As Filed with the Securities and Exchange Commission on September
12, 1996
Registration Nos. 33-7085
811-7681
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. 1 X
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No. 1 X
(Check appropriate box or boxes)
_____________
FIRST CHOICE FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices; Zip Code)
Registrant's Telephone Number, including Area Code: 1-800-454-5104
George Martinez
BISYS Fund Services
3434 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Service)
Copy to:
Steven R. Howard, Esq.
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Approximate date of proposed public offering: As soon as
practicable after the effective date of this Registration
Statement.
Registrant has elected, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, to register an indefinite number of
shares. In accordance with Rule 24f-2, a registration fee in the
amount of $500 has previously been paid.
Registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until this registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a),
may determine.
___________________________________________________________
Total Pages:
Exhibit Index:
FIRST CHOICE FUNDS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933
U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
Part A: Prospectus Prospectus Caption
Item 1 . . . . Cover Page . .Cover Page
Item 2 . . . . . Synopsis Fund Expenses; Fee Table
Item 3Condensed Financial
Information. . . . . .
Not Applicable
Item 4General Description of
Registrant . . . . . .
The Investment Policies and Practices of the Funds
Item 5Management of the Fund Management of the Funds
Item 5A.Management's Discussion of
Fund Performance. . . . . . . . . . . . . . .
Not Applicable
Item 6Capital Stock and Other
Securities . . . . . .
Dividends, Distributions and Federal Income Tax; Other Information
Item 7Purchase of Securities
Being Offered . . . . . . . . . . . . . . . .
Fund Share Valuation; Pricing and Purchase of Fund Shares
Item 8 . . Redemption or
Repurchase . . . . . .
Redemption of Fund Shares
Item 9 .Legal Proceedings Financial Statements
<PAGE>
U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
Part B: Statement of Additional Information
. . . . . .Statement of Additional
Information Caption
Item 10. . . . Cover Page . . . . .Cover Page
Item .11Table of Contents . Table of Contents
Item 12General Information and
History . . . . . . . .
Not Applicable
Item 13Investment Objectives and
Policies. . . . . . . .
Investment Policies; Investment Restrictions
Item14 Management of the Fund . . . . .Management
Item . . . . . . . . . . 15Control Persons and
Principal Holders of
Securities . . . . . .
Management
Item 16Investment Advisory and
Other Services . . . . . . . . . . . . . . .
Management; Other Information; Custodian, Transfer Agent and
Dividend Disbursing Agent; Experts
Item 17Brokerage Allocation and Other Practices . . . . . . .
Portfolio Transactions
Item 18Capital Stock and Other
Securities . . . . . .
Other Information; Capitalization; Voting Rights
Item 19Purchase, Redemption and
Pricing of Securities
Being Offered. . . . . . . . . . . . . . . .
Pricing and Purchase of Fund Shares (Part A); Redemption of Fund
Shares (Part A); Determination of Net Asset Value
Item 20. . . . Tax Status . . . . . .Taxation
Item 21. . . Underwriters . . . . .Management
Item 22Calculation of Performance
Dat. . . . . . . . . .
Yield and Performance Information
Item 23. . . . . . . .
Financial Statements . . . . . . . . . . . . . Financial Statements
<PAGE>
Part C
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Registration
Statement.
<PAGE>
FIRST CHOICE FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
General and Account Information:
1-800-454-5104
PROSPECTUS
First American Capital Management, Inc.--Investment Adviser
("First American" or "Adviser")
BISYS FUND SERVICES--Administrator, Sponsor and Distributor
("BISYS or the "Administrator" or the "Distributor")
This Prospectus describes two money market funds ("U.S.
Treasury Reserve Fund" and "Cash Reserve Fund") (each a "Fund,"
collectively, the "Funds"), both of which are managed by First
American. The Funds and their investment objectives are:
. The U.S. Treasury Reserve Fund seeks to provide investors
with as high a level of current income as is consistent with
liquidity, maximum safety of principal and the maintenance of a
stable $1.00 net asset value per share by investing in U.S.
Treasury securities.
The Cash Reserve Fund seeks to provide investors with current
income, liquidity and the maintenance of a stable $1.00 net asset
value per share by investing in high quality, short-term
obligations.
The Fund's investment Adviser is First American Capital
Management, Inc., an affiliate of The First American Financial
Corporation ("First American Financial"), a leading provider of
real estate related financial and information services to real
property buyers and mortgage lenders and trust services through
its subsidiary First American Trust Company. See "Management of
Fund" in this Prospectus.
The Funds offer, and the Prospectus relates to, two classes of
shares the Institutional Class and Service Class. The Service
Class shares are available to customers who desire enhanced
shareholder servicing. The Institutional Class shares are
available to all other investors. The Service Class shares and
Institutional Class shares are identical in all respects, with
the exception that the Institutional Class shares do not impose
any shareholder servicing or Rule 12b-1 fees.
The Funds are separate investment funds of First Choice Funds
Trust (the "Trust"), a Delaware business trust and open-end,
diversified management investment company.
An investment in shares of the Trust is neither insured nor
guaranteed by the U.S. Government. There can be no assurance
that the Funds will be able to maintain a stable net asset value
of $1.00 per share.
Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by First American Financial or its
affiliates, and are not federally insured by, the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other
government agency, and may involve investment risk, including the
possible loss of principal.
This Prospectus sets forth concisely the information a
prospective investor should know before investing in either of
the Funds and should be read and retained for information about
each Fund.
A Statement of Additional Information dated September __, 1996
(the "SAI"), containing additional and more detailed information
about the Funds has been filed with the Securities and Exchange
Commission ("SEC") and is hereby incorporated by reference into
thi s Prospectus. It is available without charge and can be
obt ained by writing or calling the Funds at the address or
inf ormation number printed above.
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.
The Date of this Prospectus is September , 1996.
Table of Contents
Page
FUND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . .1
FEE TABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
IGHLIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS . . . . . . .4
NVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . .8
RISKS OF INVESTING IN THE FUNDS. . . . . . . . . . . . . . . . .9
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . .9
FUND SHARE VALUATION . . . . . . . . . . . . . . . . . . . . . 12
PRICING AND PURCHASE OF FUND SHARES. . . . . . . . . . . . . . 12
MINIMUM PURCHASE REQUIREMENTS. . . . . . . . . . . . . . . . . 13
INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . . . . . . . . . . . 13
EXCHANGE OF FUND SHARES. . . . . . . . . . . . . . . . . . . . 13
REDEMPTION OF FUND SHARES. . . . . . . . . . . . . . . . . . . 14
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX. . . . . . . . 16
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
FUND EXPENSES
The following expense table lists the costs and expenses that
an investor will incur either directly or indirectly as a
shareholder of each Fund. The information is based upon estimates.
FEE TABLE
U.S. Treasury
Reserve Fund Cash
Reserve Fund
Institutional Class Service Class Institutional Class Service Class
Shareholder Transaction Expe . . . . . . . .
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)
NonNonNon. . . . . .None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage
of offering price)
NonNonNon. . . . . .None
Deferred Sales Load (as a percentage of redemption fee)
None None None None
Redemption Fees1
NonNonNon. . . . . .None
Exchange Fees
NonNonNon. . . . . .None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees2
.30%.30.30 . . . ..30%
12b-1 Fees (after waiver)
Non.00Non. . . . . ..00%
Other Expenses
Shareholder Servicing Expenses
Non.25Non. . . . . ..25%
Other Operating Expenses (after waiver or reimbursement)
.20% .20% .20% .20%
Total Fund Operating Expenses (after waiver and/or reimbursement)3
.50.75.50. . . . ..75%
Example:
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% gross annual return and (2) redemption at the end
of each time period:
U.S. Treasury
Reserve Fund
Cash
Reserve Fund
Institutional Class Service Class Institutional Class Service Class
1 year
$$$. . . . . . $ 8
3 years
$1$2$1 . . . . .$24
The purpose of this table is to assist a shareholder in
understanding the various costs and expenses that an investor in
the Funds will bear.
_____________
1 Shareholders may be charged a wire redemption fee by their bank
for receiving a wire payment on their behalf.
2 For Service Class shareholders, absent the waiver, 12b-1 Fees
will not exceed 0.25%.
3 Absent waivers and/or reimbursements, which may be discontinued
at any time, Other Operating Expenses and Total Fund Operating
Expenses would be 0.38% and 1.18% for the Service Class and 0.38%
and 0.68% for the Institutional Class of the U.S. Treasury Reserve
Fund, respectively, and 0.38% and 1.18% for the Service Class and
0.38% and 0.68% for the Institutional Class of the Cash Reserve
Fund, respectively.
. This example should not be considered a representation of future
expenses, which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return; actual return may
be greater or less than the assumed amount.
HIGHLIGHTS
Investment Objectives and Policies of the Funds
This Prospectus describes two money market funds -
(collectively, the "Funds"), both of which are managed by First
American. Each Fund has distinct investment objectives and
policies.
U.S. Treasury Reserve Fund. The investment objective of
the U.S. Treasury Reserve Fund is to provide investors with as high
a level of current income as is consistent with liquidity, maximum
safety of principal, and the maintenance of a stable $1.00 net
asset value per share by investing in U.S. Treasury securities.
The Fund invests exclusively in direct short-term obligations of
the United States Treasury, which are backed by the full faith and
credit of the United States Government. The U.S. Treasury Reserve
Fund may also purchase securities on a "when-issued" basis and
purchase or sell them on a "forward commitment" basis.
Cash Reserve Fund. The investment objective of the Cash
Reserve Fund is to provide investors with current income, liquidity
and the maintenance of a stable $1.00 net asset value per share by
investing in high quality, U.S. dollar-denominated short-term
obligations which are determined by the Adviser to present minimal
credit risks.
The Cash Reserve Fund will invest in obligations permitted
to be purchased under Rule 2a-7 of the Investment Company Act of
1940 (the "1940 Act") including, but not limited to, (1)
obligations of the U.S. Government or its agencies or
instrumentalities; (2) commercial paper, loan participation
interests, medium-term notes, and other promissory notes, including
floating or variable rate obligations; and (3) the following
domestic, Yankeedollar and Eurodollar obligations: certificates of
deposit, time deposits, bankers' acceptances, commercial paper,
bearer deposit notes and other promissory notes, including floating
or variable rate obligations issued by U.S. or foreign bank holding
companies and their bank subsidiaries, branches and agencies. The
Cash Reserve Fund will invest only in issuers or instruments that
at the time of purchase (1) have received the highest short-term
rating by at least two Nationally Recognized Statistical Rating
Organizations ("NRSROs"), such as "A-1" by Standard & Poor's
Corporation ("S&P") and "P-1" by Moody's Investors Service, Inc.
("Moody's"); (2) are single rated and have received the highest
short-term rating by a NRSRO; or (3) are unrated, but are
determined to be of comparable quality by the Adviser pursuant to
guidelines approved by the Fund's Board of Trustees. The Cash
Reserve Fund may also purchase securities on a "when-issued" basis
and purchase or sell them on a "forward commitment" basis.
The Cash Reserve Fund will concentrate its investments in
obligations issued by the domestic banking industry. Concentration
in this context means the investment of more than 25% of the Fund's
assets in such industry. However, for temporary, defensive
purposes during periods when the Adviser believes that maintaining
this concentration may be inconsistent with the best interest of
shareholders, the Fund will not maintain this concentration.
The Cash Reserve Fund may also invest in variable rate master
demand obligations, which are unsecured demand notes that permit
the indebtedness thereunder to vary, and provide for periodic
adjustments in the interest rate. Because master demand
obligations are direct lending arrangements between the Fund and
the issuer, they are not normally traded. There is no secondary
market for the notes; however, the period of time remaining until
payment of principal and accrued interest can be recovered under a
variable rate master demand obligation generally will not exceed
seven days. To the extent this period is exceeded, the obligation
in question would be considered illiquid. Issuers of variable rate
master demand obligations must satisfy the same criteria as set
forth for other promissory notes (e.g., commercial paper). The
Fund will invest in variable rate master demand obligations only
when such obligations are determined by the Adviser, pursuant to
guidelines established by the Board of Trustees, to be of
comparable quality to rated issuers or instruments eligible for
investment by the Fund. In determining dollar-weighted average
portfolio maturity, a variable rate master demand obligation will
be deemed to have a maturity equal to the shorter of the period of
time remaining until the next readjustment of the interest rate or
the period of time remaining until the principal amount can be
recovered from the issuer on demand.
Amortized Cost Method of Valuation for the Funds
Portfolio investments of each Fund are valued based on the
amortized cost valuation technique pursuant to Rule 2a-7 under the
1940 Act. Obligations in which the Funds invest generally have
remaining maturities of 397 days or less, although upon satisfying
certain conditions of Rule 2a-7, the Funds may, to the extent
otherwise permissible, invest in instruments subject to repurchase
agreements and certain variable and floating rate obligations that
bear longer final maturities. The dollar-weighted average
portfolio maturity of each Fund will not exceed 90 days. See the
SAI for an explanation of the amortized cost valuation method.
Risks of Investing in the Funds
The Funds attempt to maintain the net asset value of their
shares at a constant $1.00 per share, although there can be no
assurance that the Funds will always be able to do so. The Funds
may not achieve as high a level of current income as other funds
that do not limit their investments to the high quality securities
in which the Funds invest.
The Cash Reserve Fund's policy of concentrating in the banking
industry increases the Fund's exposure to market conditions
prevailing in that industry. See "Risks of Investing in the Funds"
herein.
Management of the Funds
First American Capital Management, Inc. ("First American")
acts as investment Adviser to the Funds. For its services, First
American receives a fee from each Fund based upon each Fund's
average daily net assets. See "Fee Table" in this Prospectus.
BISYS Fund Services ("BISYS") acts as administrator, sponsor
and distributor to the Funds and is sometimes referred to herein as
"Administrator" or "Distributor." For its services, BISYS receives
a fee from the Funds based on each Fund's average daily net assets.
See "Management of the Funds" in this Prospectus. The Distributor
distributes the Funds' shares and may be reimbursed for certain of
its distribution-related expenses.
Guide to investing in the First Choice Trust Family of Funds
Purchase orders for the Funds received by 12:00 noon Eastern
time for the U.S. Treasury Reserve Fund or 3:00 p.m. Eastern time
for the Cash Reserve Fund, subject to the following limitations:
Minimum Initial Investment . . . . . . . . . . . . . . .$1,000
Minimum Initial Investment for IRAs. . . . . . . . . . .$ 250
Minimum Subsequent Investment. . . . . . . . . . . . . .$ 50
The Funds' shares are purchased at net asset value.
Shareholders may exchange shares between Funds by telephone or
mail. Exchanges may not be effected by facsimile.
Minimum initial exchange . . . . . . . . . . . . . . . .$500
(no minimum for subsequent exchanges)
Shareholders may redeem shares by telephone, mail, wire, or by
writing a check. Shares may not be redeemed by facsimile.
If a redemption request is received by 12:00 noon
Eastern time for the U.S. Treasury Reserve Fund or
3:00 p.m. Eastern time for the Cash Reserve Fund,
proceeds from the Funds will be transferred to a
designated account on that day.
Minimum check amount when using the check
writing service is $500.
The Funds reserve the right to involuntarily redeem
upon not less than 30 days notice all shares in a
Fund's account which have an aggregate value of
$500 or less.
(Redemption by telephone, wire and check writing is not
available for IRAs and trust relationships of First American Trust
Company or its affiliates.)
All distributions will be automatically paid in additional
shares at net asset value of the applicable Fund unless cash
payment is requested.
Distributions from the Funds are paid monthly.
THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS
Each Fund is a separate investment fund or portfolio, commonly
known as a mutual fund. The Funds are portfolios of a business
trust, First Choice Funds Trust, organized under the laws of
Delaware as an open-end management investment company. The Trust's
Board of Trustees oversees the overall management of the Funds and
elects the officers of the Trust.
The investment objective of the U.S. Treasury Reserve
Fund is to provide investors with as high a level of
current income as is consistent with liquidity, maximum
safety of principal, and the maintenance of a stable
$1.00 net asset value per share by investing in U.S.
Treasury securities.
The investment objective of the Cash Reserve Fund is to
provide investors with current income, liquidity and the
maintenance of a stable $1.00 net asset value per share
by investing in high quality, short-term obligations.
Each Fund follows its own investment objectives and policies,
including certain investment restrictions. The SAI contains
specific investment restrictions which govern the Funds'
investments. The Funds' investment objectives are fundamental
policies, which means that they may not be changed without a
majority vote of shareholders of the affected Fund. Except for the
objectives and those restrictions specifically identified as
fundamental, all other investment policies and practices described
in this Prospectus and in the SAI are not fundamental and may be
changed solely through the approval of the Board of Trustees.
The Adviser selects investments and makes investment
decisions based on the investment objective and policies of each
Fund. The following is a description of investment practices of
the Funds and the securities in which they may invest:
U.S. Treasury Obligations (Both Funds). Each Fund may invest,
and the U.S. Treasury Reserve Fund invests exclusively, in U.S.
Treasury obligations, whose principal and interest are backed by
the full faith and credit of the United States Government. U.S.
Treasury obligations consist of bills, notes and bonds, and
separately traded interest and principal component parts of such
obligations known as STRIPS, which generally differ in their
interest rates and maturities. U.S. Treasury bills, which have
original maturities of up to one year, notes, which have maturities
ranging from one year to 10 years, and bonds, which have original
maturities of 10 to 30 years, are direct obligations of the United
States Government.
U.S. Government Securities (Cash Reserve Fund Only). U.S.
Government securities are obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. U.S.
Government securities include debt securities issued or guaranteed
by U.S. Government-sponsored enterprises and federal agencies and
instrumentalities. Some types of U.S. Government securities are
supported by the full faith and credit of the United States
Government or U.S. Treasury guarantees, such as mortgage-backed
certificates guaranteed by the Government National Mortgage
Association ("GNMA"). Other types of U.S. Government securities,
such as obligations of the Student Loan Marketing Association,
provide recourse only to the credit of the agency or
instrumentality issuing the obligation. In the case of obligations
not backed by the full faith and credit of the United States
Government, the investor must look to the agency issuing or
guaranteeing the obligation for ultimate repayment.
Commercial Paper (Cash Reserve Fund Only). Commercial
paper includes short-term unsecured promissory notes, variable rate
demand notes and variable rate master demand notes issued by both
domestic and foreign bank holding companies, corporations and
financial institutions and United States Government agencies and
instrumentalities. All commercial paper purchased by the Fund is,
at the time of investment (1) given the highest short-term rating
by at least two Nationally Recognized Statistical Rating
Organizations ("NRSROs"), such as "A-1" by Standard & Poor's
Corporation ("S&P") and "P-1" by Moody's Investors Service, Inc.
("Moody's"); (2) single rated and given the highest short-term
rating by a NRSRO; or (3) unrated, but determined to be of
comparable quality by the Adviser pursuant to guidelines approved
by the Fund's Board of Trustees.
Corporate Debt Securities (Cash Reserve Fund Only). The Fund
may purchase corporate debt securities, subject to the rating and
quality requirements specified above. The Fund may invest in both
rated commercial paper and rated corporate debt obligations of
foreign issuers that meet the same quality criteria applicable to
investments by the Fund in commercial paper and corporate debt
obligations of domestic issuers. These investments, therefore, are
not expected to involve significant additional risks as compared to
the risks of investing in comparable domestic securities.
Generally, all foreign investments carry with them both
opportunities and risks not applicable to investments in securities
of domestic issuers, such as risks of foreign political and
economic instability, adverse movements in foreign exchange rates,
the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital, changes in foreign
governmental attitudes toward private investment (possibly leading
to nationalization, increased taxation, or confiscation of foreign
assets) and added difficulties inherent in obtaining and enforcing
a judgment against a foreign issuer of securities should it
default.
Domestic and Foreign Bank Obligations (Cash Reserve Fund
Only). These obligations include but are not restricted to
certificates of deposit, commercial paper, Yankeedollar
certificates of deposit, bankers' acceptances, Eurodollar
certificates of deposit and time deposits, promissory notes and
medium-term deposit notes. The Fund will not invest in any
obligations of its affiliates, as defined under the 1940 Act.
The Fund limits its investment in United States bank
obligations to obligations of United States banks (including
foreign branches). The Fund limits its investment in foreign bank
obligations to United States dollar-denominated obligations of
foreign banks (including United States branches of foreign banks)
which, in the opinion of the Adviser, are of an investment quality
comparable to obligations of United States banks which may be
purchased by the Fund. There is no limitation on the amount of the
Fund's assets which may be invested in obligations of foreign banks
meeting the conditions set forth herein.
Fixed time deposits may be withdrawn on demand by the
investor, but may be subject to early withdrawal penalties which
vary depending upon market conditions and the remaining maturity of
the obligation. There are no contractual restrictions on the right
to transfer a beneficial interest in a fixed time deposit to a
third party, although there is no market for such deposits.
Investments in fixed time deposits subject to withdrawal penalties
maturing from two days through seven days may not exceed 10% of the
value of the total assets of the Funds.
Obligations of foreign banks involve somewhat different
investment risks than those affecting obligations of United States
banks, including the possibilities that their liquidity could be
impaired because of future political and economic developments,
that the obligations may be less marketable than comparable
obligations of United States banks, that a foreign jurisdiction
might impose withholding taxes on interest income payable on those
obligations, that foreign deposits may be seized or nationalized,
that foreign governmental restrictions, such as exchange controls,
may be adopted which might adversely affect the payment of
principal and interest on those obligations, that the selection of
those obligations may be more difficult because there may be less
publicly available information concerning foreign banks, or that
the accounting, auditing and financial reporting standards,
practices and requirements applicable to foreign banks may differ
from those applicable to United States banks. Foreign banks are
not subject to examination by any United States Government agency
or instrumentality.
Investments in Eurodollar and Yankeedollar obligations involve
additional risks. Most notably, there generally is less publicly
available information about foreign companies; there may be less
governmental regulation and supervision; they may use different
accounting and financial standards; and the adoption of foreign
governmental restrictions may adversely affect the payment of
principal and interest on foreign investments. In addition, not
all foreign branches of United States banks are supervised or
examined by regulatory authorities as are United States banks, and
such branches may not be subject to reserve requirements.
STRIPS and Zero Coupon Securities (Both Funds). Each Fund
may invest in separately traded principal and interest components
of securities backed by the full faith and credit of the United
States Treasury. The principal and interests components of United
States Treasury bonds with remaining maturities of longer than ten
years are eligible to be traded independently under the Separate
Trading of Registered Interest and Principal of Securities
("STRIPS") program. Under the STRIPS program, the principal and
interest components are separately issued by the United States
Treasury at the request of depository financial institutions, which
then trade the component parts separately. The interest component
of STRIPS may be more volatile than that of United States Treasury
bills with comparable maturities. In accordance with Rule 2a-7,
the Funds' investments in STRIPS are limited to those with maturity
components not exceeding thirteen months. The Funds will not
actively trade in STRIPS.
Each Fund may invest in zero coupon securities. A zero coupon
security pays no interest to its holder during its life and is sold
at a discount to its face value at maturity. The market prices of
zero coupon securities generally are more volatile than the market
prices of securities that pay interest periodically and are more
sensitive to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
Variable rate demand obligations (Cash Reserve Fund Only).
Variable rate demand obligations have a maturity of 397 days or
less, but carry with them the right of the holder to put the
securities to a remarketing agent or other entity on short notice,
typically seven days or less. Generally, the remarketing agent
will adjust the interest rate every seven days (or at other
intervals corresponding to the notice period for the put), in order
to maintain the interest rate at the prevailing rate for securities
with a seven-day maturity. The remarketing agent is typically a
financial intermediary that has agreed to perform these services.
Variable rate master demand obligations permit the Fund to invest
fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower.
Because the obligations are direct lending arrangements between the
Fund and the borrower, they will not generally be traded, and there
is no secondary market for them, although they are redeemable (and
thus immediately repayable by the borrower) at principal amount,
plus accrued interest, at any time. The borrower also may prepay
up to the full amount of the obligation without penalty. While
master demand obligations, as such, are not typically rated by
credit rating agencies, if not so rated, the Fund may, under its
minimum rating standards, invest in them only if, in the opinion of
the Adviser, they are of an investment quality comparable to other
debt obligations in which the Fund may invest and are within the
credit quality policies, guidelines and procedures established by
the Fund's Board of Trustees. See the SAI for further details on
variable rate demand obligations and variable rate master demand
obligations.
Other Mutual Funds (Cash Reserve Fund Only). The Fund may
invest in shares of other open-end management investment companies,
subject to the limitations of the 1940 Act and subject to such
investments being consistent with the overall objective and
policies of the Fund, provided that any such purchases will be
limited to short-term investments in shares of unaffiliated
investment companies, and will not, in the aggregate, exceed 10% of
the Fund's net assets. The purchase of securities of other mutual
funds results in duplication of expenses such that investors
indirectly bear a proportionate share of the expenses of such
mutual funds including operating costs and investment advisory and
administrative fees.
"When-Issued" and "Forward Commitment" Transactions (Both
Funds). Each Fund may purchase securities on a when-issued and
delayed-delivery basis and may purchase or sell securities on a
forward commitment basis. When-issued or delayed delivery
transactions arise when securities are purchased by a Fund with
payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price and yield to the
Fund at the time of entering into the transaction. A forward
commitment transaction is an agreement by a Fund to purchase or
sell securities at a specified future date. When a Fund engages in
these transactions, the Fund relies on the buyer or seller, as the
case may be, to consummate the sale. Failure to do so may result
in the Fund missing the opportunity to obtain a price or yield
considered to be advantageous. When-issued and delayed delivery
transactions and forward commitment transactions may be expected to
occur a month or more before delivery is due. However, no payment
or delivery is made by a Fund until it receives payment or delivery
from the other party to the transaction. A separate account
containing only liquid assets, such as cash, U.S. Government
securities, or other liquid high grade debt obligations, equal to
the value of purchase commitments will be maintained until payment
is made. Such transactions have the effect of leverage on the
Funds and may contribute to volatility of a Fund's net asset value.
For further information, see the SAI.
Loans of Portfolio Securities (Both Funds). To increase
current income, each Fund may lend its portfolio securities in an
amount up to 33 1/3% of each such Fund's total assets to brokers,
dealers and financial institutions, provided certain conditions are
met, including the condition that each loan is secured continuously
by collateral maintained on a daily mark-to-market basis in an
amount at least equal to the current market value of the securities
loaned. These transactions involve a loan by the applicable Fund
and are subject to the same risks as repurchase agreements. For
further information, see the SAI.
Repurchase Agreements (Cash Reserve Fund Only). The Fund
may enter into repurchase agreements with any bank or broker-dealer
which, in the opinion of the Board of Trustees, presents a minimal
risk of bankruptcy. Under a repurchase agreement, a Fund acquires
securities and obtains a simultaneous commitment from the seller to
repurchase the securities at a specified time and at an agreed-upon
yield. The agreements will be fully collateralized and the value
of the collateral, including accrued interest, marked-to-market
daily. The agreements may be considered to be loans made by the
purchaser, collateralized by the underlying securities. If the
seller should default on its obligation to repurchase the
securities, the Fund may experience a loss of income from the
loaned securities and a decrease in the value of any collateral,
problems in exercising its rights to the underlying securities and
costs and time delays in connection with the disposition of such
securities. The Fund may invest up to 100% of its net assets in
repurchase agreements maturing in seven days or less; however, the
Fund may not invest more than 10% of its net assets in repurchase
agreements maturing in more than seven business days or in
securities for which market quotations are not readily available.
For more information about repurchase agreements, see "Investment
Policies" in the SAI.
Reverse Repurchase Agreements (Both Funds). Each Fund may
also enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet
redemptions. Pursuant to a reverse repurchase agreement, a Fund
will sell portfolio securities and agree to repurchase them from
the buyer at a particular date and price. Whenever a Fund enters
into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets in an amount at
least equal to the repurchase price marked-to-market daily
(including accrued interest), and will subsequently monitor the
account to ensure that such equivalent value is maintained. The
Funds pay interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act.
INVESTMENT RESTRICTIONS
(Both Funds, except as indicated)
The Funds also operate under certain investment
restrictions. Certain of the Funds' investment restrictions are
set forth below. For a complete list of the Funds' investment
restrictions, see the section in the Funds' SAI entitled
"Investment Restrictions." Investment restrictions Nos. 2, 3, 4
and 5 are fundamental policies of the Funds, which can be changed
only when permitted by law and approved by a majority of the Funds'
outstanding voting securities. A "majority of the outstanding
voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding
shares are represented in person or by proxy, or (ii) more than 50%
of the outstanding shares. See "Other Information --Voting."
Investment restriction No. 1 is a nonfundamental policy of the
Funds and can be changed by approval of a majority of the Board of
Trustees.
(1) No Fund may invest more than 10% of the aggregate value
of its net assets in investments which are illiquid or not readily
marketable (including repurchase agreements having maturities of
more than seven calendar days, time deposits having maturities of
more than seven calendar days, and securities of foreign issuers
that are not listed on a recognized domestic or foreign securities
exchange).
(2) No Fund may borrow money or pledge or mortgage its
assets, except that a Fund may enter into reverse repurchase
agreements or borrow from banks up to 10% of the current value of
its net assets for temporary or emergency purposes and those
borrowings may be secured by the pledge of not more than 15% of the
current value of that Fund's total net assets (but investments may
not be purchased by a Fund while any such borrowings exist).
(3) No Fund may make loans, except loans of portfolio
securities and except that a Fund may enter into repurchase
agreements with respect to its portfolio securities and may
purchase the types of debt instruments described in this
Prospectus.
(4) No Fund will purchase a security if, as a result, more
than 25% of the value of its total assets would be invested in
securities of one or more issuers conducting their principal
business activities in the same industry (except for the Cash
Reserve Fund, which will concentrate its investments in obligations
issued by the domestic banking industry), provided that this
limitation shall not apply to obligations issued or guaranteed by
the U.S. Government or its agencies and instrumentalities;
(5) No Fund will purchase a security if, as a result, (1)
more than 5% of its total assets would be invested in any one
issuer other than the U.S. Government or its agencies and
instrumentalities, or (2) the Fund would own more than 10% of the
outstanding voting securities of such issuer.
If a percentage restriction on investment policies or the
investment or use of assets set forth in this Prospectus is adhered
to at the time a transaction is effected, later changes in
percentage resulting from changing asset values will not be
considered a violation.
RISKS OF INVESTING IN THE FUNDS
Certain Risk Considerations
The Funds attempt to maintain a constant net asset value of
$1.00 per share, although there can be no assurance that they will
always be able to do so. The Funds may not achieve as high a level
of current income as other funds that do not limit their investment
to the high quality securities in which the Funds invest.
