As filed with the Securities and Exchange Commission on December 15, 1997
Securities Act File No. 333-07085
Investment Company Act File No. 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.
Post-Effective Amendment No. 2 X
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 3 X
First Choice Funds Trust
(Exact Name of Registrant as Specified in Charter)
4400 Computer Drive
Westborough, Massachusetts 01581
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 573-1224
Name and Address of Agent for Service: Copies to:
Coleen Downs Dinneen, Esq. Steven R. Howard, Esq.
First Data Investor Services Group, Inc. Baker & McKenzie
One Exchange Place 805 Third Avenue
Boston, Massachusetts 02109 New York, NY 10022
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the Registration Statement.
It is proposed that this filing will become effective:
X immediately upon filing pursuant to paragraph (b), or on pursuant
to paragraph (b) 60 days after filing pursuant to paragraph
(a)(1), or on pursuant to paragraph (a)(1) 75 days after filing
pursuant to paragraph (a)(2) on __________ pursuant to paragraph
(a)(2) of Rule 485
FIRST CHOICE FUNDS TRUST
FORM N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
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Part A.
Item No. Prospectus Caption
Item 1. Cover Page............................................ Cover Page
Item 2. Synopsis.............................................. Fund Expenses;
Fee Table
Item 3. Condensed Financial Information....................... Financial Highlights
Item 4. General Description of Registrant..................... Highlights; Investment Policies and Practices of the
Funds; Investment Restrictions; Risks of Investing in
the Funds
Item 5. Management of the Fund................................ Management of the Funds; Exchange of Fund Shares;
Redemption of Fund Shares
Item 5A. Management's Discussion of
Fund Performance...................................... Not Applicable
Item 6. Capital Stock and Other Securities.................... Dividends, Distributions and Federal Income Tax; Other
Information
Item 7. Purchase of Securities Being Offered.................. Fund Share Valuation; Pricing and Purchase of Fund
Shares
Item 8. Redemption or Repurchase.............................. Redemption of Fund Shares
Item 9. Pending Legal Proceedings............................. Not Applicable
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N-1A Statement of Additional
Item No. Information Caption
Item 10. Cover Page......................................... Cover Page
Item 11. Table of Contents.................................. Table of Contents
Item 12. General Information and History.................... Not Applicable
Item 13. Investment Objectives and Policies................. Investment Policies; Investment Restrictions
Item 14. Management of the Fund............................. Management
Item 15. Control Persons and Principal
Holders of Securities................................. Management; Other Information
Item 16. Investment Advisory and
Other Services........................................ Management; Other Information
Item 17. Brokerage Allocation and
Other Practices....................................... Portfolio Transactions
Item 18. Capital Stock and Other Securities................. Other Information; Capitalization; Voting Rights
Item 19. Purchase, Redemption and
Pricing of Securities Being Offered................... Determination of Net Asset Value
Item 20. Tax Status......................................... Taxation
Item 21. Underwriters....................................... Management
Item 22. Calculation of Performance Data.................... Yield and Performance Information
Item 23. Financial Statements............................... Financial Statements
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Part C
Information required to be included in Part C is set forth under the
appropriate Item, so number, in Part C of this Registration Statement.
<PAGE>
FIRST CHOICE FUNDS TRUST
c/o First Data Investor Services Group, Inc.
4400 Computer Drive
P.O. Box 5176
Westborough, MA 01581-5176
General and Account Information:
1-888-FIRST16
PROSPECTUS
FIRST AMERICAN CAPITAL MANAGEMENT, INC.
Investment Adviser
("First American" or "Adviser")
FIRST DATA INVESTOR SERVICES GROUP, INC.
Administrator and Transfer Agent
FIRST DATA DISTRIBUTORS, INC.
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:
o 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.
o 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 Funds' 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 portfolios of First Choice Funds
Trust (the "Trust"), a Delaware business trust and open-end investment
management 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 December 15, 1997 (the
"SAI"), containing additional and more detailed information about the Funds has
been filed with the Securities and Exchange Commission ("SEC") and is available,
along with other materials, on the SEC Internet web site (http://www.sec.gov).
