY PARK FUNDS, INC.
TRANSFER AGENCY SERVICES
FEE SCHEDULE

Annual Base Fee Per Class: $20,000, plus the greater of .02 of 1% or $10,000.

Per Account Charges: $16.00

Plus out-of-pocket expenses

<TABLE>
BATTERY PARK HIGH YIELD FUND
SUMMARY OF FUND EXPENSES
<CAPTION>
CLASS A CLASS B
- --------------------------------------------------------------------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES

Maximum Sales Load Imposed on Purchases (as
a percentage of offering price) 4.50% None

Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None

Deferred Sales Load (as a percentage of
original purchase price or redemption
proceeds, as applicable None None

Redemption Fees (as a percentage of amount
redeemed, if applicable) None None

Exchange Fee None None

ANNUAL FUND OPERATING EXPENSES
(As a percentage of projected average net assets)

Management Fees (after waiver)(1) 0.37% 0.37%

12b-1 Fees 0.25% None

Total Other Expenses 0.63% 0.63%
Total Annual Fund Operating Expenses (2) 1.25% 1.00%

</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee by the investment adviser. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 0.65%.

(2) Total Annual Fund Operating Expenses for the Class A and Class Y Shares
are estimated to be 1.53% and 1.28% respectively, absent the voluntary waiver
of management fees.

*Annual Fund Operating Expenses are estimated based on average expenses
expected to be incurred during the fiscal year ending September 30, 1997.
During the course of this period, expenses may be more or less than the
average amount shown.

EXAMPLE
- -------
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return; (2) redemption at the end of each time period; and (3) payment
of the maximum sales charge, if applicable. The Fund charges no redemption
fees.

<TABLE>
<CAPTION>
Class A Class Y
<S> <C> <C>
1 Year $57 $10
3 Years $83 $32

</TABLE>
The above example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. This
example is based on estimated data for the Fund's fiscal year ending
September 30, 1997.

EXHIBIT 9(B)

LICENSE AGREEMENT
RELATING TO USE OF NAME AND USE OF SERVICE MARK

AGREEMENT made as of the first day of October, 1996, by and between
NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC., a New York corporation
("NCRAM"), and BATTERY PARK FUNDS, INC., a Maryland corporation (the "Fund");

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the Fund wishes to use one or more of the service marks and the
related trade names and company names (the "Marks") in Appendix A in its
corporate name and in connection with mutual fund investment services (the
"Services");

WHEREAS, the Parties agree that substantial protections are required in
order to protect NCRAM's rights, title and interest in the Marks; and

WHEREAS, the Parties agree that the Fund shall be entitled to use the
Marks solely in accordance with the provisions of this Agreement.

NOW, THEREFORE, in consideration of the premises and of the covenants
hereinafter contained, NCRAM and the Fund hereby agree as follows:

1. NCRAM hereby grants the Fund a non-exclusive license to use the
Marks in the Fund's corporate name and solely in connection with the
Services.

2. The Fund specifically acknowledges that the Marks are owned and
usable exclusively by NCRAM. Without prior permission, the Fund shall not
register and/or use the Marks or any variations thereof in any country. The
Fund shall not grant to any other third party the right to use the Marks or
variations thereof without the advance written consent of NCRAM, signed by a
duly authorized officer.

3. The Fund shall not by any action or omission impair or affect
the validity of, or raise any question concerning or objection to, the Marks
or NCRAM's ownership thereof.

4. The Fund agrees that it will assist NCRAM to the extent necessary
to ensure that the Marks will be as protectable as possible.

5. The Fund agrees that NCRAM has the right to grant to other
entities, including without limitation other investment companies, the right
to use the Marks or variations thereof in their corporate names and in
connection with Services. If any consent or permission is required by
applicable law, the Fund will grant all requisite consents.

6. NCRAM makes no representation or warranty that the use of the Marks
will not infringe any right, title or interest in any service mark,
trademark, trade name, copyright or other such right of any third party.