The Cash Reserve Fund's Policy of concentrating in the
domestic banking industry could increase the Fund's exposure to
economic or regulatory developments relating to or affecting banks.
Banks are subject to extensive governmental regulation which may
limit both the amounts and types of loans and other financial
commitments they can make and the interest rates and fees they can
charge. The financial condition of banks is largely dependent on
the availability and cost of capital funds, and can fluctuate
significantly when interest rates change. In addition, general
economic conditions may affect the financial condition of
banks.
There is, of course, no assurance that a Fund will achieve its
investment objective or be successful in preventing or minimizing
the risk of loss that is inherent in investing in particular types
of investment products. In order to attempt to minimize that risk,
the Adviser monitors developments in the economy, the securities
markets, and with each particular issuer. Also, as noted earlier,
each diversified Fund is managed within certain limitations that
restrict the amount of the Fund's investment in any single issuer.
MANAGEMENT OF THE FUNDS
The business and affairs of the Funds are managed under the
direction of the Board of Trustees. Information about the
Trustees, as well as the Trust's executive officers, may be found
in the SAI under the heading "Management--Trustees and Officers."
The Adviser: First American Capital Management, Inc.
First American Capital Management, Inc. has agreed to
provide investment advisory services to the Funds
pursuant to an advisory agreement with the Trust (the
"Advisory Agreement"). Subject to such policies as the
Trust's Board of Trustees may determine, First American
makes investment decisions for the Funds. For the
advisory services it provides to the Funds, First
American receives fees based on average daily net assets
up to the following annualized rates:
U.S. Treasury Reserve Fund, 0.30%;
Cash Reserve Fund, 0.30%.
First American is a wholly-owned subsidiary of The First
American Financial Corporation. First American was
established on December 1, 1995. The principal business
address of First American is 567 San Nicholas Drive,
Suite 101, Newport Beach, California 92660. First
American has no prior experience as an adviser to an
investment company.
Based upon the advice of counsel, First American believes that
the performance of investment advisory services for the Funds will
not violate the Glass-Steagall Act or other applicable banking laws
or regulations. However, future statutory or regulatory changes,
as well as future judicial or administrative decisions and
interpretations of present and future statutes and regulations,
could prevent First American from continuing to perform such
services for the Funds. If First American were prohibited from
acting as investment adviser to the Funds, it is expected that the
Board of Trustees would recommend to shareholders approval of a new
investment advisory agreement with another qualified investment
adviser selected by the Board, or that the Board would recommend
other appropriate action.
The Sponsor and Distributor
BISYS, the Sponsor and Distributor (the "Distributor"), has
its principal office at 3435 Stelzer Road, Columbus, Ohio 43219.
The Distributor will receive orders for, sell, and distribute
shares of the Fund. BISYS also serves as administrator and
distributor of other mutual funds.
The Distributor may from time to time pay a bonus or other
incentive to dealers that employ registered representatives who
sell a minimum dollar amount of shares of the Funds. Such bonus or
other incentive may take the form of payment for travel expenses,
including lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families
to places within or without the United States, or other bonuses,
such as gift certificates or the cash equivalent of such bonuses.
The Service Class shares of the Funds have adopted a Rule
12b-1 Distribution Plan and Agreement (the "Plan") pursuant to
which the Service Class shares of the Funds may reimburse the
Distributor, or others, on a monthly basis for costs and expenses
incurred by the Distributor in connection with the distribution and
marketing of shares of the Funds. These costs and expenses, which
are subject to a maximum limit of 0.25% per annum of the average
daily net assets of the Service Class shares of the Funds, include:
(i) advertising by radio, television, newspapers, magazines,
brochures, sales literature, direct mail or any other form of
advertising; (ii) expenses of employees or agents of the
Distributor, including salary, commissions, travel and related
expenses; (iii) payments to broker-dealers and financial
institutions for services in connection with the distribution of
shares, including promotional incentives and fees calculated with
reference to the average daily net asset value of shares held by
shareholders who have a brokerage or other service relationship
with the broker-dealer or other institution receiving such fees;
(iv) costs of printing prospectuses, statements of additional
information and other materials to be given or sent to prospective
investors; (v) such other similar services as the Trustees
determine to be reasonably calculated to result in sales of shares
of the Funds; (vi) costs of shareholder servicing incurred by
broker-dealers, banks or other financial institutions; and (vii)
other direct and indirect distribution-related expenses, including
the provision of services with respect to maintaining the assets of
the Funds. The Service Class shares of each Fund will pay all
costs and expenses in connection with the preparation, printing and
distribution of its Prospectus to current shareholders and the
operation of its Plan, including related legal and accounting fees.
Neither Fund will be liable for distribution expenditures made by
the Distributor in any given year in excess of the maximum amount
payable under the Plan for that Fund year.
Administrative Services
The Funds have also entered into an Administrative Services
Contract with BISYS pursuant to which BISYS provides certain
management and administrative services necessary for the Funds'
operations, including: (i) general supervision of the operation of
the Funds, including coordination of the services performed by the
Funds' Adviser, transfer agent, custodian, independent accountants
and legal counsel, regulatory compliance, including the compilation
of information for documents such as reports to, and filings with,
the SEC and state securities commissions, and preparation of proxy
statements and shareholder reports for the Funds; (ii) general
supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' officers
and Board of Trustees; and (iii) furnishing office space and
certain facilities required for conducting the business of the
Funds. For these services, BISYS receives from each Fund a fee,
payable monthly, at the annual rate of 0.15% of each Fund's average
daily net assets. Pursuant to a Services Agreement between the
Trust and the Administrator, BISYS assists the Trust with certain
transfer and dividend disbursing agent functions and receives a fee
of $15 per account per year plus out-of-pocket expenses. Pursuant
to a Fund Accounting Agreement between the Trust and the
Administrator, the Administrator assists the Trust in calculating
net asset values and provides certain other accounting services for
each Fund described therein, for an annual fee of $30,000 per Fund
plus out-of-pocket expenses.
Service Organizations
Various banks, trust companies, broker-dealers (other than
the Sponsor) or other financial organizations (collectively,
"Service Organizations") also may provide administrative services
for the Service Class shares of the Funds, such as maintaining
shareholder accounts and records. The Service Class shares of the
Funds may pay fees to Service Organizations in amounts up to an
annual rate of 0.25% of the daily net asset value of the shares
owned by shareholders with whom the Service Organization has a
servicing relationship.
Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to
invest more than a Fund's minimum initial or subsequent investments
or charging a direct fee for servicing. If imposed, these fees
would be in addition to any amounts which might be paid to the
Service Organization by the Funds. Each Service Organization has
agreed to transmit to its clients a schedule of any such fees.
Shareholders using Service Organizations are urged to consult with
them regarding any such fees or conditions.
The Glass-Steagall Act and other applicable laws provide that,
among other things, banks may not engage in the business of
underwriting, selling or distributing securities. There is
currently no precedent prohibiting banks from performing
administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either Federal
or state regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, could prevent a bank
Service Organization from continuing to perform all or a part of
its servicing activities. If a bank were prohibited from so
acting, its shareholder clients would be permitted to remain
shareholders of the Funds and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected
that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences.
Other Expenses
Each Fund bears all costs of its operations, other than
expenses specifically assumed by BISYS and First American. The
costs borne by the Funds include legal and accounting expenses,
Trustees' fees and expenses, insurance premiums, custodian and
transfer agent fees and expenses, expenses incurred in acquiring or
disposing of the Funds' portfolio securities, expenses of
registering and qualifying the Funds' shares for sale with the SEC
and with various state securities commissions, expenses of
obtaining quotations on the Funds' portfolio securities and pricing
of the Funds' shares, expenses of maintaining the Funds' legal
existence and of shareholders' meetings, and expenses of preparing
and distributing to existing shareholders reports, proxies and
prospectuses. Each Fund bears its own expenses associated with its
establishment as a series of the Trust; these expenses are
amortized over a five-year period from the commencement of a Fund's
operations. See "Management" in the SAI. Trust expenses directly
attributable to a Fund are charged to that Fund; other expenses are
allocated proportionately among all of the Funds in the Trust in
relation to the net assets of each Fund.
FUND SHARE VALUATION
The net asset value per share of the Funds is calculated at
4:00 p.m. (Eastern time), Monday through Friday, on each day the
New York Stock Exchange and the New York Federal Reserve Bank are
open for business (a "Business Day"), which excludes the following
business holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Columbus Day, Veterans Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. The net asset value per share of each class is computed by
dividing the value of the net assets of each class (i.e., the value
of the assets less the liabilities) by the total number of
outstanding shares of each class. All expenses, including fees
paid to the Adviser, the Administrator and the Distributor, are
accrued daily and taken into account for the purpose of determining
the net asset value. Expenses directly attributable to a Fund are
charged to the Fund; other expenses are allocated proportionately
among each Fund within the Trust in relation to the net assets of
each Fund, or on another reasonable basis. These general expenses
(e.g., investment advisory fees) are allocated among the Funds
based on each Fund's relative net asset value. Within each class,
the expenses are allocated proportionately based on the net assets
of each class, except class specific expenses which are allocated
directly to the respective class.
The Funds use the amortized cost method to value their
portfolio securities and seek to maintain a constant net asset
value of $1.00 per share, although there may be circumstances under
which this goal cannot be achieved. The amortized cost method
involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact
of fluctuating interest rates on the market value of the security.
There can be no assurances that at all times the Funds' price per
share can be maintained. However, the Board of Trustees has
established procedures designed to stabilize, to the extent
reasonably possible, the $1.00 per share price of each Fund. See
the SAI for a more complete description of the amortized cost
method.
PRICING AND PURCHASE OF FUND SHARES
Orders for the purchase of shares will be executed at the
net asset value per share next determined after an order in proper
form has been received.
All funds received are invested in full and fractional shares
of the appropriate Fund. Certificates for shares are not issued.
The Administrator maintains records of each shareholder's holdings
of Fund shares, and each shareholder receives a statement of
transactions, holdings and dividends. The Funds reserve the right
to reject any purchase.
An investment may be made using any of the following methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. Shares are available to new and existing
shareholders through authorized brokers, investment advisers and
Service Organizations. To make an investment using this method,
simply complete a Purchase Application and contact your broker,
investment adviser or Service Organization with instructions as to
the amount you wish to invest. Your broker, investment adviser or
Service Organization will then contact the Distributor to place the
order on your behalf on that day.
Orders for the Funds received prior to 12:00 noon Eastern
Time for the U.S. Treasury Reserve Fund and 3:00 p.m. for the Cash
Reserve Fund will become effective that day. Brokers who receive
orders are obligated to transmit them promptly. You should receive
written confirmation of your order within a few days of receipt of
instructions from your broker.
By Wire. Subject to acceptance by the Trust, shares of each
Fund may be purchased by wiring federal funds to BISYS. Call BISYS
at 1-800-454-5104 for instructions. Please note your bank will
normally charge a fee for handling this transaction. Federal funds
purchases will be accepted only on a day on which each of the
Trust, the Distributor and the custodian bank are open for
business.
When new accounts are established by wire, the distribution
options will be set to reinvest and the social security or tax
identification number ("TIN") will not be certified until a signed
application is received. Completed applications should be
forwarded immediately to the Distributor. With the Purchase
Application, the shareholder can specify other distribution options
and add any special features offered by a Fund. Should any
dividend distributions or redemptions be paid before the TIN is
certified, they will be subject to 31% Federal income tax
withholding.
Institutional Accounts. Bank trust departments and other
institutional accounts may place orders directly with the
Distributor by telephone at 1-800-454-5104.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Funds is $1,000
unless the investor is a purchaser who, at the time of purchase,
has a balance of $1,000 or more in the Trust, is a purchaser
through a trust investment manager or account manager or is
administered by the Adviser, is an employee or an ex-employee of
First American or any of its affiliates, the Administrator, or any
other service provider, or is an employee of any trust customer of
The First American Financial Corporation or any of its affiliates.
Note that the minimum is $250 for an IRA, other than an IRA for
which The First American Financial Corporation or any of its
affiliates acts as trustee or custodian. Any subsequent
investments, including an IRA investment, must be at least $50.
All initial investments should be accompanied by a completed
Purchase Application. A Purchase Application accompanies this
Prospectus, and a separate application is required for IRA
investments. The Funds reserve the right to reject purchase
orders.
INDIVIDUAL RETIREMENT ACCOUNTS
The Funds may be used as a funding medium for IRAs. Shares
may also be purchased for IRAs established with First American or
any of its affiliates or other authorized custodians. Completion
of a special application is required in order to create such an
account, and the minimum initial investment for an IRA is $250.
Contributions to IRAs are subject to prevailing amount limits set
by the Internal Revenue Service. A $7.50 establishment fee and an
annual $15 maintenance and custody fee is payable with respect to
each IRA, and there will be a $12 termination fee when the account
is closed. For more information concerning investments by IRAs,
call the Funds at 1-800-454-5104.
EXCHANGE OF FUND SHARES
The Funds offer two convenient ways to exchange shares in
one Fund for shares in another Fund in the Trust. Before engaging
in an exchange transaction, a shareholder should read carefully the
Prospectus describing the Fund into which the exchange will occur,
which is available without charge and can be obtained by writing to
the Fund at 3435 Stelzer Road, Columbus, Ohio 43219, or by calling
1-800-454-5104. The minimum amount for an initial exchange is
$500. No minimum is required in subsequent exchanges. The Trust
may terminate or amend the terms of the exchange privilege at any
time.
A new account opened by exchange must be established with
the same name(s), address and social security number as the
existing account. All exchanges will be made based on the net
asset value next determined following receipt of the request by a
Fund in good order, plus any applicable sales charge. An exchange
is taxable as a sale of a security on which a gain or loss may be
recognized but such gains are not expected to occur since the Funds
seek to maintain a stable net asset value of $1.00 per share.
Shareholders should receive written confirmation of the exchange
within a few days of the completion of the transaction.
Shareholders will receive at least 60 days prior written notice of
any modification or termination of the exchange privilege.
Exchange by Mail. To exchange Fund shares by mail, simply
send a letter of instruction to the Administrator. The letter of
instruction must include: (i) your account number; (ii) the Fund
from and the Fund into which you wish to exchange your investment;
(iii) the dollar or share amount you wish to exchange; and (iv) the
signatures of all registered owners or authorized parties. To
protect shareholder accounts, the Trust and its transfer agent from
fraud, signature guarantees are required to enable the Trust to
verify the identity of the person who has authorized a redemption
from an account. Signature guarantees are required for (1)
redemptions where the proceeds are to be sent to someone other than
the registered shareholder(s) at their registered address, (2)
redemptions of $25,000 or more, and (3) share transfer requests.
Signature guarantees may be obtained from certain eligible
financial institutions, including, but not limited to, the
following: banks, trust companies, credit unions, securities
brokers and dealers, savings and loan associations and participants
in the Securities and Transfer Association Medallion Program
("STAMP"), the Stock Exchange Medallion Program ("SEMP") or the New
York Stock Exchange Medallion Signature Program ("MSP").
Shareholders may contact the Trust at 1-800-454-5104 for further
details.
Exchange by Telephone. To exchange Fund shares by
telephone, or if you have any questions, simply call the Funds at
1-800-454-5104. You should be prepared to give the telephone
representative the following information: (i) your account number,
social security or tax identification number and account
registration; (ii) the name of the Fund from and the Fund into
which you wish to transfer your investment; and (iii) the dollar or
share amount you wish to exchange. The conversation may be
recorded to protect you and the Funds. Telephone exchanges are
available only if the shareholder so indicates by checking the
"yes" box on the Purchase Application. See "Redemption of Fund
Shares--By Telephone" for a discussion of telephone transactions
generally.
Automatic Investment Program. An eligible shareholder may
also participate in the Automatic Investment Program, an investment
plan that automatically debits money from the shareholder's bank
account and invests it in one or both of the Funds in the Trust
through the use of electronic funds transfers or automatic bank
drafts. Shareholders may elect to make subsequent investments by
transfers of a minimum of $50 each month into their established
Fund account. Contact the Funds for more information about the
Automatic Investment Program.
REDEMPTION OF FUND SHARES
Shareholders may redeem their shares, in whole or in part,
on any Business Day. Shares will be redeemed at the net asset
value next determined after a redemption request in good order has
been received by the applicable Fund. See "Determination of Net
Asset Value" in the SAI. A redemption may be a taxable transaction
on which gain or loss may be recognized. Generally, however, gain
or loss is not expected to be realized on a redemption of shares of
the Funds, both of which seek to maintain a net asset value of
$1.00 per share.
Redemption of shares purchased by check will be effected
immediately upon clearance of the purchase check, which may take up
to 15 days after those shares have been credited to the
shareholder's account. Shareholders may avoid this delay by
investing through wire transfers of Federal funds. During the
period prior to the time the shares are redeemed, dividends on the
shares will continue to accrue and be payable and the shareholder
will be entitled to exercise all other beneficial rights of
ownership.
Once the shares are redeemed, a Fund will ordinarily send the
proceeds by check to the shareholder at the address of record on
the next business day. The Funds may, however, take up to seven
days to make payment. This will not be the customary practice.
Also, if the New York Stock Exchange is closed (or when trading is
restricted) for any reason other than the customary weekend or
holiday closing, or if an emergency condition as determined by the
SEC merits such action, the Funds may suspend redemptions or
postpone payment dates.
Redemption Methods. To ensure acceptance of your redemption
request, it is important to follow the procedures described below.
Although the Funds have no present intention to do so, the Funds
reserve the right to refuse or to limit the frequency of any
telephone or wire redemptions. Because it may be difficult to
place orders by telephone during periods of severe market or
economic change, a shareholder should consider alternative methods
of communications, such as couriers. The Funds' services and their
provisions may be modified or terminated at any time by the Funds.
If the Funds terminate any particular service, they will do so only
after giving written notice to shareholders. Redemption by mail
will always be available to shareholders.
You may redeem your shares using any of the following methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. You may redeem your shares by contacting your
broker, investment adviser or Service Organization representative
and instructing him or her to redeem your shares. He or she will
then contact the Distributor and place a redemption trade on your
behalf. He or she may charge you a fee for this service.
By Mail. You may redeem your shares by sending a letter
directly to the Distributor. To be accepted, a letter requesting
redemption must include: (i) the Fund name and account registration
from which you are redeeming shares; (ii) your account number;
(iii) the amount to be redeemed; and (iv) the signatures of all
registered owners. To protect shareholder accounts, the Trust and
its transfer agent from fraud, signature guarantees are required to
enable the Trust to verify the identity of the person who has
authorized a redemption from an account. See "Exchange by Mail"
above for more information on signature guarantees. Shareholders
may contact the Trust at 1-800-454-5104 for further details.
By Telephone. Provided the Telephone Redemption Option has
been authorized by an investor in a purchase application, a
redemption of shares may be requested by calling the Transfer Agent
at 1-800-454-5104 and requesting that the redemption proceeds be
mailed to the primary registration address or wired per the
authorized instructions. If the Telephone Redemption Option or the
Telephone Exchange Option (as described above) is authorized, the
Transfer Agent may act on telephone instructions from any person
representing himself or herself to be a shareholder and believed by
the Transfer Agent to be genuine. The Transfer Agent's records of
such instructions are binding and the shareholder, and not the
Trust or the Transfer Agent, bears the risk of loss in the event of
unauthorized instructions reasonably believed by the Transfer Agent
to be genuine. The Transfer Agent will employ reasonable
procedures to confirm that instructions communicated are genuine
and, if it does not, it may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures employed
by the Transfer Agent in connection with transactions initiated by
telephone include tape recording of telephone instructions and
requiring some form of personal identification prior to acting upon
instructions received by telephone.
Check Writing. A check redemption ($500 minimum) feature is
available with respect to the Funds. Checks are free and may be
obtained from the Funds. It is not possible to use a check to
close out your account since additional shares accrue daily.
The above-mentioned services "By Telephone," "By Wire" and
"Check Writing" are not available for IRAs and trust relationships
of the Adviser and its affiliates.
Systematic Withdrawal Plan. An owner of $10,000 or more of
shares of a Fund may elect to have periodic redemptions made from
his or her account, to be paid on a monthly, quarterly, semi-annual
or annual basis. The minimum periodic payment is $100. A
sufficient number of shares to make the scheduled redemption will
normally be redeemed on the date selected by the shareholder.
Depending on the size of the payment requested and fluctuation in
the net asset value, if any, of the shares redeemed, redemptions
for the purpose of making such payments may reduce or even exhaust
the account. A shareholder may request that these payments be sent
to a predesignated bank or other designated party. Capital gains
and dividend distributions paid to the account will automatically
be reinvested at net asset value on the distribution payment
date.
Redemption of Small Accounts. Due to the disproportionately
higher cost of servicing small accounts, each Fund reserves the
right to redeem, on not less than 30 days' notice, an account in a
Fund that has been reduced by a shareholder to $500 or less.
However, if during the 30-day notice period the shareholder
purchases sufficient shares to bring the value of the account above
$500, this restriction will not apply.
Redemption in Kind. All redemptions of shares of the Funds
shall be made in cash, except that the commitment to redeem shares
in cash extends only to redemption requests made by each
shareholder of a Fund during any 90-day period of up to the lesser
of $250,000 or 1% of the net asset value of that Fund at the
beginning of such period. This commitment is irrevocable without
the prior approval of the SEC and is a fundamental policy of the
Funds that may not be changed without shareholder approval. In the
case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have the Funds
make payment, in whole or in part, in securities or other assets,
in case of an emergency or any time a cash distribution would
impair the liquidity of a Fund to the detriment of the existing
shareholders. In this event, the securities would be valued in the
same manner as the securities of that Fund are valued. If the
recipient were to sell such securities, he or she could receive
less than the redemption value of the securities and could incur
certain transaction costs.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX
Each Fund intends to qualify annually, and to elect to be
treated, as a regulated investment company pursuant to the
provisions of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). By so qualifying and electing, each Fund
generally will not be subject to Federal income tax to the extent
that it distributes investment company taxable income and net
capital gains in the manner required under the Code.
Each Fund intends to distribute to its shareholders
substantially all of its investment company taxable income (which
includes, among other items, dividends and interest and the excess,
if any, of net short-term capital gains over net long-term capital
losses). The Funds will declare distributions of such income daily
and pay dividends monthly. Each Fund intends to distribute, at
least annually, substantially all net capital gains (the excess of
net long-term capital gains over net short-term capital losses).
In determining amounts of capital gains to be distributed, any
capital loss carryovers from prior years will be applied against
capital gains.
Distributions will be paid in additional Fund shares based
on the net asset value at the close of business on the payment date
of the distribution, unless the shareholder elects in writing, not
less than five business days prior to the record date, to receive
such distributions in cash. Dividends declared in, and
attributable to, the preceding month will be paid within five
business days after the end of such month.
Shares purchased will begin earning dividends on the day
the purchase order is executed and shares redeemed will earn
dividends through the previous day. Net investment income for a
Saturday, Sunday or a holiday will be declared as a dividend on the
previous business day.
Investors who redeem all or a portion of Fund shares prior to
a dividend payment date will be entitled on the next dividend
payment date to all dividends declared but unpaid on those shares
at the time of their redemption.
Distributions of investment company taxable income (regardless
of whether derived from dividends, interest or short-term capital
gains) will be taxable to shareholders as ordinary income.
Distributions of net long-term capital gains properly designated by
a Fund as capital gain dividends will be taxable as long-term
capital gains, regardless of how long a shareholder has held his
Fund shares. The Funds do not anticipate realizing a substantial
amount of net long-term capital gains. Distributions are taxable
in the same manner whether received in additional shares or in
cash.
Earnings of the Funds not distributed on a timely basis in
accordance with a calendar year distribution requirement are
subject to a nondeductible 4% excise tax. To prevent imposition of
this tax, each Fund intends to comply with this distribution
requirement.
A distribution will be treated as paid on December 31 of the
calendar year if it is declared by a Fund during October, November,
or December of that year to shareholders of record in such a month
and paid by a Fund during January of the following calendar year.
Such distributions will be treated as received by shareholders in
the calendar year in which the distributions are declared, rather
than the calendar year in which the distributions are received.
A Fund's distributions with respect to a given taxable year
may exceed the current and accumulated earnings and profits of that
Fund available for distribution. In that event, distributions in
excess of such earnings and profits would be characterized as a
return of capital to shareholders for Federal income tax purposes,
thus reducing each shareholder's cost basis in his Fund shares.
Such distributions in excess of a shareholder's cost basis in his
shares would be treated as a gain realized from a sale of such
shares.
Any gain or loss realized by a shareholder upon the sale or
other disposition of shares of a Fund, or upon receipt of a
distribution in complete liquidation of a Fund, generally will be
a capital gain or loss which will be long-term or short-term,
generally depending upon the shareholder's holding period for the
shares. A loss realized by a shareholder on a redemption, sale, or
exchange of shares of a Fund held six months or less with respect
to which capital gain dividends have been paid will be
characterized as a long-term capital loss to the extent of such
capital gain dividends.
The Funds may be required to withhold for Federal income tax
("backup withholding") 31% of the distributions and the proceeds of
redemptions payable to shareholders who fail to provide a correct
taxpayer identification number or to make required certifications,
or where a Fund or shareholder has been notified by the Internal
Revenue Service that the shareholder is subject to backup
withholding. Most corporate shareholders and certain other
shareholders specified in the Code and regulations are exempt from
backup withholding. Backup withholding is not an additional tax.
Any amounts withheld may be credited against the shareholder's U.S.
Federal income tax liability.
The Cash Reserve Fund, when investing in securities of foreign
issuers, may be subject to withholding and other similar income
taxes imposed by the foreign country. The Fund intends to elect,
if it is eligible to do so under the Code, to "pass-through" to its
shareholders the amount of such foreign taxes paid. If such an
election is made by the Fund, each shareholder of the Fund will be
required to include in gross income the taxable dividends received
and the amount of pro rata share of those foreign taxes paid by the
Fund. Each shareholder would be entitled either to deduct (as an
itemized deduction) their pro rata share of the foreign taxes in
computing their taxable income or to use it (subject to
limitations) as a foreign tax credit against their U.S. Federal
income tax liability. No deduction for foreign taxes may be
claimed by a shareholder who does not itemize deductions. Each
shareholder will be notified within 60 days after the close of a
Fund's taxable year whether the foreign taxes paid by the Fund will
"pass-through" for that year.
Shareholders will be notified annually by the Trust as to the
Federal tax status of distributions made by the Fund(s) in which
they invest. Depending on the residence of the shareholder for tax
purposes, distributions also may be subject to state and local
taxes, including withholding taxes. Foreign shareholders may, for
example, be subject to special withholding requirements. Special
tax treatment, including a penalty on certain pre-retirement
distributions, is accorded to accounts maintained as IRAs.
Shareholders should consult their own tax advisers as to the
Federal, state and local tax consequences of ownership of shares of
the Funds in their particular circumstances.
OTHER INFORMATION
Capitalization Structure
First Choice Funds Trust was organized as a Delaware
business trust on June 5, 1996, and currently consists of two
separately managed portfolios. The Trust's Board of Trustees has
authorized the issuance of multiple series representing shares in
corresponding investment portfolios of the Trust. The Board of
Trustees may establish additional portfolios in the future. The
capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest with a par value of $0.001 each.
All shares of the Trust have equal voting rights and will be voted
in the aggregate, and not by class, except where voting by class is
required by law or where the matter involved affects only one
class. The Funds offer, and the Prospectus relates to, two classes
of shares the Service Class and the Institutional Class. The
Service Class shares are available to customers with additional
servicing needs. The Institutional Class shares are available to
all other investors. The Institutional Class shares and Service
Class shares are identical in all respects, with the exception that
Institutional Class shares do not impose any shareholder servicing
or Rule 12b-1 fees. All shares of the Trust issued and outstanding
are fully paid and nonassessable. The Fund will be treated as a
separate entity for Federal income tax purposes. Call 1-800-454-5104 or
contact your sales representative, broker-dealer or bank to
obtain more information about the Funds' classes of shares.
Under Delaware law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. However, the Declaration of Trust disclaims liability of
the shareholders, Trustees or officers of the Trust for acts or
obligations of the Trust, which are binding only on the assets and
property of the Trust and requires that notice of the disclaimer be
given in each contract or obligation entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for
indemnification out of Trust property for all loss and expense of
any shareholder held personally liable for the obligations of the
Trust. The risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in
which the Trust itself would be unable to meet its obligations and
should be considered remote.
Voting
Shareholders have the right to vote in the election of
Trustees and on any and all matters on which, by law or under the
provisions of the Declaration of Trust, they may be entitled to
vote. The Trust is not required to hold regular annual meetings of
the Funds' shareholders and does not intend to do so. The Trustees
are required to call a meeting for the purpose of considering the
removal of a person serving as Trustee if requested in writing to
do so by the holders of not less than 10% of the outstanding shares
of the Trust and in connection with such meeting to comply with the
shareholders' communications provisions of Section 16(c) of the
1940 Act. See "Other Information--Voting Rights" in the SAI.
Shares entitle their holders to one vote per share (with
proportionate voting for fractional shares). As used in this
Prospectus, the phrase "vote of a majority of the outstanding
shares" of a Fund (or the Trust) means the vote of the lesser of:
(1) 67% of the shares of a Fund (or the Trust) present at a meeting
if the holders of more than 50% of the outstanding shares are
present in person or by proxy; or (2) more than 50% of the
outstanding shares of a Fund (or the Trust).
Performance Information
A Fund may, from time to time, include its yield in
advertisements or reports to shareholders or prospective investors.
Shareholders of the Service Class of shares of the Funds will
experience a lower net return on their investment than shareholders
of the Institutional Class of shares because of the additional
shareholder servicing and Rule 12b-1 fees to which the Service
Class shares are subject. The methods used to calculate the yield
of the Funds are mandated by the SEC.
Quotations of "yield" for the Funds will be based on the
income received by a hypothetical investment (less a pro-rata share
of Fund expenses) over a particular seven-day period, which is then
"annualized" (i.e., assuming that the seven-day yield would be
received for 52 weeks, stated in terms of an annual percentage
return on the investment).
"Effective yield" for the Funds is calculated in a manner
similar to that used to calculate yield, but includes the
compounding effect of earnings on reinvested dividends.
Quotations of yield and effective yield reflect only a Fund's
performance during the particular period on which the calculations
are based. Yield and effective yield for a Fund will vary based on
changes in market conditions, the level of interest rates and the
level of that Fund's expenses, and no reported performance figure
should be considered an indication of performance which may be
expected in the future.