The Statement of Additional Information is incorporated by reference into this
Prospectus. It is available without charge and can be obtained by writing or
calling the Funds at the address or telephone 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 December 15, 1997.
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TABLE OF CONTENTS
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Page
FUND EXPENSES.................................................................................... 4
FEE TABLE........................................................................................ 4
FINANCIAL HIGHLIGHTS............................................................................. 5
HIGHLIGHTS....................................................................................... 6
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS................................................... 8
INVESTMENT RESTRICTIONS.......................................................................... 12
RISKS OF INVESTING IN THE FUNDS.................................................................. 13
MANAGEMENT OF THE FUNDS.......................................................................... 13
FUND SHARE VALUATION............................................................................. 16
PRICING AND PURCHASE OF FUND SHARES.............................................................. 16
MINIMUM PURCHASE REQUIREMENTS.................................................................... 18
INDIVIDUAL RETIREMENT ACCOUNTS................................................................... 18
EXCHANGE OF FUND SHARES.......................................................................... 18
REDEMPTION OF FUND SHARES........................................................................ 19
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX.................................................. 20
OTHER INFORMATION................................................................................ 22
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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 provided is based upon expenses for the Funds for the fiscal
year ended September 30, 1997, adjusted to reflect anticipated expense levels,
including fees payable under the Trust's new administration and transfer agency
agreements and currently effective expense waivers.
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FEE TABLE
U.S. Treasury Cash
Reserve Fund Reserve Fund
Institutional Service Institutional Service
Class Class Class Class
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None None None None
(as a percentage of offering price)..............................
Maximum Sales Load Imposed on Reinvested Dividends None None None None
(as a percentage of offering price)..............................
Deferred Sales Load (as a percentage of redemption fee).......... None None None None
Redemption Fees1................................................. None None None None
Exchange Fees.................................................... None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (after waiver) 2................................. .05% .05% .05% .05%
12b-1 Fees (after waiver)3....................................... None .00% None .00%
Other Expenses
Shareholder Servicing Expenses (after waiver)4 ............... None .00% None .00%
Other Operating Expenses (after waiver and/or reimbursement)5. .40% .40% .40% .40%
---- ---- ---- ----
Total Fund Operating Expenses (after waiver and/or reimbursement)5 .45% .45% .45% .45%
==== ==== ==== ====
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1 Shareholders may be charged a wire redemption fee by their bank for receiving a wire payment on their behalf.
2 Absent waivers and/or reimbursements, which may have been discontinued at any time, Management Fees would have been .30%
for the U.S. Treasury Reserve Fund and the Cash Reserve Fund
3 For Service Class shareholders, absent the waiver, 12b-1 Fees will not exceed
0.25%.
4 Absent waivers and/or reimbursements, which may be discontinued at any
time, Shareholder Servicing Expenses would have been .25% for the
Service Class of the U.S. Treasury Reserve Fund and the Cash Reserve
Fund.
5 Absent waivers and/or reimbursements, which may be discontinued at any
time, Other Operating Expenses and Total Fund Operating Expenses would
be 0.44% and .74% for the Institutional Class and 0.44% and 1.24% for
the Service Class of the U.S. Treasury Reserve Fund, respectively; and
0.58% and 0.88% for the Institutional Class and 0.58% and 1.38% for the
Service Class of the Cash Reserve Fund, respectively.
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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:
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U.S. Treasury Cash
Reserve Fund Reserve Fund
Institutional Service Institutional Service Class
Class Class Class
1 year.......................................................... $5 $5 $5 $5
3 years........................................................ $13 $13 $13 $13
5 years........................................................ $22 $22 $22 $22
10 years....................................................... $44 $44 $44 $44
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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.
-----------
* This example should not be considered a representation of past or
future expenses; actual expenses 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.
FINANCIAL HIGHLIGHTS
The following financial information has been derived from the financial
statements of the Trust. The financial statements for the most recent fiscal
period September 30, 1997 are incorporated by reference into the SAI and have
been audited by Price Waterhouse LLP whose report thereon is also incorporated
by reference into the SAI. You may obtain the Annual Report without charge by
calling the Trust at 1-888-FIRST16.