7. The Fund agrees that the standards of services and quality of
advertising and other materials used in and for the Services shall be at
least equivalent to the standards employed for other NCRAM services. If, in
the sole discretion of NCRAM, their standards are not being met, then NCRAM
shall give notice thereof and corrective steps shall be taken immediately.

8. If, during the term of this Agreement the use of the Marks
result in a claim of infringement by any third party, the Fund shall
cooperate with NCRAM in defending such claims. The Fund shall take such
actions as are reasonably required by NCRAM to satisfy this obligation.

9. The Fund shall promptly notify NCRAM of any possible infringement,
illegal use, misuse or misappropriation of the Marks, and agrees to cooperate
fully with NCRAM if any of these acts occur.

10. This Agreement shall terminate upon sixty (60) days notice by
either party. The Fund shall cease use of the Marks no later than ninety
(90) days after such notice is given.

11. All notices under this Agreement shall be sent by registered mail,
postage prepaid to the following address (or to such other address as each
party may designate in writing):

a) If to NCRAM, at

b) If to the Fund, at

12. This Agreement represents the entire understanding of the
parties hereto with respect to the subject matter hereof, supersedes all
prior written or oral agreements and shall not be modified except by
subsequent written agreement duly executed by or on behalf of the parties by
authorized officers. If any of the provisions of this Agreement shall be
held void or unenforceable, the other provisions shall survive and remain in
full force and effect.

13. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original agreement but all of which shall be
considered one and the same instrument.

14. Any failure by either party to require the other party to
strictly perform any provision of this Agreement shall not waive, effect or
diminish any right thereafter to demand strict compliance and performance
therewith.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.
By _____________________
President

BATTERY PARK FUNDS, INC.
By _____________________
President

APPENDIX A
---------

List of marks licensed:

1. BATTERY PARK

2. BATTERY PARK (plus tree design)

BROWN & WOOD LLP
One World Trade Center
New York, New York 10048-0557
Telephone: (212) 839-5300
Facsimile: (212) 839-5599

October 10, 1996

Battery Park Funds, Inc.
2 World Financial Center
New York, NY 10281-1198

Ladies and Gentlemen:

We have acted as counsel for Battery Park Funds, Inc. (the "Fund"), a
series-type investment company organized under the laws of the State of
Maryland, in connection with the organization of the Fund and its
registration as an open-end investment company under the Investment Company
Act of 1940, as amended. This opinion is being furnished in connection with
the registration of an indefinite number of shares of common stock,
designated Class A and Class Y, par value $0.001 per share, of Battery
Park/SM/ High Yield Fund, a series of the Fund (the "Shares") under the
Securities Act of 1933, which registration is being effected pursuant to a
registration statement on Form N-1A (File No. 333-7805), as amended (the
"Registration Statement").

As counsel for the Fund, we are familiar with the proceedings taken by
it in connection with the authorization, issuance and sale of the Shares.
In addition, we have examined and are familiar with the Articles of
Incorporation of the Fund, as amended, the By-Laws of the Fund, as amended,
and such other documents as we have deemed relevant to the matters referred
to in this opinion.

Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued,
fully paid and non-assessable shares of common stock of the Fund.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus and
statement of additional information constituting parts thereof.

Very truly yours,

/s/ BROWN & WOOD LLP

Exhibit 11

INDEPENDENT AUDITORS' CONSENT

To the Board of Directors of the BATTERY PARK FUNDS, INC.
and the Shareholders of BATTERY PARK HIGH YIELD FUND:

We consent to the use in Pre-Effective Amendment No. 2 to Registration
Statement (No. 333-7805) of Battery Park Funds, Inc. of our report dated
October 2, 1996, appearing in the Statement of Additional Information, which
is a part of such Registration Statement.