Performance information for a Fund may be compared to
various unmanaged indices, such as those prepared by Lipper
Analytical Services and other entities or organizations which track
the performance of investment companies. Any performance
information should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the Funds,
and the market conditions during the time period indicated, and
should not be considered to be representative of the future. For
a more detailed description of the methods used to determine the
yield for the Funds, see the SAI.
Account Services
All transactions in shares of the Funds will be reflected in
a statement for each shareholder. In those cases where a Service
Organization or its nominee is the shareholder of record for its
customer, the Funds have been advised that the statement may be
transmitted to the customer at the discretion of the Service
Organization.
BISYS acts as the Funds' transfer agent. The Trust
compensates BISYS, the Trust's administrator, pursuant to a
Services Agreement described in the section entitled "Management of
the Fund -- Administrative Services" in this Prospectus, for
providing personnel and facilities that perform dividend disbursing
and transfer agency-related services for the Trust.
Shareholder Inquiries
All shareholder inquiries should be directed to the Funds
at 3435 Stelzer Road, Columbus, Ohio 43219. General and Account
Information: 1-800-454-5104.
<PAGE>
Investment Adviser
First American Capital Management, Inc.
567 San Nicholas Drive
Suite 101
Newport Beach, California 92660
Administrator and Sponsor and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Custodian
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Counsel
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
<PAGE>
FIRST CHOICE FUNDS TRUST
A FAMILY OF
MUTUAL FUNDS
The U.S. Treasury Reserve Fund seeks to provide investors with
as high a level of current income as is consistent with liquidity,
maximum safety of principal, and the maintenance of a stable $1.00
net asset value per share by investing in U.S. Treasury
Securities.
The Cash Reserve Fund seeks to provide investors with current
income, liquidity and the maintenance of a stable $1.00 net asset
value per share by investing in high quality, short-term
obligations.
PROSPECTUS
September __, 1996
Investment Adviser:
First American Capital Management, Inc.
<PAGE>
<PAGE>
FIRST CHOICE FUNDS TRUST
3435 Stelzer Road, Columbus, Ohio 43219
General and Account Information: 1-800-454-5104
___________________________________________________________
First American Capital Management, Inc.-Investment Adviser
("First American" or "Adviser")
BISYS FUND SERVICES -
Administrator, Sponsor and Distributor
("BISYS" or "Administrator" or "Distributor")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (the "SAI") describes
two money market funds (each a "Fund," collectively, the "Funds"),
both of which are managed by First American. The Funds are:
U.S. Treasury Reserve Fund
Cash Reserve Fund
Each Fund constitutes a separate investment portfolio of
First Choice Funds Trust (the "Trust"), a Delaware business trust
and open-end, diversified management investment company. Each
portfolio has distinct investment objectives and policies. Each
Fund offers two classes of shares -- the Institutional Class and
the Service Class. The Service Class shares are available to
customers who desire enhanced shareholder servicing. The
Institutional Class shares are available to all other investors.
The Institutional Class and Service Class shares are identical in
all respects except that the Institutional Class shares do not
impose any shareholder servicing or Rule 12b-1 fees. See "Other
Information Capitalization" herein.
This SAI is not a prospectus and is only authorized for
distribution when preceded or accompanied by the prospectus for the
Funds dated September __, 1996 (the "Prospectus"). This SAI
contains additional and more detailed information than that set
forth in the Prospectus and should be read in conjunction with the
Prospectus. The Prospectus may be obtained without charge by
writing or calling the Funds at the address or information number
printed above.
September __, 1996<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . 4
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trustees and Officers . . . . . . . . . . . . . . . . . . 5
Investment Adviser. . . . . . . . . . . . . . . . . . . . 7
Distribution of Fund Shares . . . . . . . . . . . . . . . 7
Distribution Plan . . . . . . . . . . . . . . . . . . . . 7
Administrative Services . . . . . . . . . . . . . . . . . 8
Service Organizations . . . . . . . . . . . . . . . . . . 8
EXPENSES AND EXPENSE LIMITS. . . . . . . . . . . . . . . . . . 9
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . 9
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . 10
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . 11
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . 12
Capitalization. . . . . . . . . . . . . . . . . . . . . 12
Voting Rights . . . . . . . . . . . . . . . . . . . . . 13
Custodian, Transfer Agent and Dividend
Disbursing Agent . . . . . . . . . . . . . . . . . . 13
Experts . . . . . . . . . . . . . . . . . . . . . . . . 13
Yield and Performance Information . . . . . . . . . . . 13
Financial Statements 15
<PAGE>
INVESTMENT POLICIES
The Prospectus discusses the investment objectives of the
Funds and the policies to be employed to achieve those objectives.
This section contains supplemental information concerning certain
types of securities and other instruments in which the Funds may
invest, the investment policies and portfolio strategies that the
Funds may utilize, and certain risks attendant to such investments,
policies and strategies.
U.S. Treasury Obligations. Each Fund may invest, and the
U.S. Treasury Reserve Fund invests exclusively, in direct
obligations of the United States Treasury that have remaining
maturities not exceeding thirteen months. The United States
Treasury issues various types of marketable securities consisting
of bills, notes and bonds. They are direct obligations of the
United States Government and differ primarily in the length of
their maturity. Treasury bills, the most frequently issued
marketable United States Government security, have a maturity of up
to one year and are issued on a discount basis.
U.S. Government Agency Obligations (Cash Reserve Fund
Only). The Fund may invest in obligations of agencies of the
United States Government. Such agencies include, among others,
Farmers Home Administration, Federal Farm Credit System, Federal
Housing Administration, Government National Mortgage Association,
Maritime Administration, Small Business Administration, and The
Tennessee Valley Authority. The Fund may purchase securities
issued or guaranteed by the Government National Mortgage
Association, which represent participations in Veterans
Administration and Federal Housing Administration backed mortgage
pools. Obligations of instrumentalities of the United States
Government include securities issued by, among others, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal Land
Banks, Federal National Mortgage Association and the United States
Postal Service. Some of these securities are supported by the full
faith and credit of the United States Treasury (e.g., Government
National Mortgage Association). Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be a
guarantee of payment at the maturity of the obligation; therefore,
in the event of a default prior to maturity, there might not be a
market and thus no means of realizing the value of the obligation
prior to maturity.
Commercial Paper (Cash Reserve Fund Only). Commercial
paper includes short-term unsecured promissory notes, variable rate
demand notes and variable rate master demand notes issued by
domestic and foreign bank holding companies, corporations and
financial institutions and similar taxable instruments issued by
government agencies and instrumentalities. All commercial paper
purchased by the Fund is, at the time of investment: (i) rated
within the highest rating category of at least two of the
nationally recognized statistical rating organizations ("NRSROs")
that have rated the security; (ii) if rated by only one such rating
organization, rated within the highest rating category of that
rating organization; or (iii) if unrated, determined by the Adviser
to be of an investment quality comparable to the rated securities
in which the Fund may invest pursuant to guidelines established by
the Board of Trustees.
Corporate Debt Securities (Cash Reserve Fund Only). The
Fund's investments in these securities are limited to corporate
debt securities (corporate bonds, debentures, notes and similar
corporate debt instruments) which meet the rating criteria
established for the Fund.
After purchase by the Fund, a security may cease to be rated
or its rating may be reduced below the minimum required for
purchase by the Fund. Neither event will require a sale of such
security by the Fund. However, the Fund's Adviser will consider
such event in its determination of whether the Fund should continue
to hold the security. To the extent the ratings given by a NRSRO
may change as a result of changes in such organizations or their
rating systems, the Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment
policies contained in the Prospectus and in this SAI.
Bank Obligations (Cash Reserve Fund Only). A description
of the bank obligations which the Fund may purchase is set forth in
the Prospectus. These obligations include, but are not limited to
the following domestic, Eurodollar and Yankeedollar obligations:
certificates of deposits, time deposits, bankers' acceptances,
commercial paper, bank deposit notes and other promissory notes,
including floating or variable rate obligations issued by U.S. or
foreign bank holding companies and their bank subsidiaries,
branches and agencies. Certificates of deposit are issued against
funds deposited in an eligible bank (including its domestic and
foreign branches, subsidiaries and agencies), are for a definite
period of time, earn a specified rate of return and are normally
negotiable. A bankers' acceptance is a short-term draft drawn on
a commercial bank by a borrower, usually in connection with a
commercial transaction. The borrower is liable for payment, as is
the bank, which unconditionally guarantees to pay the draft at its
face amount on the maturity date. Eurodollar obligations are U.S.
Dollar obligations issued outside the United States by domestic or
foreign entities. Yankeedollar obligations are U.S. dollar
obligations issued inside the United States by foreign entities.
Bearer deposit notes are obligations of a bank, rather than a bank
holding company. Similar to certificates of deposit, deposit notes
represent bank level investments and, therefore, are senior to all
holding company corporate debt.
Variable and Floating Rate Demand and Master Demand
Obligations (Cash Reserve Fund Only). The Fund may, consistent
with its permitted investment policies, buy variable rate demand
obligations issued by corporations, bank holding companies and
financial institutions, and similar taxable and tax-exempt
instruments issued by government agencies and instrumentalities.
These securities will typically have a maturity of 397 days or
less, but carry with them the right of the holder to put the
securities to a remarketing agent or other entity on short notice,
typically seven days or less. The obligation of the issuer of the
put to repurchase the securities may or may not be backed by a
letter of credit or other obligation issued by a financial
institution. The purchase price is ordinarily par plus accrued and
unpaid interest.
The Fund may also buy variable rate master demand
obligations. The terms of these obligations permit the investment
of fluctuating amounts by the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and
the borrower. They permit weekly, and in some instances daily,
changes in the amounts borrowed. The Fund has the right to
increase the amount under the obligation at any time up to the full
amount provided by the note agreement, or to decrease the amount,
and the borrower may prepay up to the full amount of the obligation
without penalty. The obligations may or may not be backed by bank
letters of credit. Because the obligations are direct lending
arrangements between the lender and the borrower, it is not
generally contemplated that they will be traded, and there is no
secondary market for them, although they are redeemable (and thus,
immediately repayable by the borrower) at principal amount, plus
accrued interest, upon demand. The Fund has no limitations on the
types of issuers from whom such obligations may be purchased. The
Fund will invest in unrated variable rate master demand obligations
only when such obligations are determined by the Adviser or,
pursuant to guidelines established by the Board of Trustees, to be
of comparable quality to rated issuers or instruments eligible for
investment by the Fund.
When-Issued and Delayed-Delivery Securities (Both Funds).
The Funds may purchase securities on a when-issued or delayed-delivery basis.
For example, delivery of and payment for these
securities can take place a month or more after the date of the
transaction. The securities so purchased are subject to market
fluctuation during this period and no income accrues to the Fund
until settlement takes place. To facilitate such acquisitions, the
Funds will maintain with the custodian a separate account with a
segregated portfolio of securities in an amount at least equal to
the value of such commitments. On the delivery dates for such
transactions, each Fund will meet obligations from maturities or
sales of the securities held in the separate account and/or from
cash flow. While the Funds normally enter into these transactions
with the intention of actually receiving or delivering the
securities, they may sell these securities before the settlement
date or enter into new commitments to extend the delivery date into
the future, if the Adviser considers such action advisable as a
matter of investment strategy. Such transactions have the effect
of leverage on the Funds and may increase the volatility of a
Fund's net asset value.
Loans of Portfolio Securities (Both Funds). The Funds may
lend their portfolio securities to brokers, dealers and financial
institutions, provided: (1) the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or
approved bank letters of credit maintained on a daily
mark-to-market basis in an amount at least equal to the current
market value of the securities loaned; (2) the Funds may at any
time call the loan and obtain the return of the securities loaned
within five business days; (3) the Funds will receive any interest
or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed 33 %
of the total assets of a particular Fund.
The Funds will earn income for lending their securities
because cash collateral pursuant to these loans will be invested in
short-term money market instruments. A portion of the proceeds
from investing cash collateral may be rebated to the borrower. In
connection with lending securities, the Funds may pay reasonable
finders, administrative and custodial fees. Loans of securities
involve a risk that the borrower may fail to return the securities
or may fail to provide additional collateral.
Repurchase Agreements (Cash Reserve Fund Only). The Fund
may invest up to 100% of its net assets in repurchase agreements
maturing in seven days or less; however, the Fund may not invest
more than 10% of its net assets in repurchase agreements maturing
in more than seven business days and in securities for which market
quotations are not readily available. The Fund may enter into
agreements with any bank or registered broker-dealer who, in the
opinion of the Trustees, present a minimal risk of bankruptcy.
Such agreements may be considered to be loans by the Fund for
purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"). A repurchase agreement is a transaction in which the
seller of a security commits itself at the time of the sale to
repurchase that security from the buyer at a mutually agreed-upon
time and price. The repurchase price exceeds the sale price,
reflecting an agreed-upon interest rate effective for the period
the buyer owns the security subject to repurchase. The agreed-upon
rate is unrelated to the interest rate on that security. The
Adviser will monitor the value of the underlying security at the
time the transaction is entered into and at all times during the
term of the repurchase agreement to insure that the value of the
security always equals or exceeds the repurchase price. In the
event of default by the seller under the repurchase agreement, the
Fund may have problems in exercising its rights to the underlying
securities and may incur costs and experience time delays in
connection with the disposition of such securities.
Reverse Repurchase Agreements (Both Funds). The Funds may
enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet
redemptions. Pursuant to a reverse repurchase agreement, a Fund
will sell portfolio securities and agree to repurchase them from
the buyer at a particular date and price. Whenever a Fund enters
into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets in an amount at
least equal to the repurchase price marked to market daily
(including accrued interest), and will subsequently monitor the
account to ensure that such equivalent value is maintained. The
Funds pay interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act.
Illiquid Securities (Both Funds). Each Fund has adopted a
nonfundamental policy with respect to investments in illiquid
securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of
1933, as amended ("Securities Act"), securities that are otherwise
not readily marketable and repurchase agreements having a maturity
longer than seven days. Securities that have not been registered
under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or
in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid securities
because of the potential for delays on resale and uncertainty in
valuation. Limitations on resale may have an adverse effect on the
marketability of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid securities
promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund
might also have to register such restricted securities in order to
dispose of them resulting in additional expense and delay. Adverse
market conditions could impede such a public offering of
securities.
In recent years, however, a large institutional market has
developed for certain securities that are not registered under the
Securities Act, including repurchase agreements, commercial paper,
foreign securities, municipal securities and corporate bonds and
notes. Institutional investors depend on either an efficient
institutional market in which the unregistered security can be
readily resold or on the issuer's ability to honor a demand for
repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.
Each Fund may invest in restricted securities issued under
Section 4(2) of the Securities Act, which exempts from registration
"transactions by an issuer not involving any public offering."
Section 4(2) instruments are restricted in the sense that they can
only be resold through the issuing dealer and only to institutional
investors; they cannot be resold to the general public without
registration. Restricted securities issued under Section 4(2) of
the Securities Act will be treated as illiquid and subject to the
Funds' investment restriction on illiquid securities.
The Securities and Exchange Commission (the "SEC") has
adopted Rule 144A, which allows a broader institutional trading
market for securities otherwise subject to restrictions on resale
to the general public. Rule 144A establishes a "safe harbor" from
the registration requirements of the Securities Act applicable to
resales of certain securities to qualified institutional buyers.
It is the intent of the Funds to invest, pursuant to procedures
established by the Board of Trustees and subject to applicable
investment restrictions, in securities eligible for resale under
Rule 144A which are determined to be liquid based upon the trading
markets for such securities.
Pursuant to guidelines set forth by, and under the
supervision of, the Board of Trustees, the Adviser will monitor the
liquidity of restricted securities in a Fund's portfolio. In
reaching liquidity decisions, the Adviser will consider, among
other things, the following factors: (1) the frequency of trades
and quotes for the security over the course of six months or as
determined in the discretion of the Investment Adviser; (2) the
number of dealers wishing to purchase or sell the security and the
number of other potential purchasers over the course of six months
or as determined in the discretion of the Investment Adviser; (3)
dealer undertakings to make a market in the security; (4) the
nature of the security and the marketplace in which it trades
(e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer); and (5) other
factors, if any, which the Adviser deems relevant. The Adviser
will also monitor the purchase of Rule 144A securities to assure
that the total of all Rule 144A securities held by a Fund does not
exceed 10% of the Fund's average daily net assets. Rule 144A
securities which are determined to be liquid based upon their
trading markets will not, however, be required to be included among
the securities considered to be illiquid for purposes of Investment
Restriction No. 1 set forth below. Investments in Rule 144A
securities could have the effect of increasing Fund
illiquidity.
INVESTMENT RESTRICTIONS
The following restrictions restate or are in addition to
those described under "Investment Restrictions" in the Prospectus.
Investment Restrictions Nos. 2, 3, 4, 7, 8,12, 13 and 14 are
fundamental policies of the Funds, which can be changed only when
permitted by law and approved by a majority of the Funds'
outstanding voting securities. A "majority of the outstanding
voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding
shares are represented in person or by proxy, or (ii) more than 50%
of the outstanding shares. The other investment restrictions are
nonfundamental policies and can be changed by approval of a
majority of the Board of Trustees.
Each Fund, except as indicated, may not:
(1) Invest more than 10% of the value of its net assets
in investments which are illiquid (including repurchase
agreements having maturities of more than seven calendar days,
and variable and floating rate demand and master demand notes
not requiring receipt of the principal note amount within
seven days notice);
(2) Borrow money or pledge, mortgage or hypothecate its
assets, except that a Fund may enter into reverse repurchase
agreements or borrow from banks up to 10% of the current value
of its net assets for temporary or emergency purposes, and
such borrowings may be secured by the pledge of not more than
15% of the current value of its total net assets (but
investments may not be purchased by the Fund while any such
borrowings exist);
(3) Issue senior securities, except insofar as a Fund
may be deemed to have issued a senior security in connection
with any reverse repurchase agreement or any permitted
borrowing;
(4) Make loans, except loans of portfolio securities and
except that a Fund may enter into repurchase agreements with
respect to its portfolio securities and may purchase the types
of debt instruments described in its Prospectus or the SAI;
(5) Invest in companies for the purpose of exercising
control or management;
(6) Invest more than 10% of its net assets in shares of
other investment companies;
(7) Invest in real property (including limited
partnership interests, but excluding real estate investment
trusts and master limited partnerships), commodities,
commodity contracts, or oil, gas and other mineral resource,
exploration, development, lease or arbitrage transactions;
(8) Engage in the business of underwriting securities of
other issuers, except to the extent that the disposal of an
investment position may technically cause it to be considered
an underwriter as that term is defined under the Securities
Act;
(9) Sell securities short, except to the extent that a
Fund contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short;
(10) Purchase securities on margin, except that a Fund
may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities;
(11) Purchase or retain the securities of any issuer, if
those individual officers and Trustees of the Trust, the
Adviser, the Sponsor, or the Distributor, each owning
beneficially more than 1/2 of 1% of the securities of such
issuer, together own more than 5% of the securities of such
issuer;
(12) Purchase a security if, as a result, more than
25% of the value of its total assets would be invested in
securities of one or more issuers conducting their principal
business activities in the same industry (except for the Cash
Reserve Fund, which will concentrate its investments in
obligations issued by the domestic banking industry),
provided that this limitation shall not apply to obligations
issued or guaranteed by the U.S. Government or its agencies
and instrumentalities;
(13) Purchase a security if, as a result, (1) more
than 5% of its total assets would be invested in any one
issuer other than the U.S. Government or its agencies or
instrumentalities, or (2) the Fund would own more than 10% of
the outstanding voting securities of such issuer;
(14) Invest more than 5% of its net assets in
warrants which are unattached to securities, nor more than 2%
of the value of the Fund's net assets in warrants which are
not listed on the New York or American Stock Exchanges; or
(15) Write, purchase or sell puts, calls or
combinations thereof.
MANAGEMENT
Trustees and Officers
The ages and the principal occupations of the Trustees and
executive officers of the Trust for the past five years, are listed
below. The address of each, unless otherwise indicated, is 3435
Stelzer Road, Columbus, Ohio 43219. Trustees deemed to be
"interested persons" of the Trust for purposes of the 1940 Act are
indicated by an asterisk.
*JOHN J. PILEGGI, Age: 37, President and Chairman of the Board
of Trustees. Director of Furman Selz LLC since 1994; Senior
Managing Director of Furman Selz LLC (1992-1994); Managing Director
of Furman Selz LLC (1984-1992).
DENNIS W. DRAPER, Age: 47, Trustee. Associate Professor of
Finance at University of Southern California since 1978; Director
of Data Analysis, Inc. (financial services); and Editorial Board of
Chicago Board of Trade. His address is University of Southern
California, School of Business, Hoffman 701-F, Los Angeles,
California 90089.
JOSEPH N. HANKIN, Age: 56, Trustee. President, Westchester
Community College since 1971; President of Hartford Junior College
from 1967 to 1971; Adjunct Professor of Columbia University
Teachers College since 1976. His address is 75 Grasslands Road,
Valhalla, NY 10595.
RICHARD WEDEMEYER, Age: 60, Trustee. Vice President, The Channel
Corporation since July 1996; Vice President of Performance
Advantage, Inc. 1992 to July 1996; Vice President of Jim Henson
Productions from 1979 to 1992; Author of In Transition (Harper
Collins); co-founder and co-conductor of Harvard Business School
Club of New York Career Seminar; Trustee of Jim Henson Legacy
trust. His address is 5 High Ridge Park, Stamford, Connecticut
06878.
DONALD BROSTROM, Age: 37, Principal Financial and Accounting
Officer. Director, Fund Services, Furman Selz LLC since 1986;
Managing Director of Furman Selz since 1995.
JOAN V. FIORE, Age: 39, Vice President and Secretary. Managing
Director and Counsel of Furman Selz LLC since 1991; Attorney at the
U.S. Securities and Exchange Commission, Division of Investment
Management (1986-1991).
THERESA DONOVAN, Age: 46, Assistant Secretary. Director, Corporate
Secretary Services of Furman Selz LLC, since 1995; Associate
Director of Furman Selz 1990-1995.
COMPENSATION TABLE*
Aggregate Compensation from the Fund
Pension or Retirement Benefits Accrued as Part of Fund Expenses
Estimated Annual Benefits Upon Retirement
Total Compensation from the Fund complex
John J. Pileggi, Trustee None 0 N/A None
Dennis W. Draper, Trustee $7,000 0 N/A $ 7,000
Joseph N. Hankin, Trustee $7,000 0 N/A $ 7,000
Richard Wedemeyer, Trustee $ 7,000 0 N/A $ 7,000
_____________________
* Represents the total compensation estimated to be paid for a
full fiscal year.
Trustees of the Trust not affiliated with the Sponsor receive
from the Trust an annual retainer of $1,000 and a fee of $1,000 for
each Board of Trustees meeting and $1,000 for each Board committee
meeting of the Trust attended and are reimbursed for all out-of-pocket
expenses relating to attendance at such meetings. Trustees
who are affiliated with the Sponsor do not receive compensation
from the Trust.
Officers and Trustees of the Trust, as a group, own less than
1% of the outstanding shares of the Funds.
Investment Adviser
First American Capital Management, Inc.
First American Capital Management, Inc. ("First American")
has provided investment advisory services to the Funds since
inception pursuant to an advisory agreement with the Trust (the
"Advisory Agreement"). Subject to such policies as the Trust's
Board of Trustees may determine, First American makes investment
decisions for the Funds. The Advisory Agreement provides that, as
compensation for its services thereunder, First American is
entitled to receive from each Fund a monthly fee at an annual rate
based upon average daily net assets of the Fund as set forth in the
table of Fund Expenses in the Prospectus.
First American is located at 567 San Nicholas Drive, Suite
101, Newport Beach, California 92660, is a wholly-owned subsidiary
of The First American Financial Corporation, and was organized on
February 14, 1996, to provide business management, advisory,
administrative and asset management consulting services. First
American has no prior experience as an adviser to an investment
company.
The Investment Advisory Contracts for the Funds will continue
in effect for a period beyond two years from the date of their
execution only as long as such continuance is approved annually (i)
by the holders of a majority of the outstanding voting securities
of the Funds or by the Board of Trustees and (ii) by a majority of
the Trustees who are not parties to such Contract or "interested
persons" (as defined in the 1940 Act) of any such party. The
Contracts may be terminated without penalty by vote of the Trustees
or the shareholders of the Funds, or by the Adviser, on 60 days
written notice by either party to the Contract and will terminate
automatically if assigned.
Distribution of Fund Shares
The Trust retains BISYS to serve as principal underwriter
for the shares of the Funds pursuant to a Distribution Contract.
The Distribution Contract provides that the Distributor will use
its best efforts to maintain a broad distribution of the Funds'
shares among bona fide investors and may enter into selling group
agreements with responsible dealers and dealer managers as well as
sell the Funds' shares to individual investors. The Distributor is
not obligated to sell any specific amount of shares.
Distribution Plan
The Trustees of the Fund have voted to adopt a Master
Distribution Plan (the "Plan") pursuant to Rule l2b-1 of the 1940
Act for the Service Class shares of the Funds after having
concluded that there is a reasonable likelihood that the Plan will
benefit the Service Class shares of the Funds and their
shareholders. The Plan provides for a monthly payment by the
Service Class shares of the Funds to the Distributor in such
amounts that the Distributor may request, or for direct payment by
the Fund, for certain costs incurred under the Plan, subject to
periodic Board approval, provided that each such payment is based
on the average daily value of the net assets of the Funds' Service
Class Shares during the preceding month and is calculated at an
annual rate not to exceed 0.25%. (Certain expenses of the Fund may
be reduced in accordance with applicable state expense limitations.
See "Expenses and Expense Limits"). The Distributor will use all
amounts received under the Plan for payments to broker-dealers or
financial institutions (but not including banks) for their
assistance in distributing shares of the Service Class and
otherwise promoting the sale of Service Class shares, including
payments in amounts based on the average daily value of Service
Class shares owned by shareholders in respect of which the
broker-dealer or financial institution has a distributing
relationship. The Distributor may also use all or any portion of
such fees to pay Fund expenses such as the printing and
distribution of prospectuses sent to prospective investors or the
preparation, printing and distribution of sales literature and
expenses associated with media advertisements.
The Plan provides for the Distributor to prepare and submit
to the Board of Trustees on a quarterly basis written reports of
all amounts expended pursuant to the Plan and the purpose for which
such expenditures were made. The Plan provides that it may not be
amended to increase materially the costs which the Fund may bear
pursuant to the Plan without shareholder approval and that other
material amendments of the Plan must be approved by the Board of
Trustees, and by the Trustees who neither are "interested persons"
(as defined in the 1940 Act) of the Trust nor have any direct or
indirect financial interest in the operation of the Plan or in any
related agreement, by vote cast in person at a meeting called for
the purpose of considering such amendments. The selection and
nomination of the Trustees of the Trust has been committed to the
discretion of the Trustees who are not "interested persons" of the
Trust. The Plan and the related Administrative Services Contract
between the Trust and the Sponsor have been approved, and are
subject to annual approval, by the Board of Trustees and by the
Trustees who neither are "interested persons" nor have any direct
or indirect financial interest in the operation of the Plan or in
the Administrative Services Contract, by vote cast in person at a
meeting called for the purpose of voting on the Plan. The Board of
Trustees and the Trustees who are not "interested persons" and who
have no direct or indirect financial interest in the operation of
the Plan or in the Administrative Services Contract voted to
approve the Plan at a meeting held on August 23, 1996. The Plan
was submitted to the shareholders of the Funds' Service Class
shares and approved at a special meeting held on August 23, 1996.
The Plan is terminable with respect to the Funds' Service Class
shares at any time by a vote of a majority of the Trustees who are
not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in the
Administrative Services Contract or by vote of the holders of a
majority of the shares of the Fund.
Administrative Services
BISYS provides management and administrative services
necessary for the operation of the Funds, including, among other
things: (i) preparation of shareholder reports and communications;
(ii) regulatory compliance, such as reports to and filings with the
SEC and state securities commissions; and (iii) general supervision
of the operation of the Funds, including coordination of the
services performed by the Adviser, the Distributor, transfer agent,
custodians, independent accountants, legal counsel and others. In
addition, BISYS furnishes office space and facilities required for
conducting the business of the Funds and pays the compensation of
the Funds' officers, employees and Trustees affiliated with BISYS
. For these services, BISYS receives from each Fund a fee,
payable monthly, at the annual rate of 0.15% of each Fund's average
daily net assets.
The Administrative Services Contract is for a one year term
and is subject to annual approval by a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Administrative
Services Contract. The Administrative Services Contract will
terminate automatically in the event of its assignment.
Service Organizations
The Trust also contracts with banks, trust companies,
broker-dealers (other than BISYS) or other financial organizations
("Service Organizations") to provide certain administrative
services for the Service Class shares of the Funds. Services
provided by Service Organizations may include, among other things:
providing necessary personnel and facilities to establish and
maintain certain shareholder accounts and records; assisting in
processing purchase and redemption transactions; arranging for the
wiring of funds; transmitting and receiving funds in connection
with shareholders' orders to purchase or redeem shares; verifying
and guaranteeing client signatures in connection with redemption
orders, transfers among and changes in shareholders' designating
accounts; providing periodic statements showing a shareholder's
account balance and, to the extent practicable, integrating such
information with other client transactions; furnishing periodic and
annual statements and confirmations of all purchases and
redemptions of shares in a shareholder's account; transmitting
proxy statements, annual reports, and updating prospectuses and
other communications from the Service Class shares of the Funds to
shareholders; and providing such other services as the Service
Class shares of the Funds or a shareholder reasonably may request,
to the extent permitted by applicable statute, rule or regulation.
Neither the Administrator nor the Distributor will be a Service
Organization or receive fees for servicing.
Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to
invest more than the minimum initial or subsequent investments
specified by the Funds or charging a direct fee for servicing. If
imposed, these fees would be in addition to any amounts which might
be paid to the Service Organization by the Funds. Each Service
Organization has agreed to transmit to its clients a schedule of
any such fees. Shareholders using Service Organizations are urged
to consult them regarding any such fees or conditions.
The Glass-Steagall Act and other applicable laws, among other
things, prohibit banks from engaging in the business of
underwriting, selling or distributing securities. There currently
is no precedent prohibiting banks from performing administrative
and shareholder servicing functions as Service Organizations.
However, judicial or administrative decisions or interpretations of
such laws, as well as changes in either Federal or state statutes
or regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, could prevent a bank from
continuing to perform all or a part of its servicing activities.
In addition, state securities laws on this issue may differ from
the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers
pursuant to state law.
If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders of the Trust and
alternative means for continuing the servicing of such shareholders
would be sought. In that event, changes in the operation of the
Trust might occur and a shareholder serviced by such a bank might
no longer be able to avail itself of any services then being
provided by the bank. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of
these occurrences.