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U.S. Treasury Reserve Fund Cash Reserve Fund
Period Ended Period Ended
September 30, 1997(a) September 30, 1997(b)
-------------------------- ---------------------
Service Institutional Service Institutional
Class Class Class Class
Net Asset Value, beginning of period........... $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- ------------- -------- -------------
Income from Investment Operations:
Net investment income...................... 0.049 0.050 0.037 0.038
Net realized and unrealized
gain (loss) on investments............... --(c) --(c) --(c) --(c)
-------- ------------ -------- ------------
Total from Investment Operations....... 0.049 0.050 0.037 0.038
Less Distributions:
Dividends from net investment income....... (0.049) (0.050) (0.037) (0.038)
--------- ------------- -------- -------------
Net Asset Value, end of period................. $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ============= ======== =============
Total Return:.................................. 5.04% 5.08% 3.78% 3.82%
Ratios/Supplemental Data:
Net Assets, end of period (000s)............... $ 73,581 $ 1,995 $ 57,947 $ 61
Ratios to average net assets:
Net investment income...................... 4.93% 4.93% 5.23%(d) 5.23%(d)
Operating expenses*........................ 0.35% 0.35% 0.35%(d) 0.35%(d)
Operating expenses excluding
reimbursement, waiver and
custody earnings credits................. 1.36% 0.86% 1.43%(d) 0.93%(d)
Net investment income excluding
reimbursements, waiver and
custody earnings credits................. 3.92% 4.42% 4.15%(d) 4.65%(d)
.........
- ------------------
* During the period certain expenses were reduced for credits earned at
Custodian bank. If such credits had not occurred, the ratios would have
been as indicated. Impact of Custody earnings credits was less than
0.01% and $0.001 per share at September 30, 1997.
(a) The Fund commenced operations on October 1, 1996.
(b) The Fund commenced operations on January 13, 1997.
(c) Amounts were less than $0.001 per share.
(d) Annualized
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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.
<PAGE>
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 method 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 "Management
of the Funds" in this Prospectus.
First Data Investor Services Group, Inc. acts as administrator and
transfer agent to the Funds and is sometimes referred to herein as
"Administrator" or "Transfer Agent." First Data Distributors, Inc. acts as
distributor to the Funds and is sometimes referred to herein as "Distributor."
For its services, the Administrator 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:
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o Minimum Initial Investment - Service Class......................................................$1,000
o Minimum Initial Investment
for IRAs.........................................................................................$ 250
o 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.
o Minimum initial exchange...........................................................................$500
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(no minimum for subsequent exchanges)
Shareholders may redeem shares by telephone, mail or by writing a
check. Shares may not be redeemed by facsimile.
o Redemption requests made by telephone may designate the proceeds to be
wired to a designated bank account or mailed to the address of record.
o 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.
o Minimum check amount when using the check writing service is $500.
o 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 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.
o Distributions from the Funds are paid monthly.
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS
Each Fund is a separate investment 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.
o 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.
o 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 two years 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 Fund.
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 interest
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 13 months (397 days).
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% 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." The following investment restrictions 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."
(1) 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);
(2) 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;
(3) 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; and
(4) 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.
As a matter of nonfundamental policy of the Funds, which can be changed
by approval of a majority of the Board of Trustees, 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).
Fund diversification tests are measured at the time of initial
purchases, and are calculated as specified in Rule 2a-7 of the Investment
Company Act of 1940, as amended (the "1940 Act") which may allow the Fund to
exceed limits specified in this Prospectus for certain securities subject to
guarantees or demand features. The Fund will be deemed to satisfy the maturity
requirements described in this Prospectus to the extent the Funds satisfy Rule
2a-7 maturity requirements.
It is the intention of the Funds, unless otherwise indicated, that with
respect to the Funds' policies that are the result of the application of law
(for example, Rule 2a-7 of the 1940 Act) the Funds will take advantage of the
flexibility provided by rules or interpretations of the SEC currently in
existence or promulgated in the future or changes to such laws.
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. 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%.
For the fiscal year ended September 30, 1997, due to waivers and
reimbursements, First American received no advisory fees from the U.S. Treasury
Reserve Fund and Cash Reserve Fund.