/s/ Deloitte & Touche LLP

Pittsburgh, Pennsylvania
October 9, 1996

EXHIBIT 13
CERTIFICATE OF THE SOLE STOCKHOLDER OF
BATTERY PARK/SM/ HIGH YIELD FUND

Nomura Corporate Research and Asset Management Inc. ("NCRAM"), the
holder of 10 Class A shares of common stock, par value $0.001 per share, and
10,000 Class Y shares of common stock, par value $0.001, of Battery Park/SM/
High Yield Fund (the "Fund"), a series of Battery Park Funds, Inc., a
Maryland corporation, does hereby confirm to the Fund its representation that
it purchased such shares for investment purposes, with no present intention
of redeeming or reselling any portion thereof, and does further agree that if
it redeems any portion of such shares prior to the amortization of the Fund's
organizational expenses, the proceeds thereof will be reduced by the
proportionate amount of unamortized organizational expenses which the number
of shares being redeemed bears to the number of shares initially purchased
and outstanding at the time of redemption. NCRAM further agrees that in the
event such shares are sold or otherwise transferred to any other party, that
prior to such sale or transfer NCRAM will obtain on behalf of the Fund an
agreement from such other party to comply with the foregoing as to the
reduction of redemption proceeds and to obtain a similar agreement from any
transferee of such party.

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.

By: /s/ Deborah A. Montick
-------------------------------
Name: Deborah A. Montick
Title: Secretary

Dated: October 1, 1996

EXHIBIT 15

BATTERY PARK FUNDS, INC.

DISTRIBUTION PLAN

This Distribution Plan ("Plan") is adopted as of October 1, 1996, by the
Board of Directors of Battery Park Funds, Inc. (the "Corporation"), a
Maryland corporation with respect to certain classes of shares ("Classes") of
the portfolios of the Corporation (the "Funds") set forth in exhibits hereto.

1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the Corporation to
make payments as contemplated herein, in conjunction with the distribution of
Classes of the Funds ("Shares").

2. This Plan is designed to finance activities of Nomura Securities
International, Inc. ("NSI") principally intended to result in the sale of
Shares to include: (a) providing incentives to dealers ("Dealers") to sell
Shares; (b) advertising and marketing of Shares to include preparing,
printing and distributing prospectuses and sales literature to prospective
shareholders and with Dealers; and (c) implementing and operating the Plan.
In compensation for services provided pursuant to this Plan, NSI will be paid
a fee in respect of the Classes set forth on the applicable exhibit.

3. Any payment to NSI in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Corporation and
NSI. Any payments made by NSI to Dealers with funds received as compensation
under this Plan will be made pursuant to the "Sales Agreement" entered into
by NSI and the Institution.

4. NSI has the right (i) to select, in its sole discretion, the
Dealers to participate in the Plan and (ii) to terminate without cause and in
its sole discretion any Sales Agreement.

5. Quarterly in each year that this Plan remains in effect, NSI shall
prepare, or cause to be prepared, and furnish to the Board of Directors of
the Corporation, and the Board of Directors shall review, a written report of
the amounts expended under the Plan and the purpose for which such
expenditures were made.

6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Corporation's Board of
Directors; (b) the members of the Board of the Corporation who are not
interested persons of the Corporation and have no direct or indirect
financial interest in the operation of the Corporation's Plan or in any
related documents to the Plan ("Disinterested Directors"), cast in person at
a meeting called for the purpose of voting on the Plan; and (c) the
outstanding voting securities of the particular Class, as defined in Section
2(a)(42) of the Act and (ii) upon execution of an exhibit adopting this Plan
with respect to such Class.

7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added pursuant
to an exhibit during the initial year of this Plan for the period of one year
from the date set forth above and may be continued thereafter if this Plan is
approved with respect to each Class at least annually by a majority of the
Corporation's Board of Directors and a majority of the Disinterested
Directors, cast in person at a meeting called for the purpose of voting on
such Plan. If this Plan is adopted with respect to a Class after the first
annual approval by the Directors as described above, this Plan will be
effective as to that Class upon execution of the applicable exhibit pursuant
to the provisions of paragraph 6(ii) above and will continue in effect until
the next annual approval of this Plan by the Directors and thereafter for
successive periods of one year subject to approval as described above.