EXPENSES AND EXPENSE LIMITS
Currently, California is the only state imposing
limitations on the expenses of the Funds. Those expense
limitations are 2.5% of the first $30 million of a Fund's average
net assets, 2.0% of the next $70 million and 1.5% of a Fund's
remaining average net assets. If in any fiscal year expenses of
the Funds (excluding taxes, interest, expenses under the Plan,
brokerage commissions and other portfolio transaction expenses,
other expenditures which are capitalized in accordance with
generally accepted accounting principles and extraordinary
expenses, but including the advisory and administrative fees)
exceed the expense limitations applicable to the Funds imposed by
the securities regulations of any state, the Adviser will, to the
extent of its annual advisory fee, reimburse the Funds an amount
equal to the excess.
Except for the expenses paid by the Adviser and BISYS, the
Funds bear all costs of their operations.
DETERMINATION OF NET ASSET VALUE
As indicated under "Fund Share Valuation" in the Prospectus,
the Funds will use the amortized cost method to determine the value
of their portfolio securities pursuant to Rule 2a-7 under the 1940
Act. The amortized cost method involves valuing a security at its
cost and amortizing any discount or premium over the period until
maturity regardless of the impact of fluctuating interest rates on
the market value of the security. While this method provides
certainty in valuation, it may result in periods during which the
value, as determined by amortized cost, is higher or lower than the
price which the Funds would receive if the security were sold.
During these periods, the yield to a shareholder may differ
somewhat from that which could be obtained from a similar fund
which utilizes a method of valuation based upon market prices.
Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in lower value of a Fund's portfolio
on a particular day, a prospective investor in the Fund would be
able to obtain a somewhat higher yield than would result from an
investment in a fund utilizing solely market values and existing
Fund shareholders would receive correspondingly less income. The
converse would apply during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio
using the amortized cost method, each Fund must maintain a
dollar-weighted average portfolio maturity of 90 days or less,
purchase securities having remaining maturities of 397 days or less
and invest only in U.S. dollar denominated eligible securities
determined by the Trust's Board of Trustees to be of minimal credit
risks and which: (1) have received one of the two highest short-term
rating by at least two Nationally Recognized Statistical
Rating Organizations ("NRSROs"), such as "A-1" by Standard & Poor's
Corporation and "P-1" by Moody's Investors Service, Inc.; (2) are
single rated and have received the highest short-term rating by a
NRSRO; or (3) are unrated, but are determined to be of comparable
quality by the Adviser pursuant to guidelines approved by the
Board.
In addition, a Fund will not invest more than 5% of its total
assets in the securities (including the securities collateralizing
a repurchase agreement) of a single issuer, except that a Fund may
invest in U.S. Government securities or repurchase agreements that
are collateralized by U.S. Government securities without any such
limitation. Furthermore, the limitation does not apply with
respect to conditional and unconditional puts issued by a single
issuer, provided that no more than 10% of a Fund's total assets are
invested in securities issued or guaranteed by the issuer of the
put. Investments in rated securities not rated in the highest
category by at least two rating organizations (or one rating
organization if the instrument was rated by only one such
organization), and unrated securities not determined by the Board
of Trustees to be comparable to those rated in the highest rating
category, will be limited to 5% of a Fund's total assets, with
investment in any one such issuer being limited to no more than the
greater of 1% of a Fund's total assets or $1,000,000.
Pursuant to Rule 2a-7, the Board of Trustees is also required
to establish procedures designed to stabilize, to the extent
reasonably possible, the price per share of the Funds, as computed
for the purpose of sales and redemptions, at $1.00. Such
procedures include review of the Fund's portfolio holdings by the
Board of Trustees, at such intervals as it may deem appropriate, to
determine whether the net asset value of the Funds calculated by
using available market quotations deviates from $l.00 per share
based on amortized cost. The extent of any deviation will be
examined by the Board of Trustees. If such deviation exceeds 1/2 of
1%, the Board of Trustees will promptly consider what action, if
any, will be initiated. In the event the Board of Trustees
determines that a deviation exists that may result in material
dilution or other unfair results to investors or existing
shareholders, the Board of Trustees will take such corrective
action as it regards as necessary and appropriate, which may
include selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity,
withholding dividends or establishing a net asset value per share
by using available market quotations.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group
of dealers in the execution of transactions in portfolio
securities. Subject to policies established by the Trust's Board
of Trustees, First American is primarily responsible for portfolio
decisions and the placing of portfolio transactions. In placing
orders, it is the policy of the Trust to obtain the best results,
taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors,
such as the dealer's risk in positioning the securities involved.
While First American generally seeks reasonably competitive spreads
or commissions, the Funds will not necessarily be paying the lowest
spread or commission available. The policy of each Fund of
investing in securities with short maturities may result in high
portfolio turnover.
Purchases and sales of securities will usually be principal
transactions. Portfolio securities normally will be purchased or
sold from or to issuers directly or to dealers serving as market
makers for the securities at a net price. Generally, money market
securities are traded on a net basis and do not involve brokerage
commissions. The cost of executing portfolio securities
transactions for the Funds primarily consists of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated
with the Trust or First American are prohibited from dealing with
the Trust as a principal in the purchase and sale of securities
unless a permissive order allowing such transactions is obtained
from the SEC.
First American may, in circumstances in which two or more
dealers are in a position to offer comparable results, give
preference to a dealer which has provided statistical or other
research services to First American. By allocating transactions in
this manner, First American is able to supplement its research and
analysis with the views and information of securities firms.
TAXATION
The Funds intend to qualify, and elect annually to be treated,
as regulated investment companies under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). To qualify
as a regulated investment company, a Fund must: (a) distribute to
shareholders at least 90% of its investment company taxable income
(which includes, among other items, dividends, taxable interest and
the excess of net short-term capital gains over net long-term
capital losses); (b) derive in each taxable year at least 90% of
its gross income from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of
stock, securities or foreign currencies or other income derived
with respect to its business of investing in such stock, securities
or currencies; (c) derive less than 30% of its gross income from
the sale or other disposition of certain assets (namely, (i) stock
or securities; (ii) options, futures, and forward contracts (other
than those on foreign currencies); and (iii) foreign currencies
(including options, futures, and forward contracts on such
currencies) not directly related to the Fund's principal business
of investing in stock or securities (or options and futures with
respect to stocks or securities)) held less than 3 months; and (d)
diversify its holdings so that, at the end of each quarter of the
taxable year, (x) at least 50% of the market value of the Fund's
assets is represented by cash and cash items (including
receivables), U.S. Government securities, the securities of other
regulated investment companies and other securities, with such
other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the
Fund's total assets and not greater than 10% of the outstanding
voting securities of such issuer, and (y) not more than 25% of the
value of its total assets is invested in the securities of any one
issuer (other than U.S. Government securities or the securities of
other regulated investment companies). In addition, a Fund earning
tax-exempt interest must, in each year, distribute at least 90% of
its net tax-exempt income. By meeting these requirements, the
Funds generally will not be subject to Federal income tax on their
investment company taxable income and net capital gains which are
distributed to shareholders. If the Funds do not meet all of these
Code requirements, they will be taxed as ordinary corporations and
their distributions will be taxed to shareholders as ordinary
income.
Amounts, other than tax-exempt interest, not distributed on a
timely basis in accordance with a calendar year distribution
requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, each Fund must distribute for
each calendar year an amount equal to the sum of (1) at least 98%
of its ordinary income (excluding any capital gains or losses) for
the calendar year, (2) at least 98% of the excess of its capital
gains over capital losses (adjusted for certain ordinary losses)
for the one-year period ending October 31 of such year, and (3) all
ordinary income and capital gains net income (adjusted for certain
ordinary losses) for previous years that were not distributed
during such years. A distribution, including an "exempt-interest
dividend," will be treated as paid on December 31 of a calendar
year if it is declared by a Fund during October, November or
December of that year to shareholders of record on a date in such
a month and paid by the Fund during January of the following year.
Such distributions will be taxable to shareholders in the calendar
year in which the distributions are declared, rather than the
calendar year in which the distributions are received.
Distributions of investment company taxable income generally
are taxable to shareholders as ordinary income. Distributions of
net long-term capital gains, if any, designated by the Funds as
long-term capital gain dividends are taxable to shareholders as
long-term capital gain, regardless of the length of time the Funds'
shares have been held by a shareholder. All distributions are
taxable to the shareholder in the same manner, whether reinvested
in additional shares or received in cash. Shareholders will be
notified annually as to the Federal tax status of distributions.
Upon the taxable disposition (including a sale or
redemption) of shares of a Fund, a shareholder may realize a gain
or loss depending upon his basis in his shares. Such gain or loss
generally will be treated as capital gain or loss if the shares are
capital assets in the shareholder's hands. Such gain or loss will
be long-term or short-term, generally depending upon the
shareholder's holding period for the shares. However, a loss
realized by a shareholder on the disposition of Fund shares with
respect to which capital gain dividends have been paid will, to the
extent of such capital gain dividends, be treated as long-term
capital loss if such shares have been held by the shareholder for
six months or less. A loss realized on the redemption, sale or
exchange of Fund shares will be disallowed to the extent an
exempt-interest dividend was received with respect to those shares
if the shares have been held by the shareholder for six months or
less. Further, a loss realized on a disposition will be disallowed
to the extent the shares disposed of are replaced (whether by
reinvestment of distributions or otherwise) within a period of 61
days beginning 30 days before and ending 30 days after the disposal
of the shares. In such a case, the basis of the shares acquired
will be adjusted to reflect the disallowed loss. Shareholders
receiving distributions in the form of additional shares will have
a cost basis for Federal income tax purposes in each share received
equal to the net asset value of a share of the Funds on the
reinvestment date.
The Funds are required to report to the Internal Revenue
Service ("IRS") all distributions except in the case of certain
exempt shareholders. All such distributions generally are subject
to withholding of Federal income tax at a rate of 31% ("backup
withholding") in the case of nonexempt shareholders if (1) the
shareholder fails to furnish the Funds with and to certify the
shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Funds or a shareholder
that the shareholder has failed to report properly certain interest
and dividend income to the IRS and to respond to notices to that
effect, or (3) when required to do so, the shareholder fails to
certify that he is not subject to backup withholding. If the
withholding provisions are applicable, any such distributions,
whether reinvested in additional shares or taken in cash, will be
reduced by the amounts required to be withheld. Backup withholding
is not an additional tax. Any amount withheld may be credited
against the shareholder's U.S. Federal income tax liability.
Investors may wish to consult their tax advisers about the
applicability of the backup withholding provisions.
The foregoing discussion relates only to Federal income tax
law as applicable to U.S. persons (i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates).
Distributions by the Funds also may be subject to state and local
taxes and their treatment under state and local income tax laws may
differ from the Federal income tax treatment. Distributions of a
Fund which are derived from interest on obligations of the U.S.
Government and certain of its agencies and instrumentalities may be
exempt from state and local taxes in certain states. Shareholders
should consult their tax advisers with respect to particular
questions of Federal, state and local taxation. Shareholders who
are not U.S. persons should consult their tax advisers regarding
U.S. and foreign tax consequences of ownership of shares of the
Funds, including the likelihood that distributions to them would be
subject to withholding of U.S. tax at a rate of 30% (or at a lower
rate under a tax treaty).
OTHER INFORMATION
Capitalization
The Trust is a Delaware business trust established under a
Declaration of Trust dated June 5, 1996 and currently consists of
two separately managed portfolios. The capitalization of the Trust
consists solely of an unlimited number of shares of beneficial
interest with a par value of $0.001 each. The Board of Trustees may
establish additional Funds (with different investment objectives
and fundamental policies) at any time in the future. Establishment
and offering of additional Funds will not alter the rights of the
Trust's shareholders. When issued, shares are fully paid, non
assessable, redeemable and freely transferable. Shares do not have
preemptive rights or subscription rights. In any liquidation of a
Fund, each shareholder is entitled to receive his pro rata share of
the net assets of that Fund.
Each Fund offers, and the SAI relates to, two classes of
shares -- the Institutional and the Service classes of shares. The
Service Class shares are available to customers who desire enhanced
shareholder servicing. The Institutional Class shares are
available to all other investors. The Fund's Service Class shares
are subject to a Rule 12b-1 fee and a shareholder service fee.
Expenses incurred in connection with each Fund's organization
and the public offering of its shares have been deferred and are
being amortized on a straight-line basis over a period of not more
than five years.
Voting Rights
Under the Declaration of Trust, the Trust is not required to
hold annual meetings of each Fund's shareholders to elect Trustees
or for other purposes. It is not anticipated that the Trust will
hold shareholder meetings unless required by law or the Declaration
of Trust. In this regard, the Trust will be required to hold a
meeting to elect Trustees to fill any existing vacancies on the
Board if, at any time, fewer than a majority of the Trustees have
been elected by the shareholders of the Trust. In addition, the
Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove
persons serving as Trustee either by declaration in writing or at
a meeting called for such purpose. The Trustees are required to
call a meeting for the purpose of considering the removal of
persons serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the
Trust. To the extent required by applicable law, the Trustees
shall assist shareholders who seek to remove any person serving as
Trustee.
The Trust's shares do not have cumulative voting rights, so
that the holders of more than 50% of the outstanding shares may
elect the entire Board of Trustees, in which case the holders of
the remaining shares would not be able to elect any Trustees.
Custodian, Transfer Agent and Dividend Disbursing Agent
Investors Fiduciary Trust Company acts as custodian of the
Trust's assets. BISYS acts as transfer agent for the Funds. The
Trust compensates BISYS for providing personnel and facilities to
perform transfer agency related services for the Trust at a rate
intended to represent the cost of providing such services.
Experts
Price Waterhouse LLP has been selected as the independent
accountants for the Trust. Price Waterhouse LLP provides audit
services, tax return preparation and assistance and consultation in
connection with certain SEC filings. Price Waterhouse LLP is
located at 1177 Avenue of the Americas, New York, New York
10036.
Yield and Performance Information
The Funds may, from time to time, include their yield and
effective yield in advertisements or reports to shareholders or
prospective investors.
Current yield for the Funds will be based on the change in the
value of a hypothetical investment (exclusive of capital changes
such as gains or losses from the sale of securities and unrealized
appreciation and depreciation) over a particular seven-day period,
less a pro-rata share of each Fund's expenses accrued over that
period (the "base period"), and stated as a percentage of the
investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying
by 365/7, with the resulting yield figure carried to at least the
nearest hundredth of one percent. "Effective yield" for the Funds
assumes that all dividends received during the base period have
been reinvested. Calculation of "effective yield" begins with the
same "base period return" used in the calculation of yield, which
is then annualized to reflect weekly compounding pursuant to the
following formula:
Effective Yield = [(Base Period Return + 1)365/7] - 1.
Quotations of yield will reflect only the performance of a
hypothetical investment in the Funds during the particular time
period shown. Yield for the Funds will vary based on changes in
market conditions and the level of the Fund's expenses, and no
reported performance figure should be considered an indication of
performance which may be expected in the future.
In connection with communicating its yields to current or
prospective unit holders, the Funds also may compare these figures
to the performance of other mutual funds tracked by mutual fund
rating services or to other unmanaged indices, which may assume
reinvestment of dividends but generally do not reflect deductions
for administrative and management costs and expenses.
Performance information for the Funds may be compared, in
reports and promotional literature, to: (i) other groups of mutual
funds tracked by Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall
performance, investment objectives, and assets, or tracked by other
services, companies, publications, or persons who rank mutual funds
on overall performance or other criteria; and (ii) the Consumer
Price Index (measure for inflation) to assess the real rate of
return from an investment of dividends but this Index generally does
not reflect deductions for administrative and management costs and
expenses.
Investors who purchase and redeem shares of the Funds through
a customer account maintained at a Service Organization may be
charged one or more of the following types of fees as agreed upon by
the Service Organization and the investor, with respect to the
customer services provided by the Service Organization: account
fees (a fixed amount per month or per year); transaction fees (a
fixed amount per transaction processed); compensating balance
requirements (a minimum dollar amount a customer must maintain in
order to obtain the services offered); or account maintenance fees
(a periodic charge based upon a percentage of the assets in the
account or of the dividends paid on those assets). Such fees will
have the effect of reducing the yield and average annual total
return of the Funds for those investors. Investors who maintain
accounts with the Trust as transfer agent will not pay these fees.
FIRST CHOICE FUNDS TRUST
Notes to Statement of Assets and Liabilities
September 12, 1996
1. Description and Organization. First Choice Funds Trust (the
"Trust") is registered under the Investment Company Act of 1940 as
amended, as an open-end management investment company. The Trust was
organized as a Delaware business trust on June 5, 1996. The capital
of the Trust consists soley of an unlimited number of shares of
beneficial interest with a par value of $0.001 each. The Trust
currently consists of two separate portfolios or series: U.S.
Treasury Reserve Fund and the Cash Reserve Fund (collectively the
"Funds"), each with two (2) classes of shares known as the Service
Class, (offered to shareholders who require a higher level of
shareholder servicing) and the Institutional Class (available to all
other investors). The Funds have had no operations other than
organizational matters and the sale to BISYS Fund Services
("BISYS"), the Administrator and Distributor, of 100,000 shares of
capital stock representing the initial capital of the Funds as shown
on the Statement of Assets and Liabilities.
BISYS has agreed to pay the costs of organization and initial
registration of the Trust. The Funds have agreed to reimburse BISYS
after each fund's commencement of operations.
Costs incurred in connection with such organization and initial
registration of the Trust, aggregating approximately $170,000, have
been allocated equally to each Fund, have been deferred and will be
amortized over a sixty month period beginning with each Fund's
commencement of operations.
In the event any of the initial shares of the Funds owned by
BISYS are redeemed during the amortization period, the redemption
proceeds will be reduced by a pro rata portion of any unamortized
deferred organization expenses in the same proportion as the number
of initial shares outstanding being redeemed bears to the number of
initial shares outstanding at the time of redemption.
2. Advisor. The Trust has entered into an Advisory Contract with
First American Capital Management Inc. ("First American"), a wholly
owned subsidiary of The First American Financial Corporation. Under
the Advisory Contract, First American is responsible for managing
the investments of the Funds and continually reviewing, supervising
and administering the Funds' investments. For the advisory services
it provides to the Funds, First American will receive monthly fees
at up to 0.30%, annually, of the average daily net assets of each
Fund.
3. Administrator and Distributor. The Trust has entered into
Administrative Service Contracts with BISYS. Under the
Administrative Services Contract, BISYS supplies office space and
facilities, prepares reports to shareholders of the Funds, and
performs administrative services necessary for the operation of the
Funds. For these services, BISYS is paid a monthly fee at the annual
rate of 0.15% of the average daily net assets of each Fund.
BISYS serves as Distributor of the shares of the Funds. The
Trust has adopted a Rule 12b-1 Distribution Plan and Agreement (the
"Distribution Plan"). Pursuant to the Distribution Plan, BISYS will
be reimbursed each month from the Service Class shares of each Fund
for certain expenses related to activities performed by BISYS
intented to result in the sale of Service Class shares. Such
reimbursement will not exceed 0.25%, on an annualized basis, of the
average daily net assets of the Service Class shares of each
Fund. <PAGE>
FIRST CHOICE FUNDS TRUST
Notes to Statement of Assets and Liabilities (continued)
4. Service Organizations. The Trust may contract with various banks,
trust companies, broker-dealers, or other financial organizations
(collectively, the "Service Organizations ") to provide certain
administrative services for the Service Class shares of the Funds,
such as maintaining shareholder accounts and records. The Service
Class shares of the Funds may pay fees to Service Organizations in
amounts up to 0.25% of the average daily net assets of the Service
Class shares owned by shareholders serviced by Service
Organizations.
5. Other transactions with Affiliates. Pursuant to a Fund
Accounting Agreement between the Trust and BISYS, BISYS assists the
Trust in calculating net asset values and provides certain other
accounting services for each Fund, for an annualized fee of $30,000
per Fund, plus out-of-pocket expenses.
BISYS also acts as transfer agent and provides personnel
necessary to perform shareholder servicing functions. Pursuant to a
Shareholder Servicing Agreement between the Trust and BISYS, BISYS
receives a fee of $15.00 per account per year, and reimbursement for
certain expenses.
6. Federal Income Taxes. It is the Funds' intention to qualify as
"regulated investment companies" under Subchapter M of the Internal
Revenue Code of 1986, as amended. By so qualifying, the Funds will
not be subject to Federal income taxes to the extent that they
distribute taxable and tax-exempt income for their fiscal year. The
Funds also intend to meet the distribution requirements to avoid the
payment of Federal income and excise taxes.
<PAGE>
First Choice Funds Trust
STATEMENT OF ASSETS AND LIABILITIES
September 12, 1996
US Treasury Cash Reserves
Reserve Fund Fund
Assets
Cash $50,000 $50,000
Deferred organization expenses 85,000 85,000
______ ______
Total Assets 135,000 135,000
Liabilities
Organizational Expenses Payable 85,000 85,000
______ ______
Total Liabilities 85,000 85,000
______ ______
Net Assets $50,000 $50,000
_______ _______
Shares Outstanding ($.001 Par
Value) 50,000 50,000
______ ______
Net Asset Value per share $1.00 $1.00
______ ______
Composition of net assets
Capital stock $ 50 $ 50
Paid-in capital 49,950 49,950
_______ _______
Net Assets $50,000 $50,000
_______ _______
_______ _______
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)
(1) Financial Statements included in Part A of this
Registration Statement: None.
(2) Financial Statements included in Part B of this
Registration Statement: None.
(b) Exhibits
(1) Trust Instrument (filed with initial Registration
Statement).
(2) Bylaws of Registrant (filed with initial
Registration Statement).
(3) None.
(4) None.
(5)(a) Form of Master Investment Advisory Agreement and
Supplements between Registrant and Adviser.
(5)(b) Form of Master Administration Agreement and
Supplements between Registrant and
Administrator.
(6) Form of Master Distribution Contract and Supplements
between Registrant and Distributor.
(7) None.
(8) Form of Custodian Contract between Registrant and
Custodian.
(9)(a) Form of Transfer Agency and Service Agreement
between Registrant and Transfer Agent.
(10)(a) Consent of Baker & McKenzie, counsel to
Registrant.
(11) Consent of Independent Accountants.
(12) None.
(13) Subscription Agreement.
(14) None.
(15) Form of Rule 12b-1 Distribution Plan and Agreement
between Registrant and Distributor.
* (16) Schedule of Computation of Performance Calculation.
* (17) Financial Data Schedule.
(18) Rule 18f-3 Plan.
Other Exhibits
(A) Power Of Attorney.
________________________
* To be filed by Amendment.
Item 25. Persons Controlled by or under Common Control with
Registrant.
None.
Item 26. Number of Holders of Securities at August 23, 1996.
U.S. Treasury Reserve Fund NONE
Cash Reserve Fund NONE
Item 27. Indemnification.
As permitted by Section 17(h) and (i) of the Investment Company
Act of 1940 (the "1940 Act") and pursuant to Article X of the
Registrant's Trust Instrument (Exhibit 1 to the Registration
Statement), Section 4 of the Master Investment Advisory Contract
between Registrant and the Adviser (Exhibit 5(a) to this
Registration Statement), Section 9 of the Investment Advisory
Agreement between Registrant and the Adviser and Section 9 of the
Master Distribution Contract between Registrant and the Distributor
(Exhibit 6 to this Registration Statement), officers, trustees,
employees and agents of the Registrant will not be liable to the
Registrant, any shareholder, officer, trustee, employee, agent or
other person for any action or failure to act, except for bad faith,
willful misfeasance, gross negligence or reckless disregard of
duties, and those individuals may be indemnified against liabilities
in connection with the Registrant, subject to the same exceptions.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant
understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
The Registrant will purchase an insurance policy insuring its
officers and trustees against liabilities, and certain costs of
defending claims against such officers and trustees, to the extent
such officers and trustees are not found to have committed conduct
constituting willful misfeasance, bad faith, gross negligence or
reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of
indemnification payments to officers under certain circumstances.
Section 4 of the Master Investment Advisory Contract between
Registrant and the Adviser Section 9 of the Investment Advisory
Agreement between Registrant and the Adviser and Section 9 of the
Master Distribution Contract between Registrant and the Distributor,
limit the liability of the Adviser, and the Distributor to
liabilities arising from willful misfeasance, bad faith or gross
negligence in the performance of their respective duties or from
reckless disregard by them of their respective obligations and
duties under the agreements.
The Registrant hereby undertakes that it will apply the
indemnification provisions of its Declaration of Trust, By-Laws,
Investment Advisory Contracts and Distribution Contract in a manner
consistent with Release No. 11330 of the Securities and Exchange
Commission under the 1940 Act so long as the interpretations of
Section 17(h) and 17(i) of such Act remain in effect and are
consistently applied.
Item 28. Business and Other Connections of the Adviser.
First American Capital Management, Inc. ("First American") is
a subsidiary of The First American Financial Corporation, which
is headquartered in Santa Ana, California and is a provider of
real estate related financial and information services to real
property buyers and mortgage lenders and trust services through
its subsidiary First American Trust Company.
The executive officers of First American and such executive
officers' positions during the past two fiscal years are as
follows:
Name Position and Offices
William C. Conrad Director, President & Chief Executive
Officer of the Adviser since December 1995;
Chief Investment Officer of First American
Trust Company, 2161 San Joaquin Hills Road,
Newport Beach, California, since August
1994; Chairman, First Interstate Securities,
San Diego California, from January 1994 to
July 1994; President & Chief Executive
Officer of San Diego Capital Management,
Inc., San Diego California, from January
1990 to January 1994.
Mark R. Arnesen Director, Secretary & Corporate
Counsel of the Adviser since December
1995; Vice President, Secretary &
Corporate Counsel of The First
American Financial Corporation, 114
East Fifth Street, Santa Ana,
California, since April 1992; Vice
President, Secretary & Corporate
Counsel of First American Title
Insurance Company, 114 East Fifth
Street, Santa Ana, California, since
April 1992.
Thomas A. Klemens Director, Chief Financial Officer of the
Adviser since December 1995, Executive Vice
President & Chief Financial Officer of The
First American Financial Corporation, 114
East Fifth Street, Santa Ana, California,
since February 1996; Vice President, Chief
Financial Officer of said Company from 1993
to 1996; Vice President & Chief Financial
Officer of First American Title Insurance
Company since September 1993.
Gary Alan Pulford Senior Portfolio Manager of the Adviser
since December 1995; Vice President of First
American Trust Company , 2161 San Joaquin
Hills Road, Newport Beach, California, since
January 1995; President, Pinnacle Asset
Management, Inc. , 575 Anton Blvd., Suite
300, Glendale, California, from November
1991 to June 1995.
Deborah Ann Castellani Chief Operating Officer of the Adviser
since December 1995; Vice President of
First American Trust Company, 2161 San
Joaquin Hills Road, Newport Beach,
California, since April 1989.
Randall L. Zaharia Senior Portfolio Manager of the Adviser
since December 1995; Vice President of First
American Trust Company, 2161 San Joaquin
Hills Road, Newport Beach, California, since
March 1995. Investment Analyst, Los Angeles
County M.T.A. , Los Angeles, California,
from November 1988 to March 1995.
Steven Neal Huntsinger Senior Portfolio Manager of the
Adviser since December 1995; Vice
President of First American Trust
Company, 2161 San Joaquin Hills Road,
Newport Beach, California, since
September 1995; Portfolio Manager,
Analytical Investment Management, 2222
Martin St., Suite 230, Irvine,
California, from November 1983 to July
1995.
Item 29. Principal Underwriter
(a) The Distributor acts as Distributor/Underwriter for a
number of other registered investment companies.
(b) Officers and Directors
Name and Positions and
Principal Business Offices with Positions and
Address Registrant Offices with Underwriter
BISYS Fund Services, Inc. None Sole General Partner
3435 Stelzer Road
Columbus, Ohio 43219
WC Subsidiary Corporation None Sole Limited Partner
150 Clove Road
Little Falls, New Jersey 07424
The BISYS Group, Inc. None Sole Shareholder
150 Clove Road
Little Falls, New Jersey 07424
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of BISYS.
Item 31. Management Services
Not applicable.
Item 32. Undertakings.
(a) Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the removal of a trustee if
requested to do so by the holders of at least 10% of the
Registrant's outstanding shares.
(b) Registrant hereby 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 the Registrant's Registration Statement filed
under the Securities Act of 1933.
(c) 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.
(d) Registrant undertakes to provide the support to shareholders
specified in Section 16(c) of the 1940 Act as though that
section applied to the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New
York, on September 12, 1996.
FIRST CHOICE FUNDS TRUST
By:_________________________
John J. Pileggi, President
and Trustee
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
______________ President and Trustee September 12,
1996.
John J. Pileggi
______________ (Principal Financial &
Donald Brostrom Accounting Officer) September 12,
1996.
DENNIS W. DRAPER* Trustee September 12,
1996.
Dennis W. Draper
JOSEPH N. HANKIN* Trustee September 12,
1996.
Joseph N. Hankin
RICHARD WEDEMEYER* Trustee September 12,
1996.
Richard Wedemeyer
* Pursuant to Power of Attorney filed with this Pre-Effective
Amendment to Registration Statement Nos. 33-7085 and 811-7681.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS TO FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 AND
THE INVESTMENT COMPANY ACT OF 1940
FIRST CHOICE FUNDS TRUST<PAGE>
EXHIBIT INDEX
Exhibit
Number Document
5(a) Investment Advisory Agreement
5(b) Administration Agreement
6 Distribution Agreement
8 Custodian Agreement
9(a) Transfer Agency Agreement
10(a) Consent of Baker & McKenzie
11 Consent of Independent Accountants
13 Subscription Agreement
15 Rule 12b-1 Distribution Plan and
Agreement
18 Rule 18f-3 Plan
Other Exhibits
A Power of Attorney
MASTER INVESTMENT ADVISORY CONTRACT
FIRST CHOICE FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
August 23, 1996
First American Capital Management, Inc.