First American has agreed voluntarily to waive or reimburse all or a
portion of its advisory fee and/or to assume voluntarily certain expenses of the
Funds to the extent necessary to maintain the total expense ratio of each Fund
at no more than 0.45% as set forth in the table of Fund Expenses herein. The
Adviser may discontinue voluntarily waiving or reimbursing its fee and assuming
expenses of the Fund at any time.
First American is a wholly-owned subsidiary of The First American
Financial Corporation. First American was established on December 1, 1995. Prior
to becoming an Adviser, the staff at First American managed assets for Personal
Trusts, Employee Benefit Plans and Corporate Accounts through its Investment
Section of its affiliate company First American Trust Company. The individuals
currently in the Investment Section of the Trust Company comprise the portfolio
managers of First American Capital Management, Inc.
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.
Distributor
First Data Distributors, Inc. (the "Distributor"), has its principal
office at 4400 Computer Drive, Westborough, MA 01581. The Distributor will
receive orders for, sell, and distribute shares of the Fund. The Distributor
also serves as 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 its proportionate costs and expenses in connection with the
preparation, printing and distribution of the 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 entered into an Administrative Services Contract with
First Data Investor Services Group, Inc. (the "Administrator") pursuant to which
the Administrator provides certain management and administrative services
necessary for the Funds' operations, including: (i) 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, the Administrator receives from each
Fund a fee, payable monthly, at the annual rate of 0.15% of each Fund's average
daily net assets. Investor Services Group receives a separate fee for providing
fund accounting services to the Funds pursuant to the Administration Agreement.
Pursuant to a Transfer Agency Agreement between the Trust and First
Data Investor Services Group, First Data Investor Services Group serves as the
Trust's transfer agent and dividend disbursing agent.
Service Organizations
Various banks, trust companies, broker-dealers 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 Investor Services Group 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, or on another reasonable
basis.
<PAGE>
FUND SHARE VALUATION
The net asset value per share of the Funds is calculated at 12:00 noon
(Eastern time) for the U.S. Treasury Reserve Fund and 3:00 p.m. (Eastern time)
for the Cash Reserve Fund. 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, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans 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., liability insurance premiums)
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 Transfer Agent
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. The Funds do not accept third
party or foreign checks.
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 an Account Registration Form 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.
Automatic Investment Program. An eligible shareholder may also
participate in the Automatic Investment Program, an investment plan that
automatically deducts 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.
By Wire. Subject to acceptance by the Trust, shares of each Fund may be
purchased by wiring Federal Funds to the Funds.
(see instructions below).
Initial Investments by Wire
Subject to acceptance by the Trust, shares of each Fund may be
purchased by wiring Federal Funds (see "Minimum Purchase Requirements" below). A
completed Account Registration Form must be sent by overnight delivery to the
Fund at the address noted below in advance of the wire. For each Fund,
notification must be given to the Funds at 1-888-FIRST16 prior to the wire date.
(Prior notification must also be received from investors with existing
accounts.)
First Choice Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 5176
Westborough, MA 01581-5176
Federal Funds purchases will be accepted only on a day on which the
relevant Fund and the custodian bank are open for business.
Initial Investments by Mail
Subject to acceptance by the Trust, an account may also be opened by
completing and signing an Account Registration Form (accompanying the
Prospectus), and mailing it to the Fund at the address noted below, together
with a check (see "Minimum Purchase Requirements" below) payable to the:
First Choice Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 5176
Westborough, MA 01581-5176
The Fund(s) to be purchased should be designated on the Account
Registration Form. Subject to acceptance by the Funds, payment for the purchase
of shares received by mail will be credited to your account at the net asset
value per share of the Fund next determined after receipt. Such payment need not
be converted into Federal Funds (monies credited to the Funds' custodian bank by
a Federal Reserve Bank) before acceptance by the Funds. Please note that in the
case of a redemption where purchases are made by check in any Portfolio
redemption proceeds will not be made available until clearance of the purchase
check, which may take up to 15 days after purchase.
Institutional Accounts. Bank trust departments and other institutional
accounts may place orders directly with the Funds by telephone at 1-888-FIRST16.
<PAGE>
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment for the Service Class 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 1-888-FIRST16.
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 c/o First Data Investor Services Group, Inc.,
P.O. Box 5176, Westborough, MA 01581-5176, or by calling 1-888-FIRST16. 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 Funds. 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.