8. All material amendments to this Plan must be approved by a vote of
the Board of Directors of the Corporation and of the Disinterested Directors,
cast in person at a meeting called for the purpose of voting on it.

9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the Plan
without being approved by a majority vote of the outstanding voting
securities of the Classes as defined in Section 2(a)(42) of the Act.

10. This Plan may be terminated with respect to a particular Class at
any time by: (a) a majority vote of the Disinterested Directors; or (b) a
vote of a majority of the outstanding voting securities of the particular
Class as defined in Section 2(a)(42) of the Act; or (c) by NSI on 60 days'
notice to the Corporation.

11. While this Plan shall be in effect, the selection and nomination of
Disinterested Directors of the Corporation shall be committed to the
discretion of the Disinterested Directors then in office.

12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 10 herein.

13. This Plan shall be construed in accordance with and governed by the
laws of the State of New York.

EXHIBIT A
to the
Distribution Plan
BATTERY PARK FUNDS, INC.
BATTERY PARK HIGH YIELD FUND
CLASS A SHARES

The following provisions are incorporated and made part of the
Distribution Plan, dated October 1, 1996, of Battery Park Funds, Inc. with
respect to the class of shares set forth above.

This Distribution Plan is adopted by Battery Park Funds, Inc. with
respect to the class of shares set forth above.

In compensation for the services provided pursuant to this Plan, NSI
will be paid a monthly fee computed at the annual rate of 0.25 of 1% of the
average aggregate net asset value of the shares of Battery Park High Yield
Fund held during the month.

Witness the due execution hereof this 1st day of October, 1996.

BATTERY PARK FUNDS, INC.

By:
--------------------------------
Robert Levine
President

EXHIBIT 18

BATTERY PARK FUNDS, INC.

MULTIPLE CLASS PLAN

This Multiple Class Plan ("Plan") is adopted by BATTERY PARK FUNDS, INC. (the
"Corporation"), a Maryland corporation with respect to the classes of shares
("Classes") of the portfolios of the Corporation (the "Funds") set forth on
exhibit(s) hereto.

1. PURPOSE
-------

This Plan is adopted pursuant to Rule 18f-3 under the Investment Company
Act of 1940, as amended (the "Rule"), in connection with the issuance by
the Corporation of more than one class of shares of any or all of the
Funds in reliance on the Rule and to make payments as contemplated
herein.

2. SEPARATE ARRANGEMENTS/CLASS DIFFERENCES
---------------------------------------

a. Designation of Classes: The Funds set forth on exhibit(s)
----------------------
hereto offer two classes of shares: Class A Shares and Class Y
Shares.

b. Categories/types of investors eligible to purchase each class of
----------------------------------------------------------------
shares: Class Y Shares are sold only to certain qualified investors
------
and other entities as defined in the prospectus.

c. Sales loads: A maximum sales charge of 4.5% as a percentage of
-----------
offering price is imposed on purchases of Class A Shares. This sales
charge will be waived with respect to all investors who purchase
Class A Shares for a certain period of time following the Fund's
effective date (the "Special Offering"). Redemption by Shareholders
who purchase shares during the Special Offering will be subject to a
contingent deferred sales charge if such redemption occurs within one
year of the date of purchase.

Class Y Shares are offered at net asset value without a sales
charge to qualified investors investing at least a minimum of $1
million. Class Y Shares are also offered to Directors of the
Corporation and to retirement plans administered by Nomura
Corporate Research and Asset Management Inc. ("NCRAM"), or its
affiliates for the benefit of employees of NCRAM and/or its
affiliates.

d. 12b-1 fees: Under the applicable Distribution Plan adopted
----------
pursuant to Rule 12b-1 of the Investment Company Act of 1940, as
amended, the Funds are authorized to pay distribution fees of up to
0.25 of 1% of the average daily net assets of Class A Shares to
finance any activity which is principally intended to result in the
sale of Class A Shares.

e. Minimum investments: The minimum initial purchase for Class A
-------------------
Shares is $1,000 and the minimum subsequent purchase is $100. The
minimum initial purchase for Class Y Shares is $1 million.