567 San Nicholas Drive, Suite 101
Newport Beach, CA 92660
Dear Sirs or Madams:
This will confirm the agreement between First Choice
Funds Trust (the "Trust") and First American Capital Management,
Inc. (the "Adviser") as follows:
1. Definitions and Delivery of Documents. The Trust
has been organized as a business trust under the laws of the
State of Delaware and is an open-end management investment
company. The Trust's shares of beneficial interest may be
classified into series in which each series represents the entire
undivided interests of a separate portfolio of assets. For all
purposes of this Contract, a "Fund" shall mean a separate
portfolio of assets of the Trust with respect to which the Trust
has entered into an Investment Advisory Contract Supplement, and
a "Series" shall mean the series of shares of beneficial interest
representing undivided interests in a Fund. All references
herein to this Contract shall be deemed to be references to this
Contract as it may from time to time be supplemented by
Investment Advisory Contract Supplements. The Trust engages in
the business of investing and reinvesting the assets of each Fund
in the manner and in accordance with the investment objective and
restrictions specified in the Trust's Certificate of Trust, dated
June 5, 1996 (the "Certificate of Trust"), and the Prospectus or
Prospectuses (the "Prospectus") relating to the Trust and the
Funds included in the Trust's Registration Statement, as amended
from time to time (the "Registration Statement"), filed by the
Trust under the Investment Company Act of 1940 (the "1940 Act")
and the Securities Act of 1933 (the "1933 Act"). Copies of the
documents referred to in the preceding sentence have been
furnished to the Adviser. Any amendments to those documents
shall be furnished to the Adviser promptly.
2. Investment Advisory and Management Services. (a)
The Adviser shall provide to the Trust investment guidance and
policy direction in connection with the management of the
portfolio of each Fund, including oral and written research,
analysis, advice, statistical and economic data and information
and judgments, of both a macroeconomic and microeconomic
character, concerning, among other things, interest rate trends,
portfolio composition, credit conditions of both a general and
special nature and the average maturity of the portfolio of each
Fund.
(b) The Adviser shall also provide to the Trust's
officers administrative assistance in connection with the
operation of the Trust and each of the Funds. Administrative
services provided by the Adviser shall include (i) data
processing, clerical and bookkeeping services required in
connection with maintaining the financial accounts and records
for the Trust and each of the Funds, (ii) the compilation of
statistical and research data required for the preparation of
periodic reports and statements of each of the Funds which are
distributed to the Trust's officers and Board of Trustees, (iii)
the compilation of information required in connection with the
Trust's filings with the Securities and Exchange Commission and
(iv) such other services as the Adviser shall from time to time
determine, upon consultation with the Administrator, to be
necessary or useful to the administration of the Trust and each
of the Funds.
(c) As a manager of the assets of each Fund, the
Adviser shall make investments for the account of each Fund in
accordance with the Adviser's best judgment and within the
investment objectives and restrictions of each such Fund set
forth in the Trust's Declaration of Trust, the Prospectus of each
such Fund, the 1940 Act and the provisions of the Internal
Revenue Code relating to regulated investment companies, subject
to policy decisions adopted by the Trust's Board of Trustees.
The Adviser shall advise the Trust's Officers and Board of
Trustees, at such times as the Board of Trustees may specify, of
investments made for each of the Funds and shall, when requested
by the Trust's officers or Board of Trustees, supply the reasons
for making particular investments.
(d) The Adviser, subject to and in accordance
with any directions which the Trust's Board of Trustees may issue
from time to time, shall place, in the name of the Funds, orders
for the execution of the Fund's securities transactions. When
placing such orders the Adviser shall generally seek to obtain
the best net price and execution for the Funds, but this
requirement shall not be deemed to obligate the Adviser to place
any order solely on the basis of obtaining the lowest commission
rate or spread if the other standards set forth below have been
satisfied. The parties recognize that there are likely to be
many cases in which different brokers or dealers are equally able
to provide such best price and execution and that, in selecting
among such brokers or dealers with respect to particular trades,
it is desirable to choose those brokers or dealers who furnish
research, statistics, quotations and other information to the
Funds and the Adviser in accordance with the standards set forth
below. Moreover, to the extent that it continues to be lawful to
do so and so long as the Board of Trustees determines that the
Funds will benefit, directly or indirectly, by doing so, the
Adviser may place orders with a broker who charges a commission
for that transaction which is in excess of the amount of
commission that another broker would have charged for effecting
that transaction, provided that the excess commission is
reasonable in relation to the value of "brokerage and research
services" (as defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) provided by that broker.
Accordingly, the Trust and the Adviser agree that the
Adviser shall select brokers for the execution of the Funds'
transactions from among those brokers and dealers who provide
quotations and other services to the Funds, specifically
including the quotations necessary to determine the Funds' net
assets, in such amount of total brokerage as may reasonably be
required in light of such services; and those brokers and dealers
who supply research, statistical and other data to the Adviser or
its affiliates which the Adviser or its affiliates may lawfully
and appropriately use in their investment advisory capacities,
which relate directly to securities, actual or potential, of the
Funds, or which place the Adviser in a better position to make
decisions in connection with the management of the Funds' assets
and securities, whether or not such data may also be useful to
the Adviser and its affiliates in managing other portfolios or
advising other clients, in such amount of total brokerage as may
reasonably be required.
(e) The Adviser shall render regular reports to
the Trust, not more frequently than quarterly, of how much total
business for the Funds' portfolio transactions has been placed by
the Adviser with brokers or dealers falling into each of the
categories referred to above and the manner in which the
allocation has been accomplished.
(f) The Adviser agrees that no investment
decision will be made or influenced by a desire to direct
portfolio transactions for allocation in accordance with the
foregoing, and that the right to make such allocation shall not
interfere with the Adviser's paramount duty to obtain the best
net price and execution for the Funds.
(g) The Adviser shall furnish to the Board of
Trustees periodic reports on the investment performance of each
Fund and on the performance of its obligations under this
Contract and shall supply such additional reports and information
as the Trust's officers or Board of Trustees shall reasonably
request.
3. Expenses. (a) The Adviser shall, at its expense,
(i) employ or associate with itself such persons as it believes
appropriate to assist in performing its obligations under this
Contract and (ii) provide all advisory services, equipment,
facilities and personal necessary to perform its obligations
under this Contract.
The Trust shall be responsible for all of its expenses
and liabilities, including compensation of its Trustees who are
not affiliated with the Administrator or the Adviser or any of
their affiliates; taxes and governmental fees; interest charges;
fees and expenses of the Trust's independent accountants and
legal counsel; trade association membership dues; fees and
expenses of any custodian (including for keeping books and
accounts and calculating the net asset value of shares of each
Series, transfer agent, registrar and dividend disbursing agent
of the Trust; expenses of issuing, selling, redeeming,
registering and qualifying for sale the Trust's shares of
beneficial interest; expenses of preparing and printing share
certificates, prospectuses, shareholders' reports, notices, proxy
statements and reports to regulatory agencies; the cost of office
supplies; travel expenses of all officers, trustees and
employees; insurance premiums; brokerage and other expenses of
executing portfolio transactions; expenses of shareholders'
meetings; organizational expenses; and extraordinary expenses).
4. Limitation of Liability of Adviser. The Adviser
shall give the Trust the benefit of the Adviser's best judgment
and efforts in rendering services under this Contract. As an
inducement to the Adviser's undertaking to render these services,
the Trust agrees that the Adviser shall not be liable under this
Contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing
in this Contract shall be deemed to protect or purport to protect
the Adviser against any liability to the Trust or its
shareholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of the Adviser's duties under this Contract or by
reason of the Adviser's reckless disregard of its obligations and
duties hereunder.
5. Compensation of the Adviser. In consideration of
the services to be rendered, facilities furnished and expenses
paid or assumed by the Adviser under this Contract, the Trust
shall pay the Adviser a fee with respect to each Fund in
accordance with the applicable Investment Advisory Contract
Supplement. Fees under this Contract will begin to accrue on the
first day of a Fund's operations.
If the fees payable to the Adviser pursuant to this
paragraph 5 and the applicable Investment Advisory Contract
Supplement begin to accrue before the end of any month or if this
Contract terminates before the end of any month, the fees for the
period from that date to the end of that month or from the
beginning of that month to the date of termination, as the case
may be, shall be prorated according to the proportion which the
period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating the monthly
fees, the value of the net assets of each Fund shall be computed
in the manner specified in the Prospectus for the computation of
net asset value. For purposes of this Contract, "business day"
means each weekday except those holidays on which the Federal
Reserve Bank of New York, the New York Stock Exchange (the
"Exchange") or the Adviser are closed. Currently, those holidays
include: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas.
6. Limitation of Expenses Paid by the Funds. The
limitation of expenses for each Fund is set forth in the
applicable Investment Advisory Contract Supplement.
7. Duration and Termination of This Contract. This
Contract and any Investment Advisory Contract Supplement, shall
become effective with respect to a Fund on the date specified in
the Supplement and shall thereafter continue in effect provided,
that this Contract shall continue in effect with respect to a
Fund for a period of more than two years from such date specified
in the Supplement only so long as the continuance is specifically
approved at least annually (a) by the vote of a majority of the
outstanding voting securities of that Fund (as defined in the
1940 Act) or by the Trust's Board of Trustees and (b) by the
vote, cast in person at a meeting called for the purpose, of a
majority of the Trust's Trustees who are not parties to this
Contract or "interested persons" (as defined in the 1940 Act) of
any such party. This Contract may be terminated with respect to
a Fund at any time, without the payment of any penalty, by a vote
of a majority of the outstanding voting securities of that Fund
(as defined in the 1940 Act) or by a vote of a majority of the
Trust's Board of Trustees on 60 days' written notice to the
Adviser or by the Adviser on 60 days' written notice to the
Trust. If this Contract is terminated with respect to any Fund,
it shall nonetheless remain in effect with respect to any
remaining Funds. This Contract shall terminate automatically in
the event of its assignment (as defined in the 1940 Act).
8. Amendment of this Contract. No provision of this
Contract may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination
is sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Contract shall be effective until
approved by (a) the vote, cast in person at a meeting called for
the purpose, of a majority of the Trustees who are not parties to
this Contract or "interested persons" (as defined in the 1940
Act) of any such party, and (b) with respect to any Fund affected
by such change, waiver, discharge or termination, by the vote of
a majority of the outstanding voting securities of the Series
relating to such Fund, provided that no approval shall be
required pursuant to this clause (b) in respect of an Investment
Advisory Contract Supplement entered into to add a Fund to those
covered by this Contract (or any amendment or termination of such
Supplement) by the holders of the outstanding voting securities
of any Series other than that of such Fund.
9. Other Activities of the Adviser. Except to the
extent necessary to perform the Adviser's obligations under this
Contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, to engage in any other business or to
devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or
to render services of any kind to any other corporation, firm,
individual or association.
10. Miscellaneous. The captions in this Contract are
included for convenience of reference only and in no way define
or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Contract may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument. The Declaration of the Trust has
been filed with the Secretary of State of the State of Delaware.
The obligations of the Trust are not personally binding upon, nor
shall resort be had to the private property of, any of the
Trustees, shareholders, officers, employees or agents of the
Trust, but only the Trust's property shall be bound.
The Trust recognizes that from time to time directors,
officers and employees of the Adviser may serve as trustees,
directors, officers and employees of other business trusts and
corporations (including other investment companies) and that such
other entities may include the names "First American" or "First
Choice" as part of their name, and that the Adviser or its
affiliates may enter into investment advisory or other agreements
with such other entities. If the Adviser ceases to act as
investment adviser to the Trust and its Funds, the Trust agrees
that, upon the instruction of the Adviser, the Trust will take
all necessary action to change the names of the Trust and the
Funds to names not including "First American" or "First Choice"
in any form or combination of words.
If the foregoing correctly sets forth the agreement
between the Trust and the Adviser please so indicate by signing
and returning to the Trust the enclosed copy hereof.
Very truly yours,
FIRST CHOICE FUNDS TRUST
By:
Title:
ACCEPTED:
FIRST AMERICAN CAPITAL MANAGEMENT, INC.
By:
Title:
<PAGE>
CASH RESERVE FUND
First Choice Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
August 23, 1996
First American Capital Management, Inc.
567 San Nicholas Drive, Suite 101
Newport Beach, CA 92660
Investment Advisory Contract Supplement
Dear Sirs or Madams:
This will confirm the agreement between First Choice
Funds Trust (the "Trust") and First American Capital Management,
Inc. (the "Adviser") as follows:
Cash Reserve Fund (the "Fund") is a portfolio of the
Trust which has been organized as a business trust under the laws
of the State of Delaware and is an open-end management investment
company. The Trust and the Adviser have entered into a Master
Investment Advisory Contract, dated ____________, 1996 (as from
time to time amended and supplemented, the "Master Advisory
Contract"), pursuant to which the Adviser has undertaken to
provide or make provision for the Trust for certain investment
advisory and management services identified therein and to
provide certain other services, as more fully set forth therein.
Certain capitalized terms used without definition in this
Investment Advisory Contract Supplement have the meaning
specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. Adoption of Master Advisory Contract. The Master
Advisory Contract is hereby adopted for the Fund. The Fund shall
be one of the "Funds" referred to in the Master Advisory
Contract.
2. Payment of Fees. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser
as provided in the Master Advisory Contract and herein, the Fund
shall pay a monthly fee on the first business day of each month,
based upon the average daily value (as determined on each
business day at the time set forth in the Prospectus for
determining net asset value per share) of the net assets of the
Fund during the preceding month, at the annual rate of 0.30%.
3. Limitation of Expenses Paid by the Fund. (a) If
the aggregate expenses of every character incurred by, or
allocated to, a Fund in any fiscal year, other than interest,
taxes, expenses under the Plan, brokerage commissions and other
portfolio transaction expenses, other expenditures which are
capitalized in accordance with generally accepted accounting
principles and any extraordinary expenses (including, without
limitation, litigation and indemnification expenses) but
including the fees payable under the Master Administrative
Services Contract and the fees provided for in paragraph 5 of the
Master Advisory Contract ("includable expenses"), shall exceed
the expense limitations applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations
may be raised or lowered from time to time, the Fund may deduct
from the fees to be paid to the Adviser, or the Adviser will
bear, to the extent required by state law, that portion of such
excess which bears the same relation to the total of such excess
as the fee to be paid to the Adviser bears to the total fee
otherwise payable for the fiscal year by the Fund pursuant to the
Master Advisory Contract and the Master Administrative Services
Contract between the Trust and the Administrator. The Adviser's
obligation pursuant hereto will be limited to the amount of the
fees payable for the fiscal year by the Fund pursuant to the
Master Advisory Contract.
(b) With respect to portions of a fiscal year in
which this Contract shall be in effect, the limitation specified
in subparagraph (a) of paragraph 3 above shall be prorated
according to the proportion which that portion of the fiscal year
bears to the full fiscal year. At the end of each month of the
Trust's fiscal year, the Administrator will review the includable
expenses accrued during that fiscal year to the end of the period
and shall estimate the contemplated includable expenses for the
balance of that fiscal year. If, as a result of that review and
estimation, it appears likely that the includable expenses will
exceed such limitation for a fiscal year with respect to the
Fund, the monthly fees relating to that Fund payable to the
Adviser under this Contract for such month shall be reduced,
subject to the later adjustments at the end of each month through
the end of the fiscal year to reflect actual expenses, by an
amount equal to the proportionate share attributable to the
Adviser as described in subparagraph (a) of paragraph 3 above of
a pro rata portion (prorated on the basis of the remaining months
of the fiscal year, including the month just ended) of the amount
by which the includable expenses for the fiscal year (less an
amount equal to the aggregate of actual reductions made pursuant
to this provision with respect to prior months of the fiscal
year) are expected to exceed such limitation. For purposes of
the foregoing, the value of the net assets of the Fund shall be
computed in the manner specified in the penultimate sentence of
paragraph 5 of the Master Advisory Contract, and any payments
required to be made by the Adviser shall be made once a year
promptly after the end of the Trust's fiscal year.
If the foregoing correctly sets forth the agreement
between the Trust and the Adviser, please so indicate by signing
and returning to the Trust the enclosed copy hereof.
Very truly yours,
CASH RESERVE FUND,
First Choice Funds Trust
By:
Title:
The foregoing Contract
is hereby agreed to as of
the date hereof:
FIRST AMERICAN CAPITAL MANAGEMENT, INC.
By:
Title:
<PAGE>
U.S. TREASURY RESERVE FUND
First Choice Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
August 23, 1996
First American Capital Management, Inc.
567 San Nicholas Drive, Suite 101
Newport Beach, CA 92660
Investment Advisory Contract Supplement
Dear Sirs or Madams:
This will confirm the agreement between First Choice
Funds Trust (the "Trust") and First American Capital Management,
Inc. (the "Adviser") as follows:
U.S. Treasury Reserve Fund (the "Fund") is a portfolio
of the Trust which has been organized as a business trust under
the laws of the State of Delaware and is an open-end management
investment company. The Trust and the Adviser have entered into
a Master Investment Advisory Contract, dated __________, 1996 (as
from time to time amended and supplemented, the "Master Advisory
Contract"), pursuant to which the Adviser has undertaken to
provide or make provision for the Trust for certain investment
advisory and management services identified therein and to
provide certain other services, as more fully set forth therein.
Certain capitalized terms used without definition in this
Investment Advisory Contract Supplement have the meaning
specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. Adoption of Master Advisory Contract. The Master
Advisory Contract is hereby adopted for the Fund. The Fund shall
be one of the "Funds" referred to in the Master Advisory
Contract.
2. Payment of Fees. For all services to be rendered,
facilities furnished and expenses paid or assumed by the Adviser
as provided in the Master Advisory Contract and herein, the Fund
shall pay a monthly fee on the first business day of each month,
based upon the average daily value (as determined on each
business day at the time set forth in the Prospectus for
determining net asset value per share) of the net assets of the
Fund during the preceding month, at the annual rate of 0.30%.
3. Limitation of Expenses Paid by the Fund. (a) If
the aggregate expenses of every character incurred by, or
allocated to, a Fund in any fiscal year, other than interest,
taxes, expenses under the Plan, brokerage commissions and other
portfolio transaction expenses, other expenditures which are
capitalized in accordance with generally accepted accounting
principles and any extraordinary expenses (including, without
limitation, litigation and indemnification expenses) but
including the fees payable under the Master Administrative
Services Contract and the fees provided for in paragraph 5 of the
Master Advisory Contract ("includable expenses"), shall exceed
the expense limitations applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations
may be raised or lowered from time to time, the Fund may deduct
from the fees to be paid to the Adviser, or the Adviser will
bear, to the extent required by state law, that portion of such
excess which bears the same relation to the total of such excess
as the fee to be paid to the Adviser bears to the total fee
otherwise payable for the fiscal year by the Fund pursuant to the
Master Advisory Contract and the Master Administrative Services
Contract between the Trust and the Administrator. The Adviser's
obligation pursuant hereto will be limited to the amount of the
fees payable for the fiscal year by the Fund pursuant to the
Master Advisory Contract.
(b) With respect to portions of a fiscal year in
which this Contract shall be in effect, the limitation specified
in subparagraph (a) of paragraph 3 above shall be prorated
according to the proportion which that portion of the fiscal year
bears to the full fiscal year. At the end of each month of the
Trust's fiscal year, the Administrator will review the includable
expenses accrued during that fiscal year to the end of the period
and shall estimate the contemplated includable expenses for the
balance of that fiscal year. If, as a result of that review and
estimation, it appears likely that the includable expenses will
exceed such limitation for a fiscal year with respect to the
Fund, the monthly fees relating to that Fund payable to the
Adviser under this Contract for such month shall be reduced,
subject to the later adjustments at the end of each month through
the end of the fiscal year to reflect actual expenses, by an
amount equal to the proportionate share attributable to the
Adviser as described in subparagraph (a) of paragraph 3 above of
a pro rata portion (prorated on the basis of the remaining months
of the fiscal year, including the month just ended) of the amount
by which the includable expenses for the fiscal year (less an
amount equal to the aggregate of actual reductions made pursuant
to this provision with respect to prior months of the fiscal
year) are expected to exceed such limitation. For purposes of
the foregoing, the value of the net assets of the Fund shall be
computed in the manner specified in the penultimate sentence of
paragraph 5 of the Master Advisory Contract, and any payments
required to be made by the Adviser shall be made once a year
promptly after the end of the Trust's fiscal year.
If the foregoing correctly sets forth the agreement
between the Trust and the Adviser, please so indicate by signing
and returning to the Trust the enclosed copy hereof.
Very truly yours,
U.S. TREASURY RESERVE FUND,
First Choice Funds Trust
By:
Title:
The foregoing Contract
is hereby agreed to as of
the date hereof:
FIRST AMERICAN CAPITAL MANAGEMENT, INC.
By:
Title:
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this _____ day of
______________, 1996, by and between First Choice Funds Trust, a
Delaware business trust (the "Trust"), and BISYS FUND SERVICES
LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES (the
''Administrator"), an Ohio limited partnership.
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), consisting of several series of shares
of beneficial interest ("Shares"); and
WHEREAS, the Trust desires the Administrator to
provide, and the Administrator is willing to provide, management
and administrative services to such series of the Trust as the
Trust and the Administrator may agree on ("Portfolios") and as
listed on Schedule A attached hereto and made a part of this
Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the covenants hereinafter contained, the Trust and the
Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator; Conversion
to the Services. The Trust hereby engages the Administrator to
act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set
forth in Article 2 below (collectively, the "Services"), and, in
connection therewith, the Trust agrees to convert to the
Administrator's data processing systems and software (the "BISYS
System") as necessary in order to receive the Services. The Trust
shall cooperate with the Administrator to provide the
Administrator with all necessary information and assistance
required to successfully convert to the BISYS System. The
Administrator shall provide the Trust with a schedule relating to
such conversion and the parties agree that the conversion may
progress in stages. The date upon which all Services shall have
been converted to the BISYS System shall be referred to herein as
the "Conversion Date". The Administrator hereby accepts such
engagement and agrees to perform the Services commencing, with
respect to each individual Service, on the date that the
conversion of such Service to the BISYS System has been
completed. The Administrator shall determine in accordance with
its normal acceptance procedures when the applicable Service has
been successfully converted.
The Administrator shall, for all purposes herein, be
deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority, to act
for or represent the Trust in any way and shall not be deemed an
agent of the Trust.
ARTICLE 2. Administrative Services. The Administrator
shall perform or supervise the performance by others of other
administrative services in connection with the operations of the
Portfolios, and, on behalf of the Trust, will investigate, assist
in the selection of and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons
in any other capacity deemed to be necessary or desirable for the
Portfolios' operations. The Administrator shall provide the
Trustees of the Trust with such reports regarding investment
performance as they may reasonably request but shall have no
responsibility for supervising the performance by any investment
adviser or sub-adviser of its responsibilities.
The Administrator shall provide the Trust with
regulatory reporting, all necessary office space, equipment,
personnel, compensation and facilities (including facilities for
meetings of shareholders ("Shareholders") and Trustees of the
Trust) for handling the affairs of the Portfolios and such other
services as the Administrator shall, from time to time, determine
to be necessary to perform its obligations under this Agreement.
In addition, at the request of the Board of Trustees, the
Administrator shall make reports to the Trust's Trustees
concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the
Administrator shall:
(a) calculate contractual Trust expenses and control
all disbursements for the Trust, and as
appropriate compute the Trust's yields, total
return, expense ratios, portfolio turnover rate
and, if required, portfolio average
dollar-weighted maturity;
(b) assist Trust counsel with the preparation of
prospectuses, statements of additional
information, registration statements and proxy
materials;
(c) prepare such reports, applications and documents
(including reports regarding the sale and
redemption of Shares as may be required in order
to comply with Federal and state securities law)
as may be necessary or desirable to register the
Trust's Shares with state securities authorities,
monitor sale of Trust Shares for compliance with
state securities laws, and file with the
appropriate state securities authorities the
registration statements and reports for the Trust
and the Trust's Shares and all amendments thereto,
as may be necessary or convenient to register and
keep effective the Trust and the Trust's Shares
with state securities authorities to enable the
Trust to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the
Trust's investment adviser, communications to
Shareholders, including the annual report to
Shareholders, coordinate the mailing of
prospectuses, notices, proxy statements, proxies
and other reports to Trust Shareholders, and
supervise and facilitate the proxy solicitation
process for all shareholder meetings, including
the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with,
among others, the Trust's investment adviser,
distributor, custodian, transfer agent and fund
accountant;
(f) supervise the Trust's transfer agent with
respect to the payment of dividends and other
distributions to Shareholders;
(g) calculate performance data of the Trust and its
portfolios for dissemination to information
services covering the investment company industry;
(h) coordinate and supervise the preparation and
filing of the Trust's tax returns;
(i) examine and review the operations and
performance of the various organizations
providing services to the Trust or any
Portfolio of the Trust, including, without
limitation, the Trust's investment adviser,
distributor, custodian, fund accountant,
transfer agent, outside legal counsel and
independent public accountants, and at the
request of the Board of Trustees, report to
the Board on the performance of
organizations;
(j) assist with the layout and printing of publicly
disseminated prospectuses and assist with and
coordinate layout and printing of the Trust's
semi-annual and annual reports to Shareholders;
(k) assist with the design, development, and operation
of Trust Portfolios, including new classes,
investment objectives, policies and structure;
(1) provide individuals reasonably acceptable to
the Trust's Board of Trustees to serve as
officers of the Trust, who will be
responsible for the management of certain of
the Trust's affairs as determined by the
Trust's Board of Trustees;
(m) advise the Trust and its Board of Trustees on
matters concerning the Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and
trustees and officers/errors and omissions
insurance policies for the Trust in accordance
with the requirements of Rules 17g-1 and 17d-1(7)
under the 1940 Act as such bonds and policies are
approved by the Trust's Board of Trustees;
(o) monitor and advise the Trust and its Portfolios on
their registered investment company status under
the Internal Revenue Code of 1986, as amended;
(p) perform all administrative services and functions
of the Trust and each Portfolio to the extent
administrative services and functions are not
provided to the Trust or such Portfolio pursuant
to the Trust's or such Portfolio's investment
advisory agreement, distribution agreement,
custodian agreement, transfer agent agreement and
fund accounting agreement;
(q) furnish advice and recommendations with respect to
other aspects of the business and affairs of the
Portfolios as the Trust and the Administrator
shall determine desirable; and
(r) prepare and file with the SEC the semi-annual
report for the Trust on Form N-SAR and all
required notices pursuant to Rule 24f-2.
The Administrator shall perform such other services for
the Trust that are mutually agreed upon by the parties from time
to time. Such services may include performing internal audit
examinations; mailing the annual reports of the Portfolios;
preparing an annual list of Shareholders; and mailing notices of
Shareholders meetings, proxies and proxy statements, for all of
which the Trust will pay the Administrator's out-of-pocket
expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall
furnish at its own expense the executive, supervisory and
clerical personnel necessary to perform its obligations under
this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall
pay all compensation, if any, of officers of the Trust as well as
all Trustees of the Trust who are affiliated persons of the
Administrator or any affiliated corporation of the Administrator;
provided, however, that unless otherwise specifically provided,
the Administrator shall not be obligated to pay the compensation
of any employee of the Trust retained by the Trustees of the
Trust to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or
cause to be paid all other expenses of the Trust not otherwise
allocated herein, including, without limitation, organization
costs, taxes, expenses for legal and auditing services, the
expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional
information, proxy solicitation material and notices to existing
Shareholders, all expenses incurred in connection with issuing
and redeeming Shares, the costs of custodial services, the cost
of initial and ongoing registration of the Shares under Federal
and state securities laws, fees and out-of-pocket expenses of
Trustees who are not affiliated persons of the Administrator or
the Investment Adviser to the Trust or any affiliated corporation
of the Administrator or the Investment Adviser, insurance,
interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment
advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be
rendered, the facilities furnished and the expenses assumed by
the Administrator pursuant to this Agreement, the Trust shall pay
to the Administrator compensation at an annual rate specified in
Schedule A attached hereto. Such compensation shall be calculated
and accrued daily, and paid to the Administrator monthly. The
Trust shall also reimburse the Administrator for its reasonable
out-of-pocket expenses, including the travel and lodging expenses
incurred by officers and employees of the Administrator in
connection with attendance at Board meetings.
If the Conversion Date occurs subsequent to the first
day of a month or terminates before the last day of a month, the
Administrator's compensation for that part of the month in which
this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees as set forth above.
Payment of the Administrator's compensation for the preceding
month shall be made promptly.
(B) Survival of Compensation Rates. All rights of
compensation under this Agreement for services performed as of
the termination date shall survive the termination of this
Agreement.
ARTICLE 5. Limitation of Liability of the
Administrator. The duties of the Administrator shall be confined
to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties
hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by
reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions
of applicable law which cannot be waived or modified hereby. (As
used in this Article 5, the term "Administrator" shall include
Trustees, officers, employees and other agents of the
Administrator as well as the Administrator itself.)
So long as the Administrator acts in good faith and
with due diligence and without negligence, the Trust assumes full
responsibility and shall indemnify the Administrator and hold it
harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including
reasonable investigation expenses) arising directly or indirectly
out of said administration, transfer agency, and dividend
disbursing relationships to the Trust or any other service
rendered to the Trust hereunder. The indemnity and defense
provisions set forth herein shall indefinitely survive the
termination of this Agreement.
The rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any
pending or threatened litigation with respect to which
indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply,
however, it is understood that if in any case the Trust may be
asked to indemnify or hold the Administrator harmless, the Trust
shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to
identify and notify the Trust promptly concerning any situation
which presents or appears likely to present the probability of
such a claim for indemnification against the Trust, but failure
to do so in good faith shall not affect the rights hereunder.
The Trust shall be entitled to participate at its own
expense or, if it so-elects, to assume the defense of any suit
brought to enforce any claims subject to this indemnity
provision. If the Trust elects to assume the defense of any such
claim, the defense shall be conducted by counsel chosen by the
Trust and satisfactory to the Administrator, whose approval shall
not be unreasonably withheld. In the event that the Trust elects
to assume the defense of any suit and retain counsel, the
Administrator shall bear the fees and expenses of any additional
counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the
reasonable fees and expenses of any counsel retained by the
Administrator.
The Administrator may apply to the Trust at any time
for instructions and may consult counsel for the Trust or its own
counsel and with accountants and other experts with respect to
any matter arising in connection with the Administrator's duties,
and the Administrator shall not be liable or accountable for any
action taken or omitted by it in good faith in accordance with
such instruction or with the opinion of such counsel, accountants
or other experts.
Also, the Administrator shall be protected in acting
upon any document which it reasonably believes to be genuine and
to have been signed or presented by the proper person or persons.
The Administrator will not be held to have notice of any change
of authority of any officers, employee or agent of the Trust
until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The
services of the Administrator rendered to the Trust are not to be
deemed to be exclusive. The Administrator is free to render such
services to others and to have other businesses and interests. It
is understood that trustees, officers, employees and Shareholders
of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders
or otherwise and that partners, officers and employees of the
Administrator and its counsel are or may be or become similarly
interested in the Trust, and that the Administrator may be or
become interested in the Trust as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of
this Agreement shall be as specified in Schedule A hereto.