Exchange by Telephone. To exchange Fund shares by telephone, or if you
have any questions, simply call the Funds at 1-888-FIRST16. 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 telephone exchange privilege will be suspended for a period of ten
days following an address change made by telephone. 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.
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.
Where the shares to be redeemed have been purchased by check, the Funds
will make redemption proceeds available upon clearance of the purchase check,
which may take up to 15 days. 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
mail or 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
Funds. 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 Funds and its Transfer
Agent from fraud, signature guarantees are required when redemption proceeds are
to be sent to an address other than the registered address or if the redemption
proceeds exceed $50,000. Shareholders may contact the Funds at 1-888-FIRST16 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 Funds at 1-888-FIRST16 and requesting that the
redemption proceeds be mailed to the primary registration address or wired per
the authorized instructions. The telephone redemption privilege will be
suspended for a period of ten days following an address change made by
telephone. 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 redemption services "By Telephone" 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 has qualified for its most recent fiscal year and intends to
continue to qualify annually, and to continue 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
gain 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 gain (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) generally
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. This is true for distributions from net gains on
securities held for more than one year, but not more than 18 months and from net
gains on securities held more than 18 months. 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 particular matter
affects only one class. The Funds offer, and this 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 Funds issued and
outstanding are fully paid and nonassessable. Each Fund will be treated as a
separate entity for Federal income tax purposes. Call 1-888-FIRST16 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.
Investor Services Group acts as the Funds' transfer agent. The Trust
compensates Investor Services Group, 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 P.O. Box 5176,
Westborough, MA 01581-5176. General and Account Information: 1-888- FIRST16.
<PAGE>
Investment Adviser
First American Capital Management, Inc.
567 San Nicolas Drive
Suite 101
Newport Beach, California 92660
Administrator
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 01581-5176
Custodian
Investors Fiduciary Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105-1716
Counsel
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
FST-0002
U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
INSERT LOGO
PROSPECTUS
December 15, 1997
Investment Adviser:
First American Capital Management, Inc.
an affiliate of The First American Financial
Corporation
<PAGE>
FIRST CHOICE FUNDS TRUST
4400 COMPUTER DRIVE, WESTBOROUGH, MA 01581
GENERAL AND ACCOUNT INFORMATION: 1-888-FIRST16
FIRST AMERICAN CAPITAL MANAGEMENT, INC.
INVESTMENT ADVISER
("FIRST AMERICAN" OR "ADVISER")
FIRST DATA INVESTOR SERVICES GROUP, INC.
ADMINISTRATOR AND TRANSFER AGENT
FIRST DATA DISTRIBUTORS, INC., 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:
o U.S. Treasury Reserve Fund
o Cash Reserve Fund
Each Fund constitutes a separate investment portfolio of First Choice
Funds Trust (the "Trust"), a Delaware business trust and open-end, investment
management 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 December 15,
1997 (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.
December 15, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PAGE
INVESTMENT POLICIES.....................................................................................3
INVESTMENT RESTRICTIONS.................................................................................7
MANAGEMENT..............................................................................................9
Trustees and Officers...................................................................................9
Investment Adviser......................................................................................10
Distribution of Fund Shares.............................................................................11
Distribution Plan.......................................................................................11
Administrative Services.................................................................................12
Service Organizations...................................................................................13
DETERMINATION OF NET ASSET VALUE........................................................................14
PORTFOLIO TRANSACTIONS..................................................................................15
TAXATION................................................................................................16
OTHER INFORMATION.......................................................................................18
Capitalization..........................................................................................18
Voting Rights...........................................................................................19
Custodian, Transfer Agent and Dividend Disbursing Agent.................................................19
Experts.................................................................................................19
Yield and Performance Information.......................................................................20
Financial Statements....................................................................................21
</TABLE>
<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 (397
days). 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, except certificates
of deposit.
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
1/3% 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 established 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 nonfundamental 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. The following
Investment Restrictions 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) 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);
(2) 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;
(3) 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;
(4) 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;
(5) 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;
(6) 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;
(7) 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; or
(8) 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.