f. Voting rights: Shareholders of each Class are entitled to one
-------------
vote for each share held and fractional votes for each fractional
share held on the record date for the election of Directors and any
other matter requiring a shareholder vote. Shareholders of the
Corporation will vote in the aggregate and not by Fund or Class
except (i) as otherwise expressly required by law or when the
Directors determine that the matter to be voted upon affects only the
interests of the shareholders of a particular Fund or Class, and (ii)
only holders of Class A Shares will be entitled to vote on matters
submitted to shareholder vote with respect to the Rule 12b-1 Plan
applicable to such Class.

g. Special services or features related to purchasing or redeeming
---------------------------------------------------------------
shares: Shareholders who have redeemed their Class A Shares have a
------
one-time privilege to reinstate their accounts by purchasing Class A
shares of the Funds, at net asset value without a sales charge, up to
the dollar amount redeemed. The reinstatement privilege is a
one-time privilege. It may be exercised only the first time a Class
A shareholder makes a redemption and must be exercised within 90 days
of the date of the redemption request.

3. EXPENSE ALLOCATIONS
-------------------

12B-1 FEES: Expenses incurred pursuant to the Rule 12b-1 Plan will
----------
be borne solely by the Class A Shares of the Funds.

SHAREHOLDER SERVICES: The Corporation may enter into a Shareholder
--------------------
Services Agreement with the Transfer Agent of the Corporation, Federated
Shareholder Services Company ("FSSC"), under which the Corporation may
make additional payments up to 0.25 of 1% of the average daily net asset
value of Class A Shares to obtain certain personal services for certain
shareholders and the maintenance of certain shareholder accounts. FSSC
would either perform shareholder services directly or will select
financial institutions to perform shareholder services, and financial
institutions would receive fees based upon Class A Shares owned by clients
or customers. The schedule of such fees and the basis upon which such
fees will be paid will be determined from time to time by the Corporation
and FSSC.

IV. CONVERSION FEATURES
-------------------

When the aggregate net investments of clients of a financial planner
with appropriate arrangements with the Fund(s) or Nomura Corporate
Research and Asset Management Inc. or the investment of a single
investor in Class A Shares reaches $1 million, such Class A Shares will
convert to Class Y Shares upon written request by the financial planner
or investor. Thereafter, such financial planner or individual investor
will be offered Class Y Shares of the Fund(s) so long as the aggregate
net investment of clients of such financial planner or the investment of
such individual investor equals at least $1 million in the Fund(s) at
the date the purchase order is accepted by the Transfer Agent.
Conversion of Class A Shares into Class Y Shares will occur at least
once each month ("Conversion Date") on the basis of the relative net
asset values of the shares of the two classes on the Conversion Date,
without the imposition of any fee or any other charge.

V. EFFECTIVENESS
-------------

This Plan shall become effective with respect to each Class, (i) to the
extent required by the Act, after approval by a majority vote of:
(a) the Corporation's Board of Directors; (b) the members of the Board
of the Corporation who are not interested persons of the Corporation and
have no direct or indirect financial interest in the operation of the
Corporation's Plan, and (ii) upon execution of an exhibit adopting this
Plan with respect to such Class.

VI. AMENDMENT
---------

Any material amendment to this Plan will be effective after approval by
a majority vote of: (a) the Corporation's Board of Directors; and
(b) the members of the Board of the
Corporation who are not interested persons of the Corporation and have
no direct or indirect financial interest in the operation of the
Corporation's Plan.

EXHIBIT A
to the
Multiple Class Plan

BATTERY PARK FUNDS, INC.

Battery Park High Yield Fund
Class A Shares
Class Y Shares

This Multiple Class Plan is adopted by Battery Park Funds with respect
to the Classes of Shares of the Fund of the Corporation set forth above.

Witness the due execution hereof this 1st day of October, 1996.

BATTERY PARK FUNDS, INC.

By:
-------------------------
Robert Levine
President