ARTICLE 8. Assignment. This Agreement shall not be
assignable by either party without the written consent of the
other party; provided, however, that the Administrator may, at
its expense, subcontract with any entity or person concerning the
provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its
obligations under this Agreement by the appointment of such
subcontractor and provided further, that the Administrator shall
be responsible, to the extent provided in Article 5 hereof, for
all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and
permitted assigns.
ARTICLE 9. Amendments. This Agreement may be amended
by the parties hereto only if such amendment is specifically
approved (i) by the vote of a majority of the Trustees of the
Trust, and (ii) by the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons
of any such party, cast in person at a Board of Trustees meeting
called for the purpose of voting on such approval.
For special cases, the parties hereto may amend such
procedures set forth herein as may be appropriate or practical
under the circumstances, and the Administrator may conclusively
assume that any special procedure which has been approved by the
Trust does not conflict with or violate any requirements of its
Declaration of Trust or then current prospectuses, or any rule,
regulation or requirement of any regulatory body.
ARTICLE 10. Certain Records. The Administrator shall
maintain customary records in connection with its duties as
specified in this Agreement. Any records required to be
maintained and preserved pursuant to Rules 31a-1 and 31a-2 under
the 1940 Act which are prepared or maintained by the
Administrator on behalf of the Trust shall be prepared and
maintained at the expense of the Administrator, but shall be the
property of the Trust and will be made available to or
surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of
such records by another party, the Administrator shall notify the
Trust and follow the Trust's instructions as to permitting or
refusing such inspection; provided that the Administrator may
exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to
do so, unless (in cases involving potential exposure only to
civil liability) the Trust has agreed to indemnify the
Administrator against such liability.
ARTICLE 11. Definitions of Certain Terms. The terms
"interested person" and "affiliated person," when used in this
Agreement, shall have the respective meanings specified in the
1940 Act and the rules and regulations thereunder, subject to
such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. Notice. Any notice required or permitted
to be given by either party to the other shall be deemed
sufficient if sent by registered or certified mail, postage
prepaid, addressed by the party giving notice to the other party
at the following address: if to the Administrator, to it at 3435
Stelzer Road, Columbus, Ohio 43219; if to the Trust, to it at
3435 Stelzer Road, Columbus, Ohio 43219 with a copy to the
Trust's counsel at 805 Third Avenue, New York, NY 10022, or at
such other address as such party may from time to time specify in
writing to the other party pursuant to this Section.
ARTICLE 13. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of Ohio and
the applicable provisions of the 1940 Act. To the extent that the
applicable laws of the State of Ohio, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control.
ARTICLE 14. Multiple Originals. This Agreement may be
executed in two or more counterparts, each of which when so
executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the day and year first above
written.
FIRST CHOICE FUNDS TRUST
By:
Attest:
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc,
General Partner
By:
Attest:
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF ____________________
BETWEEN
FIRST CHOICE FUNDS TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all Portfolios of
First Choice Funds Trust, either now or hereafter
created (collectively, the ''Portfolios"). The
current portfolios of the Trust are set forth
below:
The Cash Reserve Fund
The Treasury Reserve Fund
Fees: Pursuant to Article 4, in consideration of
services rendered and expenses assumed pursuant to
this Agreement, the Trust will pay the
Administrator on the first business day of each
month, or at such time(s) as the Administrator
shall request and the parties hereto shall agree,
a fee computed daily at the annual rate of:
The fee for the period from the day of the month this
Agreement is entered into until the end of that month
shall be prorated according to the proportion which
such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any
month, the fee for such part of a month shall be
prorated according to the proportion which such period
bears to the full monthly period and shall be payable
upon the date of termination of this Agreement.
For the purpose of determining fees payable to the
Administrator, the value of the net assets of a
particular Fund shall be computed in the manner
described in the Fund's Declaration of Trust or in the
Prospectus or Statement of Additional Information
respecting that Fund as from time to time is in effect
for the computation of the value of such net assets in
connection with the determination of the liquidating
value of the shares of such Fund.
The parties hereby confirm that the fees payable
hereunder shall be applied to each Portfolio as a
whole, and not to separate classes of shares within the
Portfolios.
Term: The initial term of this Agreement (the "Initial Term")
shall be for a period commencing on the date this
Agreement is executed by both parties and ending on the
date that is _______ months (years) after the
Conversion Date. This Agreement shall be renewed
automatically for successive periods of one year after
the Initial Term, unless written notice of nonrenewal
is provided by either party not less than 90 days prior
to the end of the then-current term. In the event of a
material breach of this Agreement by either party, the
non breaching party shall notify the breaching party in
writing of such breach and upon receipt of such notice,
the breaching party shall have 45 days to remedy the
breach. In the event the breach is not remedied within
such time period, the nonbreaching party may
immediately terminate this Agreement.
Notwithstanding the foregoing, after such termination
for so long as the Administrator, with the written
consent of the Fund, in fact continues to perform any
one or more of the services contemplated by this
Agreement or any schedule or exhibit hereto, the
provisions of this Agreement, including without
limitation the provisions dealing with indemnification,
shall continue in full force and effect. Compensation
due the Administrator and unpaid by the Fund upon such
termination shall be immediately due and payable upon
and notwithstanding such termination. The Administrator
shall be entitled to collect from the Fund, in addition
to the compensation described in this Schedule A, the
amount of all of the Administrator's cash disbursements
for services in connection with the Administrator's
activities in effecting such termination, including
without limitation, the delivery to the Fund and/or its
designees of the Fund's property, records, instruments
and documents, or any copies thereof. Subsequent to
such termination, for a reasonable fee, the
Administrator will provide the Fund with reasonable
access to any Fund documents or records remaining in
its possession.
If, for any reason, the Administrator is replaced as
fund manager and administrator, or if a third party is
added to perform all or a part of the services provided
by the Administrator under this Agreement (excluding
any sub-administrator appointed by the Administrator as
provided in Article 7 hereof), then the Fund shall make
a one-time cash payment, as liquidated damages, to the
Administrator equal to the balance due the
Administrator for the remainder of the term of this
Agreement, assuming for purposes of calculation of the
payment that the asset level of the Fund on the date
the Administrator is replaced, or a third party is
added, will remain constant for the balance of the
contract term.
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made this ________day of __________________,
between First Choice Funds Trust (the "Trust"), a Delaware
business trust having its principal place of business at 3435
Stelzer Road, Columbus, Ohio 43219, and BISYS FUND SERVICES
LIMITED PARTNERSHIP d/b/a BISYS FUND SERVICES ("Distributor),
having its principal place of business at 3435 Stelzer Road,
Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment
company, organized as a Delaware business trust and registered
with the Securities and Exchange Commission (the "Commission")
under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, it is intended that Distributor act as the
distributor of the units of beneficial interest ("Shares") of
each of the investment portfolios of the Trust (such portfolios
being referred to individually as a "Fund" and collectively as
the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein set forth, the parties agree as follows:
1. Services as Distributor; Conversion to the Services.
1.1 Distributor (i) will act as agent for the
distribution of the Shares covered by the registration statement
and prospectus of the Trust then in effect under the Securities
Act of 1933, as amended (the "Securities Act") and (ii) will
perform such additional services as are provided in this Section
1 (collectively, the "Services"). In connection therewith, the
Trust agrees to convert to the Distributor's data processing
systems and software (the "BISYS System"). The Trust shall
cooperate with the Distributor to provide the Distributor with
all necessary information and assistance required to successfully
convert to the BISYS System. The Distributor shall provide the
Trust with a schedule relating to such conversion and the parties
agree that the conversion may progress in stages. The date upon
which all Services shall have been converted to the BISYS System
shall be referred to herein as the "Conversion Date". The
Distributor hereby accepts such engagement and agrees to perform
the Services commencing, with respect to each individual Service,
on the date that the conversion of such Service to the BISYS
System has been completed. The Distributor shall determine in
accordance with its normal acceptance procedures when the
applicable Service has been successfully converted.
1.2 Distributor agrees to use appropriate efforts to
solicit orders for the sale of the Shares and will undertake such
advertising and promotion as it believes reasonable in connection
with such solicitation. The Trust understands that Distributor is
now and may in the future be the distributor of the shares of
several investment companies or series (together, "Companies")
including Companies having investment objectives similar to those
of the Trust. The Trust further understands that investors and
potential investors in the Trust may invest in shares of such
other Companies. The Trust agrees that Distributor's duties to
such Companies shall not be deemed in conflict with its duties to
the Trust under this paragraph 1.2.
Distributor shall, at its own expense, finance
appropriate activities which it deems reasonable, which are
primarily intended to result in the sale of the Shares,
including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and
mailing of prospectuses to other than current Shareholders, and
the printing and mailing of sales literature.
1.3 In its capacity as distributor of the Shares, all
activities of Distributor and its partners, agents, and employees
shall comply with all applicable laws, rules and regulations,
including, without limitation, the 1940 Act, all rules and
regulations promulgated by the Commission thereunder and all
rules and regulations adopted by any securities association
registered under the Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons,
during normal business hours, to respond to telephone questions
with respect to the Trust.
1.5 Distributor will transmit any orders received by
it for purchase or redemption of the Shares to the transfer agent
and custodian for the Funds.
1.6 Whenever in their judgment such action is
warranted by unusual market, economic or political conditions, or
by abnormal circumstances of any kind, the Trust's officers may
decline to accept any orders for, or make any sales of, the
Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as
principal if it chooses to enter into selling agreements with
selected dealers or others.
1.8 The Trust agrees at its own expense to execute any
and all documents and to furnish any and all information and
otherwise to take all actions that may be reasonably necessary in
connection with the qualification of the Shares for sale in such
states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use
in connection with the sale of the Shares, such information with
respect to the Funds and the Shares as Distributor may reasonably
request; and the Trust warrants that the statements contained in
any such information shall fairly show or represent what they
purport to show or represent. The Trust shall also furnish
Distributor upon request with: (a) unaudited semiannual
statements of the Funds' books and accounts prepared by the
Trust, (b) a monthly itemized list of the securities in the
Funds, (c) monthly balance sheets as soon as practicable after
the end of each month, and (d) from time to time such additional
information regarding the financial condition of the Funds as
Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with
respect to the Shares, all registration statements and
prospectuses filed by the Trust with the Commission under the
Securities Act have been carefully prepared in conformity with
requirements of said Act and rules and regulations of the
Commission thereunder. The registration statement and prospectus
contain all statements required to be stated therein in
conformity with said Act and the rules and regulations of said
Commission and all statements of fact contained in any such
registration statement and prospectus are true and correct.
Furthermore, neither any registration statement nor any
prospectus includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a
purchaser of the Shares. The Trust may, but shall not be
obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or
supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Trust's counsel, be
necessary or advisable. If the Trust shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Trust of a written request from
Distributor to do so, Distributor may, at its option, terminate
this Agreement. The Trust shall not file any amendment to any
registration statement or supplement to any prospectus without
giving Distributor reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall
in any way limit the Trust's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and
unconditional.
1.11 The Trust authorizes Distributor and dealers to
use any prospectus in the form furnished from time to time in
connection with the sale of the Shares. The Trust agrees to
indemnity defend and hold Distributor, its several partners and
employees, and any person who controls Distributor within the
meaning of Section 15 of the Securities Act free and harmless
from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in
connection therewith) which Distributor, its partners and
employees, or any such controlling person, may incur under the
Securities Act or under common law or otherwise, arising out of
or based upon any untrue statement, or alleged untrue statement,
of a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Trust's agreement to
indemnify Distributor, its partners or employees, and any such
controlling person shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any statements or
representations as are contained in any prospectus and in such
financial and other statements as are furnished in writing to the
Trust by Distributor and used in the answers to the registration
statement or in the corresponding statements made in the
prospectus, or arising out of or based upon any omission or
alleged omission to state a material fact in connection with the
giving of such information required to be stated in such answers
or necessary to make the answers not misleading; and further
provided that the Trust's agreement to indemnify Distributor and
the Trust's representations and warranties hereinbefore set forth
in paragraph 1.10 shall not be deemed to cover any liability to
the Trust or its Shareholders to which Distributor would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by
reason of Distributor's reckless disregard of its obligations and
duties under this Agreement. The Trust's agreement to indemnify
Distributor, its partners and employees and any such controlling
person, as aforesaid, is expressly conditioned upon the Trust
being notified of any action brought against Distributor, its
partners or employees, or any such controlling person, such
notification to be given by letter or by telegram addressed to
the Trust at its principal office specified in the first
paragraph of this Agreement and sent to the Trust by the person
against whom such action is brought, within 10 days after the
summons or other first legal process shall have been served. The
failure to so notify the Trust of any such action shall not
relieve the Trust from any liability which the Trust may have to
the person against whom such action is brought by reason of any
such untrue, or allegedly untrue, statement or omission, or
alleged omission, otherwise than on account of the Trust's
indemnity agreement contained in this paragraph 1.11. The Trust
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Trust and approved by Distributor, which approval
shall not be unreasonably withheld. In the event the Trust elects
to assume the defense of any such suit and retain counsel of good
standing approved by Distributor, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Trust does not
elect to assume the defense of any such suit, or in case
Distributor reasonably does not approve of counsel chosen by the
Trust, the Trust will reimburse Distributor, its partners and
employees, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses
of any counsel retained by Distributor or them. The Trust's
indemnification agreement contained in this paragraph 1.11 and
the Trust's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of Distributor, its
partners and employees, or any controlling person, and shall
survive the delivery of any Shares.
This Agreement of indemnity will inure exclusively to
Distributor's benefit, to the benefit of its several partners and
employees, and their respective estates, and to the benefit of
the controlling persons and their successors. The Trust agrees
promptly to notify Distributor of the commencement of any
litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the issue and sale of any
Shares.
1.12 Distributor agrees to indemnify, defend and hold
the Trust, its several officers and Trustees and any person who
controls the Trust within the meaning of Section 15 of the
Securities Act free and harmless from and against any and all
claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands, or liabilities
and any counsel fees incurred in connection therewith) which the
Trust, its officers or Trustees or any such controlling person,
may incur under the Securities Act or under common law or
otherwise, but only to the extent that such liability or expense
incurred by the Trust, its officers or Trustees or such
controlling person resulting from such claims or demands, shall
arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished
in writing by Distributor to the Trust and used in the answers to
any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise
out of or be based upon any omission, or alleged omission, to
state a material fact in connection with such information
furnished in writing by Distributor to the Trust required to be
stated in such answers or necessary to make such information not
misleading. Distributor's agreement to indemnify the Trust, its
officers and Trustees, and any such controlling person, as
aforesaid, is expressly conditioned upon Distributor being
notified of any action brought against the Trust, its officers or
Trustees, or any such controlling person, such notification to be
given by letter or telegram addressed to Distributor at its
principal office in Columbus, Ohio, and sent to Distributor by
the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been
served. Distributor shall have the right of first control of the
defense of such action, with counsel of its own choosing,
satisfactory to the Trust, if such action is based solely upon
such alleged misstatement or omission on Distributor's part, and
in any other event the Trust, its officers or Trustees or such
controlling person shall each have the right to participate in
the defense or preparation of the defense of any such action. The
failure to so notify Distributor of any such action shall not
relieve Distributor from any liability which Distributor may have
to the Trust, its officers or Trustees, or to such controlling
person by reason of any such untrue or alleged untrue statement,
or omission or alleged omission, otherwise than on account of
Distributor's indemnity agreement contained in this paragraph
1.12.
1.13 No Shares shall be offered by either Distributor
or the Trust under any of the provisions of this Agreement and no
orders for the purchase or sale of Shares hereunder shall be
accepted by the Trust if and so long as the effectiveness of the
registration statement then in effect or any necessary amendments
thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current prospectus as
required by Section 10(b)(2) of said Act is not on file with the
Commission; provided, however, that nothing contained in this
paragraph 1.13 shall in any way restrict or have an application
to or bearing upon the Trust's obligation to repurchase Shares
from any Shareholder in accordance with the provisions of the
Trust's prospectus, Agreement and Declaration of Trust, or By-laws.
1.14 The Trust agrees to advise Distributor as soon as
reasonably practical by a notice in writing delivered to
Distributor or its counsel:
(a) of any request by the Commission for
amendments to the registration statement or
prospectus then in effect or for additional
information;
(b) in the event of the issuance by the
Commission of any stop order suspending the
effectiveness of the registration statement
or prospectus then in effect or the
initiation by service of process on the Trust
of any proceeding for that purpose;
(c) of the happening of any event that makes
untrue any statement of a material fact made
in the registration statement or prospectus
then in effect or which requires the making
of a change in such registration statement or
prospectus in order to make the statements
therein not misleading; and
(d) of all action of the Commission with respect
to any amendment to any registration
statement or prospectus which may from time
to time be filed with the Commission.
For purposes of this section, informal requests by or
acts of the Staff of the Commission shall not be deemed actions
of or requests by the Commission.
1.15 Distributor agrees on behalf of itself and its
partners and employees to treat confidentially and as proprietary
information of the Trust all records and other information
relative to the Trust and its prior, present or potential
Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties
hereunder, except, after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where Distributor may be exposed
to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.
2. Fee.
Distributor shall receive from the Funds identified in
the Distribution and Shareholder Service Plan attached as
Schedule A hereto (the "Distribution Plan Funds") a distribution
fee at the rate and upon the terms and conditions set forth in
such Plan. The distribution fee shall be accrued daily and shall
be paid on the first business day of each month, or at such
time(s) as the Distributor shall reasonably request.
3. Sale and Payment.
Shares of a Fund may be subject to a sales load and may
be subject to the imposition of a distribution fee pursuant to
the Distribution and Shareholder Service Plan referred to above.
To the extent that Shares of a Fund are sold at an offering price
which includes a sales load or at net asset value subject to a
contingent deferred sales load with respect to certain
redemptions (either within a single class of Shares or pursuant
to two or more classes of Shares), such Shares shall hereinafter
be referred to collectively as "Load Shares" (in the case of
Shares that are sold with a front-end sales load or Shares that
are sold subject to a contingent deferred sales load), "Front-End
Load Shares" or ''CDSL Shares" and individually as a "Load
Share", "Front-End Load Share" or a "CDSL Share". A Fund that
contains Front-End Load Shares shall hereinafter be referred to
collectively as ''Load Funds" or "Front-End Load Funds" and
individually as a Load Fund" or a "Front-end Load Fund". A Fund
that contains CDSL Shares shall hereinafter be referred to
collectively as "Load Funds" or "CDSL Funds" and individually as
a "Load Fund" or a "CDSL Fund". Under this Agreement, the
following provisions shall apply with respect to the sale of, and
payment for, Load Shares.
3.1 Distributor shall have the right to purchase Load
Shares at their net asset value and to sell such Load Shares to
the public against orders therefor at the applicable public
offering price, as defined in Section 4 hereof. Distributor shall
also have the right to sell Load Shares to dealers against orders
therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the
amount of the sales charge or underwriting discount, if any,
referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares
by a Load Fund to, or on the order of, Distributor, Distributor
shall pay or cause to be paid to the Load Fund or to its order an
amount in Boston or New York clearing house funds equal to the
applicable net asset value of such Shares. Distributor may retain
so much of any sales charge or underwriting discount as is not
allowed by Distributor as a concession to dealers.
4. Public Offering Price.
The public offering price of a Load Share shall be the
net asset value of such Load Share, plus any applicable sales
charge, all as set forth in the current prospectus of the Load
Fund. The net asset value of Shares shall be determined in
accordance with the provisions of the Agreement and Declaration
of Trust and By-laws of the Trust and the then current prospectus
of the Load Fund.
5. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell
Load Shares at net asset value (a) in connection with the merger
or consolidation of the Trust or the Load Fund(s) with any other
investment company or the acquisition by the Trust or the Load
Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in
connection with a pro rata distribution directly to the holders
of Shares in the nature of a stock dividend or split; (c) upon
the exercise of subscription rights granted to the holders of
Shares on a pro rata basis; (d) in connection with the issuance
of Load Shares pursuant to any exchange and reinvestment
privileges described in any then-current prospectus of the Load
Fund; and (e) otherwise in accordance with any then-current
prospectus of the Load Fund.
6. Term, Duration and Termination.
The initial term of this Agreement (the "Initial Term")
shall be for a period commencing on the date this Agreement is
executed by both parties and ending on the date that is ___
months (years) after the Conversion Date. Thereafter, if not
terminated, this Agreement shall continue with respect to a
particular Fund automatically for successive one-year terms,
provided that such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the
Trust's Board of Trustees who are not parties to this Agreement
or interested persons of any such party, cast in person at a
meeting for the purpose of voting on such approval and (b) by the
vote of the Trust's Board of Trustees or the vote of a majority
of the outstanding voting securities of such Fund. This Agreement
is terminable without penalty, on not less than sixty days' prior
written notice, by the Trust's Board of Trustees, by vote of a
majority of the outstanding voting securities of the Trust or by
the Distributor. This Agreement will also terminate automatically
in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities",
"interested persons" and "assignment" shall have the same
meanings as ascribed to such terms in the 1940 Act).
7. Limitation of Liability of the Trustees and
Shareholders.
It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the
Trust personally, but shall bind only the trust property of the
Trust. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed
and delivered by an authorized officer of the Trust, acting as
such, and neither such authorization by the 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, but shall bind only the trust property
of the Trust as provided in the Trust's Agreement and Declaration
of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the day and year first written above.
BISYS FUND SERVICES
LIMITED PARTNERSHIP
FIRST CHOICE FUNDS TRUST By: BISYS Fund Services, Inc.,
General Partner
ByBy:
TitleTitle:
DateDate:
<PAGE>
Dated:___________________
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
FIRST CHOICE FUNDS TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
<PAGE>
CUSTODIAN AGREEMENT
between
FIRST CHOICE FUNDS TRUST
and
________________________
Dated ________________, 1996
<PAGE>
TABLE OF CONTENTS
Page No.
I. DEFINITION AND EMPLOYMENT OF ___________ AS CUSTODIAN AND
PROPERTY TO BE HELD BY IT. . . . . . . . . . . . . . . . . 1
II. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF THE TRUST HELD BY THE CUSTODIAN . . . . . . . . . . . . 2
A. Holding Securities . . . . . . . . . . . . . . . . . . 2
B. Delivery of Securities . . . . . . . . . . . . . . . . 3
C. Registration of Securities . . . . . . . . . . . . . . 7
D. Bank Accounts. . . . . . . . . . . . . . . . . . . . . 7
E. Payments for Portfolio Shares. . . . . . . . . . . . . 8
F. Availability of Federal Funds. . . . . . . . . . . . . 8
G. Collection of Income . . . . . . . . . . . . . . . . . 8
H. Payment of Portfolio Moneys. . . . . . . . . . . . . . 9
I. Liability for Payment in Advance of Receipt
of Securities Purchased. . . . . . . . . . . . . . .11
J. Payments for Repurchases or Redemptions of
Portfolio Shares of the Trust. . . . . . . . . . . .11
K. Appointment of Agents. . . . . . . . . . . . . . . . .12
L. Deposit of Portfolio Assets in a Securities
Systems. . . . . . . . . . . . . . . . . . . . . . .12
M. Ownership Certificates for Tax Purchases . . . . . . .15
N. Proxies. . . . . . . . . . . . . . . . . . . . . . . .15
O. Communications Relating to Portfolio
Securities . . . . . . . . . . . . . . . . . . . . .16
P. Proper Instructions. . . . . . . . . . . . . . . . . .18
Q. Actions Permitted Without Express Authority. . . . . .19
R. Evidence of Authority. . . . . . . . . . . . . . . . .20
S. No Liability Until Receipt . . . . . . . . . . . . . .20
T. Segregated Accounts. . . . . . . . . . . . . . . . . .20
III. DUTIES OF CUSTODIAN WITH RESPECT TO BOOKS OF
ACCOUNT AND CALCULATION OF NET ASSET VALUE
AND NET INCOME . . . . . . . . . . . . . . . . . . . . . .21
IV. RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . .21
V. OPINIONS OF TRUST'S INDEPENDENT PUBLIC
ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . .22
VI. REPORTS TO EACH PORTFOLIO AND INDEPENDENT
PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . .22
VII. COMPENSATION OF CUSTODIAN. . . . . . . . . . . . . . . . .23
VIII. RESPONSIBILITY OF CUSTODIAN. . . . . . . . . . . . . . . .23
IX. FUNDS TRANSFERS. . . . . . . . . . . . . . . . . . . . . .25
X. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. . . . . . . .27
XI. SUCCESSOR CUSTODIAN. . . . . . . . . . . . . . . . . . . .28
XII. INTERPRETIVE AND ADDITIONAL PROVISIONS . . . . . . . . . .30
XIII. TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . .30
XIV. APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . .30
<PAGE>
CUSTODIAN AGREEMENT
This Custodian Agreement between First Choice Funds
Trust, hereinafter called the "Trust," a Delaware business trust,
organized on June 5, 1996, pursuant to the Trust Instrument, as the
same may be amended from time to time, and _____________________,
hereinafter called "________" or the "Custodian."
WITNESSETH:
That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as
follows:
I. DEFINITIONS AND EMPLOYMENT OF ___ AS CUSTODIAN AND PROPERTY
TO BE HELD BY IT. The Trust is an open-end investment company
organized under the General Laws of the State of Delaware. For all
purposes of this Agreement, a "Portfolio" shall mean a separate
portfolio of assets of the Trust. The current portfolios are Cash
Reserve Fund and U.S. Treasury Reserve Fund. For the purposes of
this Agreement, the term "Portfolio Shares" shall be deemed to
refer to the shares of beneficial interest which are offered for
each Portfolio, and the term "Adviser" shall be deemed to refer to
the investment adviser of the Trust. The Trust hereby employs
___________ as the custodian of the assets of each Portfolio. In
the event the Trust establishes one or more portfolios other than
the Portfolios with respect to which the Trust decides to retain
the Custodian to act as custodian hereunder, the Trust shall so
notify the Custodian in writing. If the Custodian is willing to
render such services, the Custodian shall promptly notify the Trust
in writing whereupon such portfolio shall be deemed to be a
Portfolio hereunder. The Trust agrees to deliver to ___________
all securities other than securities issued by the Trust (the
"Portfolio Securities") and cash owned by the Trust for the account
of each Portfolio, and all payments of income, payments of
principal or capital distributions received by the Trust with
respect to all securities owned by the Trust for the account of
each Portfolio from time to time, and the cash consideration
received by the Trust for Portfolio Shares which may be issued or
sold from time to time. ___________ shall not be responsible for
any property of the Trust held or received by the Trust and not
delivered to ___________.
The Custodian may from time to time employ one or more
sub-custodians. The terms of each sub-custodian agreement shall be
approved by a vote of the Trustees of the Trust. Each
sub-custodian agreement shall specify the same standard of care as
is set forth in this Agreement.
II. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE TRUST
HELD BY THE CUSTODIAN.
A. Holding Securities. The Custodian shall hold,
earmark and physically segregate for the account of each Portfolio
all non-cash property delivered to it, including all securities
owned by each Portfolio, other than securities which are maintained
pursuant to Section L of this Article II in a clearing agency which
acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively
referred to herein as a "Securities System".
B. Delivery of Securities. The Custodian shall release
and deliver securities owned by each Portfolio held by the
Custodian or in a Securities System account of the Custodian only
upon receipt of Proper Instructions (as defined below in Section P
of this Article II), which may be continuing instructions when
deemed appropriate by the Trust and the Custodian, and only in the
following cases:
(1) Except in the case of a sale effected through a
Securities System, upon sale of such securities for
the account of each Portfolio and receipt of payment
therefor;
(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by a Portfolio;
(3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
L hereof;
(4) To the transfer or forwarding agent in connection
with tender or other similar offers for Portfolio
Securities of each Portfolio;
(5) To the issuer thereof or its agent when such
Portfolio Securities are called, redeemed, retired
or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be
delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer
into the name of a Portfolio or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed pursuant
to Section K of this Article II or into the name or
nominee name of any sub-custodian appointed pursuant
to Article I; or for exchange for a different number
of bonds, certificates or other evidence
representing the same aggregate face amount or
number of units; provided that, in any such case,
the new securities are to be delivered to the
Custodian;
(7) Upon the sale of such securities for the account of
a Portfolio, to the broker or its clearing agent
against a receipt for examination in accordance with
"street delivery" custom;
(8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer, or pursuant to provisions for conversion
contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case,
the new securities and cash, if any, are to be
delivered to the Custodian;
(9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary
securities for definitive securities; provided that,
in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
(10) For delivery in connection with any loans of
securities made by a Portfolio, but only against
Proper Instructions from the Adviser, against
receipt of the designated collateral, which may be
in the form of cash or obligations issued by the
United States Government, its agencies or
instrumentalities;
(11) For delivery as security in connection with any
borrowings by a Portfolio requiring a pledge of
assets by such Portfolio, but only against receipt
of amounts borrowed;
(12) Upon receipt of instructions from the transfer agent
for the Trust, for delivery to such transfer agent
or to holders of Portfolio Shares in connection with
distributions in kind in satisfaction of requests by
holders of Portfolio Shares for repurchase or
redemption;
(13) For delivery in accordance with the provisions of
any agreement among the Portfolio, the Custodian and
a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities,
Inc. (the "NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any
similar organization or organizations, regarding
escrow or other arrangements in connection with
transactions by the Portfolio;
(14) For delivery in accordance with the provisions of
any agreement among the Portfolio, the Custodian,
and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any contract market or any similar
organization or organizations, regarding account
deposits in connection with transactions by the
Portfolio; and
(15) For any other proper corporate purposes, but only
upon receipt of, in addition to Proper Instructions,
a notification signed by two officers of the Trust
and certified by the Secretary or an Assistant
Secretary of the Trust, specifying the securities to
be delivered, setting forth the purposes for which
such delivery is to be made, declaring such purposes
to be proper corporate purposes, and naming the
person or persons to whom delivery of such
securities shall be made.
C. Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be registered in the
name of a Portfolio or in the name of any nominee of the Custodian,
or in the name or nominee name of any agent appointed pursuant to
Section K of Article II hereof or in the name or nominee name of
any sub-custodian appointed pursuant to Article I. All securities
accepted by the Custodian on behalf of a Portfolio under the terms
of this Contract shall be in "street" or other good delivery form.
D. Bank Accounts. The Custodian shall open and
maintain a separate bank account or accounts in the name of each
Portfolio, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such
account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of each Portfolio, other
than cash maintained by each Portfolio in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for
each Portfolio may be deposited by it to its credit as Custodian in
the commercial banking side of the Custodian or in such other banks
or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and
the funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Trustees of the
Trust. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.
E. Payment for Portfolio Shares. The Custodian shall
receive from the distributor of each Portfolio's Portfolio Shares
or from the transfer agent of the Trust and deposit into each
Portfolio's account such payments as are received for Portfolio
Shares of each Portfolio issued or sold from time to time by such
Portfolio. The Custodian will provide timely notification to each
Portfolio and the transfer agent of any receipt by it of cash
payments for Portfolio Shares of such Portfolio.
F. Availability of Federal Funds. Upon mutual
agreement between each Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions and in accordance
with the agreed deadlines, which may be continuing instructions
when deemed appropriate by the parties, make federal funds
available to each Portfolio as of specified times agreed upon from
time to time by such Portfolio and the Custodian in the amount of
checks received in payment for Portfolio Shares of each Portfolio
which are deposited into such Portfolio's account.
G. Collection of Income. The Custodian shall collect
on a timely and reasonable basis all income and other payments with
respect to registered securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in
the securities business and shall collect on a timely and
reasonable basis all income and other payments with respect to
bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or agent thereof and shall
credit such income, as collected, to such Portfolio's Custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. The Custodian's obligations under this Section II.G.
shall be to take all reasonable and customary steps to collect such
income and payments, and the Custodian shall bear no responsibility
for its failure to make collections beyond the exercise of such
reasonable and customary steps.
H. Payment of Portfolio Moneys. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall pay out moneys of
a Portfolio in accordance with its usual and customary business
practice, in the following cases only:
(1) Upon the purchase of securities for the account of
a Portfolio but only (a) against the delivery of
such securities to the Custodian (or any bank,
banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act
as custodian and has been designated by the
Custodian as its agent for this purpose) registered
in the name of such Portfolio or in the name of a
nominee of the Custodian referred to in Section C of
Article II hereof or in proper form for transfer;
(b) in the case of a purchase effected through a
Securities System, in accordance with the conditions
set forth in Section L of Article II hereof, or (c)
in the case of repurchase agreements, (i) against
delivery of securities either in certificate form or
through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities, or
(ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Portfolio;
(2) In connection with conversion, exchange or surrender
of securities owned by a Portfolio as set forth in
Section B of Article II hereof;
(3) For the redemption or repurchase of Portfolio Shares
as set forth in Section J of Article II hereof;
(4) For the payment of any expense or liability incurred
by a Portfolio, including but not limited to the
following payments for the accounts of such
Portfolio: interest, taxes, management,
administration, accounting, transfer agent and legal
fees, and operating expenses of such Portfolio
whether or not such expenses are to be in whole or
in part capitalized or treated as deferred expenses;
(5) For the payment of any dividends declared pursuant
to the governing documents of a Portfolio; and
(6) For any other proper corporate purposes, but only
upon receipt of, in addition to Proper Instructions,
a notification signed by two officers of the Trust
and certified by its Secretary or an Assistant
Secretary of the Trust, specifying the amount of
such payment, setting forth the purpose of which
such payment is to be made, declaring such purpose
to be a proper corporate purpose, and naming the
person or persons to whom such payment is to be
made.
I. Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where payment for
purchase of securities for the account of a Portfolio is made by
the Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from such Portfolio to
so pay in advance, the Custodian shall be absolutely liable to such
Portfolio for such securities to the same extent as if the
securities had been received by the Custodian.
J. Payments for Repurchases or Redemptions of Portfolio
Shares of the Trust. The Custodian shall upon instruction from the
distributor or transfer agent deposit into the account of the
appropriate Portfolio such payments as are received for Shares of
that Portfolio issued or sold from time to time by the Portfolio.
The Custodian will provide timely notification to the Portfolio and
the transfer agent of any receipt by it of payments for Shares of
such Portfolio.
From such funds as may be available for the purpose but
subject to the limitations of the Trust Instrument and any
applicable votes of the Board of Trustees of the Trust pursuant
thereto, the Custodian shall, upon receipt of Proper Instructions
from the transfer agent, make funds available for payment to
holders of Shares who have delivered to the transfer agent a
request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions
from the transfer agent to wire funds to the transfer agent for
payment by the transfer agent or through a commercial bank
designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Portfolio, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Trust to the holder of
Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to
time between the Trust and the Custodian.
K. Appointment of Agents. Subject to prior approval by
the Board of Trustees of the Trust, the Custodian may at any time
appoint any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this
Article II as the Custodian may from time to time direct.
L. Deposit of Portfolio Assets in a Securities Systems.
The Custodian may deposit and/or maintain securities owned by each
Portfolio in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of Treasury and
certain federal agencies, collectively referred to herein as a
"Securities Systems" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and regulations,
if any, and subject to the following provisions:
(1) The Custodian may keep securities of each Portfolio
in a Securities System provided that such securities
are represented in an account (the "Account") of the
Custodian in a Securities System which shall not
include any assets of the Custodian other than
assets held as a fiduciary, custodian, or otherwise
for customers;
(2) The records of the Custodian with respect to
securities of each Portfolio which are maintained in
its Securities System shall identify by book-entry
those securities belonging to each Portfolio;
(3) The Custodian shall pay for securities purchased for
the account of each Portfolio upon (i) receipt of
advices from a Securities System that such
securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of each Portfolio. The Custodian shall
transfer securities sold for the account of each
Portfolio upon (i) receipt of advices from a
Securities System that payment for such securities
has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian
to reflect such transfer and payment for the account
of such Portfolio. Copies of all advices from its
Securities System of transfers of securities for the
account of each Portfolio shall be maintained for
such Portfolio by the Custodian and be provided to
such Portfolio at its request. The Custodian shall
furnish each Portfolio confirmation of each transfer
to or from the account of such Portfolio in the form
of copies of daily transaction advices reflecting
each day's transactions in its Securities System for
the account of such Portfolio on the next business
day, which daily transaction advices may be provided
by electronic means;
(4) The Custodian shall have received the initial or
annual certificate, as the case may be, required by
Article X hereof;
(5) The Custodian shall provide each Portfolio with any
report obtained by the Custodian on its Securities
System's accounting system, internal accounting
control and procedures for safeguarding securities
deposited in its Securities System;
(6) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to
each Portfolio for any loss or damage to such
Portfolio resulting from use of its Securities
System by reason of any acts of negligence,
misfeasance or misconduct of the Custodian or of any
of its employees or from any failure of the
Custodian or any such agent to make reasonable
efforts to enforce effectively such rights as it may
have against a Securities System; at the election of
each Portfolio, it shall be entitled to be
subrogated to the rights of the Custodian with
respect to any claim against a Securities System or
any other person which the Custodian may have as a
consequence of any such loss or damage if and to the
extent that a Portfolio has not been made whole for
any such loss or damage.
M. Ownership Certificates for Tax Purposes. The
Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to securities
of each Portfolio held by it and in connection with transfers of
securities.
N. Proxies. The Custodian shall, with respect to the
securities held by it hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities are
registered otherwise than in the name of a Portfolio, all proxies,
without indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Adviser such proxies, all
proxy soliciting materials and all notices relating to such
securities.
O. Communications Relating to Portfolio Securities.
The Custodian shall transmit promptly to the Adviser all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for such Portfolio.
(1) Notwithstanding any provision hereunder to the
contrary, with respect to Securities which possess
so-called put options or similar characteristics
which grant the Trust the option to redeem such
Securities prior to their maturity date (the "Put
Option Securities"), including, but not limited to,
so-called put bonds, the Custodian shall not have
any liability with respect to the exercise or
non-exercise of any such Put Option, except that:
(a) With respect to put options which are exercisable
semiannually or less frequently than semiannually,
and where such Put Option Security is actually
delivered to the Custodian not less than fifteen
business days prior to the put option exercise date,
the Custodian will use its best efforts to notify
the Trust and the Adviser of such put options where
correct and timely notification is published in the
publications or services (the "Notification
Sources") the Custodian routinely uses for this
purpose, or as to which the Custodian receives
timely notice from the Trust;
(b) Once notified, the Trust must direct the exercise or
non-exercise of such put option by written
instrument delivered to the Custodian not less than
five business days prior to the put option exercise
date;
(c) For the purposes of this Section O(1), a "business
day" is a day on which the Custodian is open for
business under the laws of the State of New York;
the Notification Sources include, but are not
limited to The Wall Street Journal and/or Depository
Trust Company of New York. The Custodian reserves
the right to utilize other Notification Sources or
discontinue any of the aforementioned Notification
Sources at any time and without notice. The
Custodian will not notify the Trust of put options
exercisable more frequently than semiannually.
(2) With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Adviser all
written information received by the Custodian from
issuers of the securities whose tender or exchange
is sought and from the party (or his agents) making
the tender or exchange offer. If the Adviser
desires to take action with respect to any tender
offer, exchange offer or any other similar
transaction, the Adviser shall notify the Custodian
at least three business days prior to the date on
which the Custodian is to take such action.
P. Proper Instructions. "Proper Instructions" as used
throughout this Article II means a writing signed or initialed by
one or more person or persons and in the manner as the Trustees,
the Adviser or the transfer agent, as the case may be, shall have
authorized from time to time. Each such writing shall set forth
the transaction involved, including a specific statement of the
purpose of which such action is requested. The Custodian may also
accept and rely on instructions transmitted by the Trust or the
Trust's authorized agent including the Adviser, whether given
orally, by telephone, cable or telex, facsimile transmission or
other electronic means which the Custodian reasonably believes to
be genuine. Oral instructions will be considered Proper
Instructions if the Custodian believes them to have been given by
a person authorized to give such instructions with respect to the
transaction involved. The Trust and the Adviser shall cause all
oral instructions to be confirmed in writing. Written confirmation
of oral instructions shall in no way affect any action the
Custodian takes in reliance upon the oral instructions. Upon
receipt of a certificate of the Secretary or an Assistant Secretary
as to the authorization by the Trustees of the Trust accompanied by
a detailed description of procedures approved by the Trustees,
"Proper Instructions" may include communications effected directly
between electromechanical or electronic devices provided that the
Trustees and the Custodian agree that such procedures afford
adequate safeguards for each Portfolio's assets.
Q. Actions Permitted Without Express Authority. The
Custodian may in its discretion, without express authority from
each Portfolio:
(1) Make payments to itself or others for minor expenses
of handling securities or other similar items
relating to its duties under this Agreement,
provided that all such payments shall be accounted
for to each Portfolio, such expenses shall include,
but not be limited to postage, shipping, courier,
wire transfers, expenses to enforce any obligation
of any agent, sub-custodian or Securities System and
other out-of-pocket expenses not assumed by the
Custodian pursuant to this Agreement;
(2) Surrender securities in temporary form in exchange
for securities in definitive form;
(3) Endorse for collection, in the name of each
Portfolio, checks, drafts and other negotiable
instruments; and
(4) In general, attend to all non-discretionary details
in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of each Portfolio except as
otherwise directed by the Board of Trustees of the
Trust.
R. Evidence of Authority. The Custodian shall be
protected in acting upon any Proper Instructions whether oral or in
writing, and any notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of a Portfolio. The Custodian
may receive and accept a certificate copy of a vote of the Board of
Trustees of the Trust as conclusive evidence (a) of the authority
of any person to act in accordance with such vote, or (b) of any
determination or of any action by the Board of Trustees pursuant to
the Trust Instrument as described in such vote, and such vote may
be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
S. No Liability Until Receipt. 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, or any securities received by it on
behalf of any Portfolio until the Custodian actually receives and
collects such money or securities directly or by the final
crediting of the Account representing the Portfolio's interest in
a Securities System, or a subcustodian.
T. Segregated Accounts. The Custodian shall upon
receipt of Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of a Portfolio, into which
account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian in
a Securities System or with a subcustodian, (i) in accordance with
the provisions of any agreement among the Trust, the Custodian and
a broker-dealer registered under the Exchange Act and a member of
the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or Commodity Futures Trading Commission or any
registered contract market) or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by such Portfolio, (ii) for purposes of
segregating cash or government securities in connection with
options purchased, sold or written by such Portfolio or commodity
futures contracts or options thereon purchased of sold by such
Portfolio, (iii) for the purposes of compliance by such Portfolio
with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies, and (iv) for other
corporate purposes.
III. DUTIES OF CUSTODIAN WITH RESPECT TO BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME. The Custodian shall
cooperate with and supply necessary information to the entity or
entities appointed by the Trustees to keep the books of account of
each Portfolio, compute the net asset value per share of the
outstanding shares of each Portfolio and compute the daily net
income of each Portfolio.
IV. RECORDS. The Custodian shall create and maintain all records
relating to its activities and obligations under this Agreement in
such manner as will meet the obligations of each Portfolio under
the Investment Company Act of 1940, including, but not limited to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable
federal and state tax laws and any other law or administrative
rules or procedures which may be applicable to each Portfolio. All
such records shall be available to each Portfolio and shall at all
times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of
each Portfolio and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at each Portfolio's
request, supply such Portfolio with a tabulation of securities
owned by such Portfolio and held by the Custodian and shall, when
requested to do so by a Portfolio and for such compensation as
shall be agreed upon between such Portfolio and the Custodian,
include certificate numbers in such tabulations.
V. OPINION OF TRUST'S INDEPENDENT PUBLIC ACCOUNTANTS. The
Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable
opinions from the Trust's independent public accountants with
respect to its activities hereunder in connection with the
preparation of the Trust's Form N-1A and the Trust's Form N-SAR or
other annual reports to the Securities and Exchange Commission and
with respect to any other requirements of such Commission.
VI. REPORTS TO EACH PORTFOLIO BY INDEPENDENT PUBLIC ACCOUNTANTS.
The Custodian shall provide each Portfolio, at such times as each
Portfolio may reasonably require and at the Portfolio's expenses,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the
Custodian under this Agreement; such reports, which shall be of
sufficient scope and in sufficient detail, as may reasonably be
required by each Portfolio, to provide reasonable assurance that
any material inadequacies disclosed by such examination, and, if
there are no such inadequacies, shall so state.
VII. COMPENSATION OF CUSTODIAN. The Custodian shall be entitled
to reasonable compensation for its services as Custodian, as set
forth in the Supplements to this Agreement.
VIII. RESPONSIBILITY OF CUSTODIAN. The Custodian shall not be
responsible for the title, validity or genuineness of any property
or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument
believed by it to be genuine and to be signed by the proper party
or parties.
The Custodian shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Trust) on all
matters, and shall be without liability for any action taken or
omitted by it in good faith in accordance with such advice.
Notwithstanding the foregoing, the responsibility of the Custodian
with respect to redemptions effected by check may be set forth in
a separate agreement entered into between the Custodian, a
Portfolio and the Adviser.
In carrying out the provisions of this Agreement the
Custodian shall not be held liable for any act or failure to act
which shall constitute the exercise of reasonable care, or is in
accordance with industry standards and practice. Each Portfolio
shall indemnify the Custodian and hold it harmless from and against
all claims, liabilities, and expenses (including attorneys' fees)
which the Custodian may suffer or incur on account of being
Custodian hereunder except such claims, liabilities and expenses
arising from the Custodian's own acts or omissions to act which
shall fail to meet the foregoing standard of care.
If a Portfolio requires the Custodian to take any action
with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result
in the Custodian or its nominee assigned to such Portfolio being
liable for the payment of money or incurring liability of some
other form, such Portfolio, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
If a Portfolio requires the Custodian to advance cash or
securities for any purpose or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from the
Custodian's own acts or omissions to act in the absence of
reasonable care and in a manner that is not consistent with
industry standards and practice, any property at any time held for
the account of such Portfolio shall be security therefor and should
such Portfolio fail to repay the Custodian promptly, the Custodian
shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
IX. FUNDS TRANSFERS. For the purposes of this Section IX, "funds
transfer" shall mean a series of transactions, beginning with a
payment order of an originator made for the purpose of making
payment to the beneficiary of such order (such beneficiary is
referred to as the "beneficiary") but does not include debit
transfer made through the automated clearing house system or
transfers governed by the Federal Electronic Funds Transfer Act and
"payment order" shall mean an instruction transmitted orally,
electronically, or in writing to pay a fixed or determinable amount
to a beneficiary.
In accepting any payment order directing payment from the
account of a Portfolio to a beneficiary, the Custodian and the
beneficiary's bank may rely solely upon any account number or
similar identifying number such Portfolio has provided to identify
(i) the beneficiary, (ii) the beneficiary's bank, or (iii) an
intermediary bank to be used in executing such payment order. A
Portfolio shall be required to pay the Custodian and the Custodian
is authorized to charge the account of such Portfolio for any funds
transfer made by the Custodian at the direction of such Portfolio
utilizing any such identifying numbers even where their use may
result in a person other than the beneficiary being paid or the
transfer of funds to a bank other than the beneficiary's bank or an
intermediary bank other than that intended. In sending any payment
order the Custodian may send only the account number (or similar
identifying number) and the bank identification number provided.
When the Custodian receives a payment order to which a
Portfolio is the beneficiary it may credit the proceeds of that
order solely on the basis of the account number (or similar
identifying number) contained in such payment order.
If any payment order is transmitted through any funds
transfer system including, but not limited to the Clearing House
Interbank Payment System (CHIPS) or the automated clearing house
system (ACH), a Portfolio shall be subject to the rules of such
funds transfer system in effect at the time that such transfer is
made. Any provisional credit granted on any ACH credit entry may
be reversed by the Custodian if final settlement does not occur.
Should the Custodian be required to pay a Portfolio any
interest in connection with a payment order (whether as the
originator or the beneficiary) such interest shall be computed
based on the Rules on Interbank Compensation then in effect in The
New York Clearing House Association.
In executing any payment order the Custodian may use the
services of correspondent and intermediary banks, funds transfer
systems, telecommunication companies and other entities of similar
purpose. Such entities shall not be deemed the Custodian's agents,
and the Custodian will not be responsible for their acts or
omissions with regard to any payment orders in the absence of the
exercise of reasonable care as is consistent with industry
standards and practice on the part of the Custodian.
X. EFFECTIVE PERIOD - TERMINATION AND AMENDMENT.
(a) Subject to prior termination as provided in
paragraph (d) of this Section X, this Agreement shall continue in
force for two (2) years from the date hereof and indefinitely
thereafter, but only so long as the continuance shall be
specifically approved at least annually by vote of the Trust's
Board of Trustees or by vote of a majority of the outstanding
voting securities of the Trust;
(b) This Agreement may be modified by mutual consent;
(c) In addition to the requirements of sub-paragraph (a)
of this Section X, the terms of any continuance or modification of
the Agreement must have been approved by the vote of a majority of
those Trustees of the Trust who are not parties to such Agreement
or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval; and
(d) Either party hereto may, at any time, on sixty (60)
days' prior written notice to the other, terminate this Agreement,
without payment of any penalty, provided however that the Trust
shall only do so by action of its Board of Trustees, or by vote of
a majority of its outstanding voting securities. This Agreement
shall terminate automatically in the event of its assignment.
The Custodian shall receive an initial certificate from
the Trust that the Trustees of the Trust have approved the initial
use of a particular Securities System and an annual certificate
reporting that the Trustees, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended, have reviewed the use
by each Portfolio of such Securities System; further the Trust
shall not amend or terminate the Agreement in contravention of any
applicable federal or state regulations, or any provision of the
Trust Instrument; and the Trust may at any time by action of its
Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or
(ii) immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by the
appropriate banking authorities or upon the happening of a like
event at the direction of an appropriate regulatory agency or court
of competent jurisdiction.
Upon termination of the Agreement, the Trust shall pay to
the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements, including any costs, expenses
and disbursements incurred in performing the obligations set forth
in Section XI hereof.
If this Agreement is terminated with respect to any
Portfolio, it shall nonetheless remain in effect with respect to
any remaining Portfolio.
XI. SUCCESSOR CUSTODIAN. If a successor custodian is appointed
by the Trustees of the Trust, the Custodian shall, upon
termination, deliver to such successor custodian at the office of
the Custodian, duly endorsed and in the form for transfer, all
securities and other assets of each Portfolio then held by it
hereunder. The Custodian shall also deliver to such successor
custodian copies of such books and records relating to each
Portfolio including but not limited to the records required to be
maintained by the Custodian in accordance with the Investment
Company Act of 1940.
If no such successor custodian is appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Trustees of the Trust, deliver at the office of
the Custodian such securities, funds and other properties in
accordance with such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the Board of
Trustees shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the
Custodian shall have the right to deliver to a bank or trust
company of its own selection, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of
not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the
Custodian relative thereto and all other property held by it under
this Agreement. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Agreement.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Trust to procure the
certified copy of a vote of the Board of Trustees to appoint a
successor custodian, the Custodian shall be entitled to fair
compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties
and the provisions of this Agreement relating to the duties and
obligations of the Custodian shall remain in full force and effect.
XII. INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with
the operation of this Agreement, the Custodian and the Trust 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 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
Trust Instrument of the Trust. No interpretive or additional
provisions made as provided in the preceding sentence shall be
deemed to be an amendment to this Agreement.
XIII. TRUSTEES. All references to actions of or by Trustees of the
Trust shall require action by such Trustees acting as a Board or
formally constituted group and not individually.
XIV. APPLICABLE LAW. This Agreement shall be construed and the
provision thereof interpreted under and in accordance with the laws
of New York. The name "First Choice Funds Trust" is the
designation by the Trustees under the Trust Instrument, dated June
5, 1996, as amended, and all persons dealing with the Trust must
look solely to the Trust property for the enforcement of any claims
against the Trust as neither any or all of the Trustees, officers,
or agents, nor any or all of the shareholders assume(s) any
personal liability for obligations entered into on behalf of the
Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
By:
Title:
FIRST CHOICE FUNDS TRUST
By:
Title:
TRANSFER AGENCY AGREEMENT
AGREEMENT made this _____ day of _________________,
___________, between First Choice Funds Trust (the "Trust"), a
Delaware business trust having its principal place of business at
3435 Stelzer Road, Columbus, Ohio 34219, and BISYS FUND SERVICES,
INC. ("BISYS"), a Delaware corporation having its principal place
of business at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain services
for each series of the Trust (individually referred to herein as a
"Fund" and collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein set forth, the parties agree as follows:
1. Retention of BISYS: Conversion to the Services.
The Trust hereby engages BISYS to act as the transfer
agent for the Funds to perform- (i) the transfer agent services set
forth in Schedule A hereto (the "Initial Services"), (ii) such
special services (the "Special Services") incidental to the
performance of such services as may be agreed to by the parties
from time to time (for such fees as the parties may agree as
aforesaid) and (iii) such additional services (collectively with
the Initial Services and the Special Services, the "Services") as
may be agreed to by the parties from time to time and set forth in
an amendment to said Schedule A (for such fees as the parties may
agree as aforesaid), and, in connection therewith, the Trust agrees
to convert to BISYS' data processing systems and software (the
"BISYS System") as necessary in order to receive the Services. The
Trust shall cooperate with BISYS to provide BISYS with all
necessary information and assistance required to successfully
convert to the BISYS System. BISYS shall provide the Trust with a
schedule relating to such conversion and the parties agree that the
conversion may progress in stages. The date upon which all Initial
Services shall have been converted to the BISYS System shall be
referred to herein as the "Conversion Date". BISYS hereby accepts
such engagement and agrees to perform the Services commencing, with
respect to each individual Service, on the date that the conversion
of such Service to the BISYS System has been completed. BISYS shall
determine in accordance with its normal acceptance procedures when
the applicable Service has been successfully converted.
BISYS may, in its discretion, appoint in writing other
parties qualified to perform transfer agency services reasonably
acceptable to the Trust (individually, a "Subtransfer Agent") to
carry out some or all of its responsibilities under this Agreement
with respect to a Fund; provided, however, that the Sub-transfer
Agent shall be the agent of BISYS and not the agent of the Trust or
such Fund, and that BISYS shall be fully responsible for the acts
of such Sub-transfer Agent and shall not be relieved of any of its
responsibilities hereunder by the appointment of such Sub-transfer
Agent.
2. Fees.
The Trust shall pay BISYS for the services to be provided
by BISYS under this Agreement in accordance with, and in the manner
set forth in, Schedule B hereto. Fees for any additional services
to be provided by BISYS pursuant to an amendment to Schedule A
hereto shall be subject to mutual agreement at the time such
amendment to Schedule A is proposed.
3. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section
2 hereof, the Trust agrees to reimburse BISYS for BISYS'
out-of-pocket expenses in providing services hereunder, including
without limitation, the following:
a. All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and
from the Trust and in delivering all materials to
shareholders;
b. All direct telephone, telephone transmission and
telecopy or other electronic transmission expenses
incurred by BISYS in communication with the Trust,
the Trust's investment adviser or custodian,
dealers, shareholders or others as required for
BISYS to perform the services to be provided
hereunder;
c. Costs of postage, couriers, stock computer paper,
statements, labels, envelopes, checks, reports,
letters, tax forms, proxies, notices or other form
of printed material which shall be required by BISYS
for the performance of the services to be provided
hereunder;
d. The cost of microfilm or microfiche of records or
other materials; and
e. Any expenses BISYS shall incur at the written
direction of an officer of the Trust thereunto duly
authorized.
4. Effective Date.
This Agreement shall become effective as of the date
first written above (the "Effective Date").
5. Term.
The initial term of this Agreement (the "Initial Term")
shall be for a period commencing on the date this Agreement is
executed by both parties and ending on the date that is ____ months
(years) after the Conversion Date. Thereafter, it shall be renewed
automatically for successive one-year terms unless written notice
not to renew is given by the non-renewing party to the other party
at least 60 days prior to the expiration of the then current term;
provided, however, that after such termination, for so long as
BISYS, with the written consent of the Trust, in fact continues to
perform any one or more of the services contemplated by this
Agreement or any Schedule or exhibit hereto, the provisions of this
Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Fees and
out-of-pocket expenses incurred by BISYS but unpaid by the Trust
upon such termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to
collect from the Trust, in addition to the fees and disbursements
provided by Sections 2 and 3 hereof, the amount of all of BISYS'
cash disbursements and a reasonable fee (which fee shall be not
less than one hundred and two percent (102%) of the sum of the
actual costs incurred by BISYS in performing such service) for
services in connection with BISYS' activities in effecting such
termination, including without limitation, the delivery to the
Trust and/or its distributor or investment adviser and/or other
parties of the Trust's property, records, instruments and
documents, or any copies thereof. To the extent that BISYS may
retain in its possession copies of any Trust documents or records
subsequent to such termination which copies had not been requested
by or on behalf of the Trust in connection with the termination
process described above, BISYS, for a reasonable fee, will provide
the Trust with reasonable access to such copies.
In the event of a material breach of this Agreement by
either party, the nonbreaching party shall notify the breaching
party in writing of such breach and, upon receipt of such notice,
the breaching party shall have 45 days to remedy the breach. In the
event the breach is not remedied within such time period, the
nonbreaching party may immediately terminate this Agreement.
If, for any reason, BISYS is replaced as transfer agent,
or if a third party is added to perform all or a part of the
services provided by BISYS under this Agreement (excluding any
sub-transfer agent appointed by BISYS as provided in Section 1
hereof), then the Trust shall make a one-time cash payment, as
liquidated damages, to BISYS equal to the balance due BISYS for the
remainder of the term of this Agreement, assuming for purposes of
calculation of the payment that the asset level of the Trust on the
date BISYS is replaced, or a third party is added, will remain
constant for the balance of the contract term.
6. Uncontrollable Events.
BISYS assumes no responsibility hereunder, and shall not
be liable for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control.
7. Legal Advice.
BISYS shall notify the Trust at any time BISYS believes
that it is in need of the advice of counsel (other than counsel in
the regular employ of BISYS or any affiliated companies) with
regard to BISYS' responsibilities and duties pursuant to this
Agreement; and after so notifying the Trust, BISYS, at its
discretion, shall be entitled to seek, receive and act upon advice
of legal counsel of its choosing, such advice to be at the expense
of the Trust or Funds unless relating to a matter involving BISYS'
willful misfeasance, bad faith, gross negligence or reckless
disregard with respect to BISYS' responsibilities and duties
hereunder and BISYS shall in no event be liable to the Trust or any
Fund or any shareholder or beneficial owner of the Trust for any
action reasonably taken pursuant to such advice.
8. Instructions.
Whenever BISYS is requested or authorized to take action
hereunder pursuant to instructions from a shareholder, or a
properly authorized agent of a shareholder ("shareholder's agent"),
concerning an account in a Fund, BISYS shall be entitled to rely
upon any certificate, letter or other instrument or communication,
believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the
Trust or by the shareholder or shareholder's agent, as the case may
be, and shall be entitled to receive as conclusive proof of any
fact or matter required to be ascertained by it hereunder a
certificate signed by an officer of the Trust or any other person
authorized by the Trust's Board of Trustees or by the shareholder
or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may
rely conclusively upon the terms of the Prospectuses and Statement
of Additional Information of the Trust relating to the Funds to the
extent that such services are described therein unless BISYS
receives written instructions to the contrary in a timely manner
from the Trust.
9. Standard of Care; Reliance on Records and Instructions;
Indemnification.
BISYS shall use its best efforts to ensure the accuracy
of all services performed under this Agreement, but shall not be
liable to the Trust for any action taken or omitted by BISYS in the
absence of bad faith, willful misfeasance, negligence or from
reckless disregard by it of its obligations and duties. The Trust
agrees to indemnify and hold harmless BISYS, its employees, agents,
directors, officers and nominees from and against any and all
claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way relating to
BISYS' actions taken or nonactions with respect to the performance
of services under this Agreement or based, if applicable, upon
reasonable reliance on information, records, instructions or
requests given or made to BISYS by the Trust, the investment
adviser and on any records provided by any fund accountant or
custodian thereof; provided that this indemnification shall not
apply to actions or omissions of BISYS in cases of its own bad
faith, willful misfeasance, negligence or from reckless disregard
by it of its obligations and duties; and further provided that
prior to confessing any claim against it which may be the subject
of this indemnification, BISYS shall give the Trust written notice
of and reasonable opportunity to defend against said claim in its
own name or in the name of BISYS.
10. Record Retention and Confidentiality.
BISYS shall keep and maintain on behalf of the Trust all
books and records which the Trust or BISYS is, or may be, required
to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended (the "1940
Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS
further agrees that all such books and records shall be the
property of the Trust and to make such books and records available
for inspection by the Trust or by the Securities and Exchange
Commission (the "Commission") at reasonable times and otherwise to
keep confidential all books and records and other information
relative to the Trust and its shareholders, except when requested
to divulge such information by duly-constituted authorities or
court process, or requested by a shareholder or shareholder's agent
with respect to information concerning an account as to which such
shareholder has either a legal or beneficial interest or when
requested by the Trust, the shareholder, or shareholder's agent, or
the dealer of record as to such account.
11. Reports.
BISYS will furnish to the Trust and to its
properly-authorized auditors, investment advisers, examiners,
distributors, dealers, underwriters, salesmen, insurance companies
and others designated by the Trust in writing, such reports at such
times as are prescribed in Schedule C attached hereto, or as
subsequently agreed upon by the parties pursuant to an amendment to
Schedule C. The Trust agrees to examine each such report or copy
promptly and will report or cause to be reported any errors or
discrepancies therein not later than three business days from the
receipt thereof In the event that errors or discrepancies, except
such errors and discrepancies as may not reasonably be expected to
be discovered by the recipient within three days, after conducting
a diligent examination, are not so reported within the aforesaid
period of time, a report will for all purposes be accepted by and
be binding upon the Trust and any other recipient, and BISYS shall
have no liability for errors or discrepancies therein and shall
have no further responsibility with respect to such report except
to perform reasonable corrections of such errors and discrepancies
within a reasonable time after requested to do so by the Trust.
12. Rights of Ownership.
All computer programs and procedures developed to perform
services required to be provided by BISYS under this Agreement are
the property of BISYS. All records and other data except such
computer programs and procedures are the exclusive property of the
Trust and all such other records and data will be furnished to the
Trust in appropriate form as soon as practicable after termination
of this Agreement for any reason.
13. Return of Records.
BISYS may at its option at any time, and shall promptly
upon the Trust's demand, turn over to the Trust and cease to retain
BISYS' files, records and documents created and maintained by BISYS
pursuant to this Agreement which are no longer needed by BISYS in
the performance of its services or for its legal protection. If not
so turned over to the Trust, such documents and records will be
retained by BISYS for six years from the year of creation. At the
end of such six-year period, such records and documents will be
turned over to the Trust unless the Trust authorizes in writing the
destruction of such records and documents.
14. Bank Accounts.
The Trust and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Trust, as
are necessary in order that BISYS may perform the services required
to be performed hereunder. To the extent that the performance of
such services shall require BISYS directly to disburse amounts for
payment of dividends, redemption proceeds or other purposes, the
Trust and Funds shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.
15. Representations of the Trust.
The Trust certifies to BISYS that: (a) as of the close of
business on the Effective Date, each Fund which is in existence as
of the Effective Date has authorized unlimited shares, and (b) by
virtue of its Declaration of Trust, shares of each Fund which are
redeemed by the Trust may be sold by the Trust from its treasury,
and (c) this Agreement has been duly authorized by the Trust and,
when executed and delivered by the Trust, will constitute a legal,
valid and binding obligation of the Trust, enforceable against the
Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and
secured parties.
16. Representations of BISYS.
BISYS represents and warrants that: (a) BISYS has been
in, and shall continue to be in, substantial compliance with all
provisions of law, including Section 17A(c) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), required in
connection with the performance of its duties under this Agreement;
and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage
attributable to fire, theft or any other cause of the blank checks,
records, and other data of the Trust and BISYS' records, data,
equipment, facilities and other property used in the performance of
its obligations hereunder are adequate and that it will make such
changes therein from time to time as are required for the secure
performance of its obligations hereunder.
17. Insurance.
BISYS shall notify the Trust should its insurance
coverage with respect to professional liability or errors and
omissions coverage be canceled or reduced. Such notification shall
include the date of change and the reasons therefor. BISYS shall
notify the Trust of any material claims against it with respect to
services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Trust from time to time
as may be appropriate of the total outstanding claims made by BISYS
under its insurance coverage.
18. Information to be Furnished by the Trust and Funds.
The Trust has furnished to BISYS the following:
a. Copies of the Declaration of Trust of the Trust and
of any amendments thereto, certified by the proper
official of the state in which such Declaration has
been filed.
b. Copies of the following documents:
a. The Trust's By-laws and any amendments
thereto;
b. Certified copies of resolutions of the Board
of Trustees covering the following matters:
A. Approval of this Agreement and
authorization of a specified officer of
the Trust to execute and deliver this
Agreement and authorization for specified
officers of the Trust to instruct BISYS
hereunder; and
B. Authorization of BISYS to act as Transfer
Agent for the Trust on behalf of the
Funds.
c. A list of all officers of the Trust, together with
specimen signatures of those officers, who are
authorized to instruct BISYS in all matters.
d. Two copies of the following (if such documents are
employed by the Trust):
(a) Prospectuses and Statement of Additional
Information;
(b) Distribution Agreement; and
(c) All other forms commonly used by the Trust or
its Distributor with regard to their
relationships and transactions with
shareholders of the Funds.
e. A certificate as to shares of beneficial interest of
the Trust authorized, issued, and outstanding as of
the Effective Date of BISYS' appointment as Transfer
Agent (or as of the date on which BISYS' services
are commenced, whichever is the later date) and as
to receipt of full consideration by the Trust for
all shares outstanding, such statement to be
certified by the Treasurer of the Trust.
19. Information Furnished by BISYS.
BISYS has furnished to the Trust the following:
a. BISYS' Articles of Incorporation.
b. BISYS' Bylaws and any amendments thereto.
c. Certified copies of actions of BISYS covering the
following matters
(a) Approval of this Agreement, and authorization
of a specified officer of BISYS to execute and
deliver this Agreement;
(b) Authorization of BISYS to act as Transfer
Agent for the Trust.
d. A copy of the most recent independent accountants'
report relating to internal accounting control
systems as filed with the Commission pursuant to
Rule 17Ad-13 under the Exchange Act.
20. Amendments to Documents.
The Trust shall furnish BISYS written copies of any
amendments to, or changes in, any of the items referred to in
Section 18 hereof forthwith upon such amendments or changes
becoming effective. In addition, the Trust agrees that no
amendments will be made to the Prospectuses or Statement of
Additional Information of the Trust which might have the effect of
changing the procedures employed by BISYS in providing the services
agreed to hereunder or which amendment might affect the duties of
BISYS hereunder unless the Trust first obtains BISYS' approval of
such amendments or changes.
21. Reliance on Amendments.
BISYS may rely on any amendments to or changes in any of
the documents and other items to be provided by the Trust pursuant
to Sections 18 and 20 of this Agreement and the Trust hereby
indemnifies and holds harmless BISYS from and against any and all
claims, demands, actions, suits, judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every
nature and character which may result from actions or omissions on
the part of BISYS in reasonable reliance upon such amendments
and/or changes. Although BISYS is authorized to rely on the
above-mentioned amendments to and changes in the documents and
other items to be provided pursuant to Sections 18 and 20 hereof,
BISYS shall be under no duty to comply with or take any action as
a result of any of such amendments or changes unless the Trust
first obtains BISYS' written consent to and approval of such
amendments or changes.
22. Compliance with Law.
Except for the obligations of BISYS set forth in Section
10 hereof, the Trust assumes full responsibility for the
preparation, contents, and distribution of each prospectus of the
Trust as to compliance with all applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act''), the 1940 Act,
and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to
take cognizance of any laws relating to the sale of the Trust's
shares. The Trust represents and warrants that no shares of the
Trust will be offered to the public until the Trust's registration
statement under the 1933 Act and the 1940 Act has been declared or
becomes effective.
23. Notices.
Any notice provided hereunder shall be sufficiently given
when sent by registered or certified mail to the party required to
be served with such notice at the following address: if to the
Trust, to it at 3435 Stelzer Road, Columbus, Ohio 43219 with a copy
to Trust counsel at 805 Third Avenue, New York NY 10022; if to
BISYS, to it at 3435 Stelzer Road, Columbus, Ohio 43219, or at such
other address as such party may from time to time specify in
writing to the other party pursuant to this Section.
24. Headings.
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret
this Agreement.
25. Assignment.
This Agreement and the rights and duties hereunder shall
not be assignable by either of the parties hereto except by the
specific written consent of the other party. This Section 25 shall
not limit or in any way affect BISYS' right to appoint a
Sub-transfer Agent pursuant to Section 1 hereof. This Agreement
shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted
assigns.
26. Governing Law and Matters Relating to the Trust as a
Delaware Business Trust.
This Agreement shall be governed by and provisions shall
be construed in accordance with the laws of the State of Ohio. It
is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust personally,
but shall bind only the trust property of the Trust. The execution
and delivery of this Agreement have been authorized by the
Trustees, and this Agreement has been signed and delivered by an
authorized officer of the Trust, acting as such, and neither such
authorization by the 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,
but shall bind only the trust property of the Trust as provided in
the Trust's Agreement and Declaration of Trust
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above
written.
FIRST CHOICE FUNDS TRUST
By:
Attest:
BISYS FUND SERVICES, INC.
By:
Attest:
<PAGE>
Dated:________________
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
FIRST CHOICE FUNDS TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identification numbers and wire
instructions.
c. Issue confirmations in compliance with Rule 10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares, through dividend reimbursement.
2. Shareholder Information Services
a. Make information available to shareholder servicing unit
and other remote access units regarding trade date, share
price, current holdings, yields, and dividend
information.
b. Produce detailed history of transactions through
duplicate or special order statements upon request.
c. Provide mailing labels for distribution of financial
reports, prospectuses, proxy statements or marketing
material to current shareholders.
3. Compliance Reporting
a. Provide reports to the Securities and Exchange
Commission, the National Association of Securities
Dealers and the States in which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue
Service forms for corresponding Fund and shareholder
income and capital gains.
c. Issue tax withholding reports to the Internal Revenue
Service.
4. Dealer/Load Processing (if applicable)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and
provide for payment of commissions on direct shareholder
purchases in a load Fund.
5. Shareholder Account Maintenance
a. Maintain all shareholder records for each account in the
Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each
shareholder.
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
FIRST CHOICE FUNDS TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENT FEES
Annual Per Fund Fee: $
Annual Per Account Fee: $
Daily/Monthly Dividend $
Annual Dividend $
Closed Accounts $
Additional Services:
Additional services such as IRA processing, development of
interface capabilities, servicing of 403(b) and 408(c) accounts,
management of cash sweeps between DDAs and mutual fund accounts and
coordination of the printing and distribution of prospectuses,
annual reports and semi-annual reports are subject to additional
fees which will be quoted upon request. Programming costs or
database management fees for special reports or specialized
processing will be quoted upon request.
Multiple Classes of Shares:
Classes of shares which have different net asset values or pay
different daily dividends will be treated as separate classes, and
the fee schedule above, including the appropriate minimums, will be
charged for each separate class.
Out-of-pocket Expenses:
BISYS shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses including, but not limited to, the expenses
set forth in Section 3 of the Transfer Agency Agreement to which
this Schedule B is attached.
<PAGE>
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
FIRST CHOICE FUNDS TRUST
AND
BISYS FUND SERVICES, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning
BISYS' shareholder system and internal accounting control
systems to be filed with the Securities and Exchange
(commission pursuant to Rule 17Ad-13 of the Securities
Exchange Act of 1934, as amended.
September 12, 1996
First Choice Funds Trust
3435 Stelzer Road
Columbus, OH 43219
Dear Sirs:
We understand that First Choice Funds Trust, a Delaware
business trust (the "Trust"), has filed with the Securities and
Exchange Commission a Registration Statement on Form N-1A under the
Securities Act of 1933 and the Investment Company Act of 1940. The
Trust has elected to register an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
In connection with the registration of such shares, we have
examined the Trust's Agreement and Declaration of Trust, its By-Laws,
and the Registration Statement, as amended, as well as such
other records and documents as we have deemed necessary. Based
upon such examination, we are of the opinion that:
1. The Trust has been duly organized and is validly existing
in good standing as a business trust under the laws of the
Commonwealth of Delaware; and
2. The shares of beneficial interest in the Trust to be
offered to the public have been duly authorized for issuance and
will be legally issued, fully paid and nonassessable when said
shares have been issued and sold in accordance with the terms and
in the manner set forth in the Trust's Registration Statement, as
amended.
We hereby consent to the filing of this opinion as an exhibit
to the Trust's Registration Statement and to the reference to our
name in the documents comprising said Registration Statement.
Very truly yours,
BAKER & MCKENZIE
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional
Information constituting part of this Pre-Effective Amendment No.
1 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated September 12, 1996, relating to the
statement of assets and liabilities of U.S. Treasury Reserve Fund
and Cash Reserve Fund (two portfolios constituting First Choice
Funds Trust), which appears in such Statement of Additional
Information, and to the incorporation by reference of our report
into the Prospectus constituting part of the Registration
Statement. We also consent to the references to us under the
heading "Experts" in such Statement of Additional Information and
under the heading "Independent Accountants" appearing on the cover
of such Prospectus.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
September 12, 1996
PURCHASE AGREEMENT
First Choice Funds Trust, a Delaware business trust (the
"Company"), and BISYS Fund Services (the "Distributor"), hereby
agree as follows:
1. The Company hereby offers the Distributor and the
Distributor hereby purchases the following shares, par value $.001
per share, of each portfolio ("Fund") of the Trust:25,000 shares at
$1.00 per share representing shares in Service Class Shares of U.S.
Treasury Reserve Fund; 25,000 shares at $1.00 per share
representing shares in Institutional Class Shares of U.S. Treasury
Reserve Fund; 25,000 shares at $1.00 per share representing shares
in Service Class Shares of Cash Reserve Fund; and 25,000 shares at
$1.00 per share representing shares in Institutional Class Shares
of Cash Reserve Fund. The Distributor hereby acknowledges receipt
of a purchase confirmation reflecting the purchase of the Shares,
and the Company hereby acknowledges receipt from the Distributor of
funds in the amount of $100,000 in full payment for the shares.
2. The Distributor represents and warrants to the Trust
that the Shares are being acquired for investment purposes and not
with a view to the distribution thereof.
3. The Distributor agrees that if it or any direct or
indirect transferee of the Shares redeems the Shares prior to the
fifth anniversary of the date the Company begins its investment
activities, the Distributor will pay to the Company an amount equal
to the number resulting from multiplying each Fund's total
unamortized organizational expenses by a fraction, the numerator of
which is equal to the number of Shares redeemed by the Distributor
or such transferee and the denominator of which is equal to the
number of shares of each Fund outstanding as of the date of such
redemption, as long as the administrative position of the staff of
the Securities and Exchange Commission requires such reimbursement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the ____ day of ____________, 1996.
FIRST CHOICE FUNDS TRUST
Attest:
By:
Name:
Title:
BISYS FUND SERVICES
Attest:
By:
Name: Title:
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
FIRST CHOICE FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
August 23, 1996
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Dear Sirs or Madams:
This will confirm the agreement between First Choice
Funds Trust (the "Trust") and BISYS Fund Services (the
"Distributor") as follows:
1. Definitions. (a) The Trust is an open-end management
investment company organized under the laws of the State of
Delaware. The Trust is registered under the Investment Company Act
of 1940, as amended (the "Act"). The Trust's shares of beneficial
interest may be classified into series in which each series
represents the entire undivided interests of a separate portfolio
of assets. Each series may be divided into multiple classes. For
all purposes of this Agreement and Plan, a "Fund" shall mean a
separate portfolio of assets of the Trust which has entered into a
Rule 12b-1 Distribution Plan and Agreement Supplement, and a
"Series" shall mean the series of shares of beneficial interest
representing undivided interests in a Fund. All references herein
to this Agreement and Plan shall be deemed to be references to this
Agreement and Plan as it may from time to time be supplemented by
Rule 12b- 1 Distribution Plan and Agreement Supplements.
(b) As permitted by Rule 12b-1 (the "Rule") under the
Act, the Trust has adopted a Distribution Plan and Agreement (the
"Plan") for each Fund pursuant to which the Trust may make certain
payments to the Distributor for direct and indirect expenses
incurred in connection with the distribution of shares of the
Funds. The Trust's Board of Trustees has determined that there is
a reasonable likelihood that the Plan, if implemented, will benefit
each Fund and its shareholders.
2. Adoption of Plan. The Trust hereby adopts this Plan,
and the parties hereto enter into this Plan, on the terms and
conditions specified herein.
3. Distribution-Related Fee. (a) For Service Class Shares
the trust shall pay the Distributor on the first business day of
each month in such an amount as the Distributor may have requested
for distribution activities, provided that each such payment shall
not exceed an annual rate of 0.25% of the average daily value of a
Fund's net assets (as determined on each business day at the time
set forth in the Trust's currently effective prospectus for
determining net asset value per share) during the preceding month
in which the Plan is implemented.
(b) For purposes of calculating the maximum of each
such monthly fee, the value of a Fund's net assets shall be
computed in the manner specified in the Trust's Declaration of
Trust, dated June 5, 1996, and in the Trust's Prospectus or
Prospectuses. All expenses incurred by the Trust hereunder shall be
charged against such Fund's assets. For purposes of this Plan, a
"business day" is any day the New York Stock Exchange is open for
trading.
4. Purposes of Payments. (a) For Service Class Shares the
Distributor must use all amounts received under the Plan for (i)
advertising by radio, television, newspapers, magazines, brochures,
sales literature, direct mail or any other form of advertising,
(ii) expenses of sales employees or agents of the Distributor,
including salary, commissions, travel and related expenses, (iii)
payments to broker-dealers and financial institutions in connection
with the distribution of shares, including payments in amounts
based on the average daily value of Fund Shares owned by
shareholders in respect of which the broker-dealer or institution
has a distributing relationship, (iv) costs of printing
prospectuses, statements of additional information and other
materials to be given or sent to prospective investors, (v) such
other similar services as the Trustees determine to be reasonably
calculated to result in the sale of shares of the Funds, (vi) costs
of shareholder servicing which may be incurred by broker-dealers,
banks or other financial institutions, and (vii) other direct and
indirect distribution-related activities, including the provision
of services with respect to maintaining the assets of the Funds.
(b) The services rendered by the Distributor hereunder
are in addition to the distribution and administrative services
reasonably necessary for the operation of the Trust and the Fund
pursuant to the Master Administrative Services Contract between the
Trust and BISYS Fund Services and the Master Distribution Contract
between the Trust and the Distributor, other than those services
which are to be provided by the investment adviser pursuant to the
Master Investment Advisory Agreement between the Trust and First
American Capital Management, Inc.
5. Related Agreements. All other agreements relating to
the implementation of this Plan (the "related agreements") shall be
in writing, and such related agreements shall be subject to
termination, without penalty, on not more than sixty days' written
notice to any other party to the agreement, in accordance with the
provisions of clauses (a) and (b) of paragraph 9 hereof.
6. Approvals by Trustees and Shareholders. This Plan
shall become effective upon approval by (a) a majority of the Board
of Trustees of the Trust for each Fund, including a majority of the
Trustees who are not "interested persons" (as defined in the Act)
of the Trust and who have no direct or indirect financial interest
in the operation of the Plan or in any related agreements (the
"Plan Trustees"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on the Plan, and (b) the holders
of a majority of the outstanding securities of a Fund (as defined
in the Act). Related agreements shall be subject to approval by the
Trustees in the manner provided in clause (a) of the preceding
sentence.
6. Duration and Annual Approval by Trustees. This Plan
and any related agreements shall continue in effect for a period of
more than one year from the date of their adoption or execution,
provided such continuances are approved annually by a majority of
the Board of Trustees, including a majority of the Plan Trustees,
pursuant to a vote east in person at a meeting called for the
purpose of voting on the continuance of this Plan or any related
agreement.
8. Amendments. This Plan may be amended at any time with
the approval of a majority of the Board of Trustees, provided that
(a) any material amendment of this Plan must be approved by the
Trustees in accordance with procedures set forth in paragraph 7
hereof, and (b) any amendment to increase materially the amount to
be expended by the Fund pursuant to this Plan must also be approved
by the vote of the holders of a majority of the outstanding voting
securities of the Fund (as defined in the Act), provided that no
approval shall be required in respect of a Rule 12b-1 Distribution
Plan and Agreement Supplement entered into to add a Fund to those
covered by this Plan (or to amend or terminate such supplement) by
the holders of the outstanding voting securities of any Series
other than that of such Fund.
9. Termination. This Plan may be terminated at any time,
without the payment of any penalty, by (a) the vote of a majority
of the Plan Trustees or (b) the vote of the holders of a majority
of the outstanding voting securities of a Fund (as defined in the
Act). If this Plan is terminated with respect to any Fund, it shall
nonetheless remain in effect with respect to any remaining Funds.
10. Selection and Nomination of Trustees. While this Plan
is in effect, the selection and nomination of the Trustees who are
not "interested persons" of the Trust (as defined in the Act) shall
be committed to the discretion of the Trustees then in office who
are not "interested persons" of the Trust.
11. Effect of Assignment. To the extent that this Plan
constitutes a plan of distribution adopted pursuant to the Rule, it
shall remain in effect as such so as to authorize the use of the
Fund's assets in the amounts and for the purposes set forth herein,
notwithstanding the occurrence of an assignment (as defined in the
Act). To the extent this Plan concurrently constitutes an agreement
relating to implementation of the plan of distribution, it shall
terminate automatically in the event of its assignment, and the
Trust may continue to make payments pursuant to this Plan only (a)
upon the approval of the Board of Trustees in accordance with the
procedures set forth in paragraph 7 hereof, and (b) if the
obligations of the Distributor under this Plan are to be performed
by any organization other than the Distributor, upon such
organization's adoption and assumption in writing of all provisions
of this Plan as party hereto.
12. Quarterly Reports to Trustees. The Distributor shall
prepare and furnish to the Board of Trustees, at least quarterly,
a written report setting forth all amounts expended pursuant to
this Plan and any related agreements and the purposes for which
such expenditures were made. The written report shall include a
detailed description of the continuing services provided by
broker-dealers and other financial intermediaries pursuant to
paragraph 4 of this Plan.
13. Preservation of Records. The Trust shall preserve
copies of this Plan, any related agreements and any reports made
pursuant to this Plan for a period of not less than six years from
the date of this Plan or any such related agreement or report. For
the first two years, copies of such documents shall be preserved in
an easily accessible place.
14. Limitations on Liability of Distributor. The
Distributor shall give the Trust the benefit of the Sponsor's best
judgment and efforts in rendering services under this Plan. As an
inducement to the Distributor's undertaking to render these
services, the Trust agrees that the Distributor shall not be liable
under this Plan for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in
this Plan shall be deemed to protect or purport to protect the
Distributor against any liability to the Trust or its shareholders
to which the Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of the Distributor's duties under this Plan or by
reason of the Distributor's reckless disregard of its obligations
and duties hereunder.
15. Other Distribution-Related Expenditures. Nothing in
this Plan shall operate or be construed to limit the extent to
which the Distributor or any other person other than the Trust may
incur costs and pay expenses associated with the distribution of
Fund shares.
16. Miscellaneous. The Trust's Certificate of Trust, dated
as of June 5, 1996, as amended, is on file with the Secretary of
State of the State of Delaware. The obligations of the Trust are
not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees
or agents of the Trust, but only the Trust's property shall be
bound.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly
authorized representative as of the date first above written.
Very truly yours,
FIRST CHOICE FUNDS TRUST
By:
Title:
BISYS FUND SERVICES
By:
Title:
<PAGE>
U.S. TREASURY RESERVE FUND
A Series of First Choice Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
August 23, 1996
BISYS Funds Services
3435 Stelzer Road
Columbus, Ohio 43219
Rule 12b-1 Distribution Plan and Agreement Supplement
Dear Sirs or Madams:
This will confirm the agreement between First Choice
Funds Trust (the "Trust") and BISYS Funds Services (the
"Distributor") as follows:
The U.S. Treasury Reserve Fund (the "Fund") is a
series portfolio of the Trust which has been organized as a
business trust under the laws of the State of Delaware and is an
open-end management investment company. The Trust and the
Distributor have entered into a Rule 12b-1 Distribution Plan and
Agreement, dated August 23, 1996 (as from time to time amended
and supplemented, the "Master Agreement"), pursuant to which the
Distributor has agreed to pay broker-dealers and other
financial intermediaries for rendering certain distribution
related services, as more fully set forth therein. Certain
capitalized terms used without definition in this Supplement
have the meaning specified in the Master Agreement.
The Trust agrees with the Sponsor as follows:
1. Adoption of Master Agreement. The Master Agreement
is hereby adopted for the Fund. The Fund shall be one of the
"Funds" referral to in the Master Agreement; and its shares shall
be a "Series" of shares as referred to therein.
2. Payment of Fees. Payments pursuant to the Master
Agreement and this Supplement are paid in accordance with para-
graph 3 of the Master Agreement and at an annual rate not in
excess of 0.25% of the average daily value of the net assets of
U.S. Treasury Reserve Fund.
If the foregoing correctly sets forth the agreement
between the Trust and the Distributor, please so indicate by
signing and returning to the Trust the enclosed copy hereof.
Very truly yours,
U.S. TREASURY RESERVE FUND,
a Series of First Choice Funds
Trust
By:
Title:
The foregoing Plan and
Agreement is hereby agreed
to as of the date hereof:
BISYS FUND SERVICES
By:
Title:
<PAGE>
CASH RESERVE FUND
A Series of First Choice Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
August 23, 1996
BISYS Funds Services
3435 Stelzer Road
Columbus, Ohio 43219
Rule 12b-1 Distribution Plan and Agreement Supplement
Dear Sirs or Madams:
This will confirm the agreement between First Choice Funds
Trust (the "Trust") and BISYS Funds Services (the "Distributor")
as follows:
The Cash Reserve Fund (the "Fund") is a series portfolio
of the Trust which has been organized as a business trust under
the laws of the State of Delaware and is an open-end management
investment company. The Trust and the Distributor have entered
into a Rule 12b-1 Distribution Plan and Agreement, dated August
23, 1996 (as from time to time amended and supplemented, the
"Master Agreement"), pursuant to which the Distributor has agreed
to pay broker-dealers and other financial intermediaries
for rendering certain distribution related services, as more
fully set forth therein. Certain capitalized terms used without
definition in this Supplement have the meaning specified in the
Master Agreement.
The Trust agrees with the Sponsor as follows:
1. Adoption of Master Agreement. The Master Agreement
is hereby adopted for the Fund. The Fund shall be one of the
"Funds" referral to in the Master Agreement; and its shares shall
be a "Series" of shares as referred to therein.
2. Payment of Fees. Payments pursuant to the Master
Agreement and this Supplement are paid in accordance with
paragraph 3 of the Master Agreement and at an annual rate not in
excess of 0.25% of the average daily value of the net assets of
Cash Reserve Fund.
If the foregoing correctly sets forth the agreement
between the Trust and the Distributor, please so indicate by
signing and returning to the Trust the enclosed copy hereof.
Very truly yours,
CASH RESERVE FUND,
a Series of First Choice Funds Trust
By:
Title:
The foregoing Plan and
Agreement is hereby agreed
to as of the date hereof:
BISYS FUND SERVICES
By:
Title:
<PAGE>
FIRST CHOICE FUNDS TRUST
Rule 18f-3 Plan
Rule 18f-3
Pursuant to Rule 18f-3 ("Rule 18f-3") of the Investment
Company Act of 1940, as amended (the "Act"), an open-end
management investment company whose shares are registered on Form
N-1A may issue more than one class of voting stock (hereinafter
referred to as "shares"), provided that these multiple classes
differ either in the manner of distribution, or in services they
provide to shareholders, or both. The First Choice Funds Trust
(the "Trust"), a registered open-end investment company whose
shares are registered on Form N-1A, consisting of the U.S.
Treasury Reserve Fund and the Cash Reserve Fund, and any future
fund or series created by the Trust (collectively, the "Funds"),
may offer to shareholders multiple classes of shares in the Funds
in accordance with a Rule 18f-3 Plan as described herein.
Authorized Classes
Each Fund may issue one or more classes of shares, in the
same or separate prospectuses which may include the Service Class
and the Institutional Class (collectively, the "Classes" and
individually, each a "Class"). The Service Class shares are
available (as defined in the respective Fund prospectus) to
investors who desire enhanced shareholder services and are
subject to a minimum initial investment which may vary from Fund
to Fund. There is no minimum initial investment for certain
accounts and/or classes of individuals as specified in the Fund's
. Service Class shares may be offered and sold with a sales
load, the amount of which may vary from Fund to Fund, as may be
approved by the Board of Trustees of the Trust from time to time.
The sales load for the Service Class Shares may vary or be
eliminated for certain classes of offerees as described in the
Fund's prospectus. Service Class shares may also be offered with
fees for distribution, servicing and marketing of such shares
("12b-1 Fees"), as well as fees for shareholder servicing
("Service Organization Fees" and "Shareholder Servicing Fees") of
such shares pursuant to a Servicing Agreement and Shareholder
Servicing Agreement, respectively.
Institutional Class shares are available to investors who do
not desire enhanced shareholder servicing. Institutional Shares
are offered and sold without a sales load, and do not impose 12b-1 Fees,
Service Organization Fees or Shareholder Servicing Fees.
The Classes of shares issued by any Fund will be identical
in all respects except for Class designation, allocation of
certain expenses directly related to the distribution or service
arrangement, or both, for a Class, and voting rights--each Class
votes separately with respect to issues affecting only that
Class. Shares of all Classes will represent interests in the
same investment fund; therefore each Class is subject to the same
investment objectives, policies and limitations.
Class Expenses
Each Class of shares shall bear expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, that are directly attributable
to the kind or degree of services rendered to that Class ("Class
Expenses"). Class Expenses, including the management fee or the
fee of other service providers, may be waived or reimbursed by
the Funds' investment adviser, underwriter or any other provider
of services to the Funds with respect to each Class of a Fund on
a Class by Class basis.
Exchanges and Conversion Privileges
For a nominal charge, shareholders who have held all or part
of their shares in a Fund for at least seven days may exchange
shares of one Fund for shares of any of the other portfolios of
the Trust which are available for sale in their state. A
shareholder who has paid a sales load in connection with the
purchase of shares of any of the Funds will be subject only to
that portion of the sales load of the Fund into which the
shareholder is exchanging which exceeds the sales load originally
paid by the shareholder.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, being a
Trustee of First Choice Funds Trust, a Delaware Business Trust (the
"Trust"), does hereby make, constitute and appoint John J. Pileggi
and Joan V. Fiore, and each of them, attorneys-in-fact and agents
of the undersigned with full power and authority of substitution
and resubstitution, in any and all capacities, to execute for and
on behalf of the undersigned any all amendments to the Registration
Statement on Form N-1A relating to the shares of the Trust and any
other documents and instruments incidental thereto, and to deliver
and file the same, with all exhibits thereto, and all documents and
instruments in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing that said attorneys-in-fact
and agents, and each of them, deem advisable or necessary to enable
the Trust to effectuate the intents and purposes hereof, and the
undersigned hereby fully ratifies and confirms all that said
attorneys-in-fact and agents, or any of the, or their or his or her
substitute or substitutes, shall do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has subscribed his name,
this 3rd day of September, 1996.
_______________________________
Dennis W. Draper
_______________________________
Richard A. Wedemeyer
_______________________________
Joseph N. Hankin<PAGE>