The following investment restrictions are nonfundamental policies which
may 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) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 10% of its net assets in shares of other
investment companies;
(4) 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;
(5) 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;
(6) Purchase or retain the securities of any issuer, if those
individual officers and Trustees of the Trust, the Adviser 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; or
(7) Write, purchase or sell puts, calls or combinations thereof.
MANAGEMENT
TRUSTEES AND OFFICERS
The names, ages and the principal occupations for the past five years
of the Trustees and executive officers of the Trust, are listed below. The
address of each, unless otherwise indicated, is 4400 Computer Drive,
Westborough, MA 01581. All of the Trustees are deemed to be "non-interested
persons" of the Trust for purposes of the 1940 Act.
JOHN J. PILEGGI, Age: 38, 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). His address is
237 Park Avenue, New York, NY 10017.
DENNIS W. DRAPER, Age: 48, 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: 57, 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: 61, 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.
NEIL FORREST, Age: 37, President of the Trust. Vice President and Division
Manager, Client Services, First Data Investor Services Group, Inc. since 1995.
From 1992 through March 1995 Vice President of 440 Financial Inc.
DIANA TARNOW, Age: 35, Treasurer of the Trust. Vice President, Fund
Accounting and Portfolio Valuation Group, First Data Investor Services Group,
Inc. since 1997. Prior to 1997 she was Vice President of Financial Reporting and
Tax. From 1989 to 1994, Vice President of Financial Reporting and Tax at The
Boston Company, Inc.
COLEEN DOWNS DINNEEN, ESQ., Age: 36, Secretary of the Trust. Counsel,
Mutual Fund Legal Division, First Data Investor Services Group, Inc. since 1997.
Vice President, Scudder, Stevens & Clark, Inc. (1989-1996).
The following table sets forth certain information regarding the
compensation paid to the Trustees for the fiscal year ended September 30, 1997.
No officer of the Trust receives compensation from the Funds. No Trustee
receives pension or retirement benefits from the Funds.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMPENSATION TABLE
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM THE FUND COMPLEX
FROM THE
TRUST
John J. Pileggi, Trustee $5,000 $5,000
Dennis W. Draper, Trustee $5,000 $5,000
Joseph N. Hankin, Trustee $5,000 $5,000
Richard Wedemeyer, Trustee $5,000 $5,000
</TABLE>
Trustees of the Trust receive from the Trust an annual retainer of $
1,000 and a fee of $ 1,000 for each Board of Trustees meeting attended 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.
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.
For the fiscal year ended September 30, 1997, First American received $168,045
from the U. S. Treasury Reserve Fund and $113,162 from the Cash Reserve Fund, of
those amounts $146,252 and $100,521 were waived and $72,732 and $74,316 were
reimbursed. First American has agreed voluntarily to waive or reimburse all or a
portion of its advisory fee and/or to assume voluntarily certain expenses of the
Funds to the extent necessary to maintain the total expense ratio of each Fund
at no more than as set forth in the table of Fund Expense in the Prospectus.
First American is located at 567 San Nicolas Drive, Suite 101, Newport
Beach, California 92660 and is a wholly-owned subsidiary of The First American
Financial Corporation. It was organized on December 1, 1995, 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 First Data Distributors Inc. to serve as principal
underwriter for the shares of the Funds pursuant to a Distribution Agreement.
The Distribution Agreement provides that the Distributor will use efforts it
deems appropriate to solicit orders for the sale of shares and may enter into
sales or servicing agreements with securities dealers, financial institutions
and other industry professionals 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 12b-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%. The Distributor will use all amounts received under the Plan for
payments to broker-dealers or financial institutions (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 has been
approved, and is 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, 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 most recently voted to approve
the Plan at a meeting held on August 28, 1997. The Plan was submitted to the
shareholders of the Funds' Service Class shares and approved at a special
meeting of shareholders 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.
For the fiscal year ended September 30, 1997, no 12b-1 fees were paid
to the distributor pursuant to the 12b-1 plan.
ADMINISTRATIVE SERVICES
On September 20, 1997, the Administrator replaced BISYS Fund Services
("BISYS") as administrator of the Trust. The Administrator 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. In addition, the Administrator 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 the Administrator.
For these services, the Administrator receives from each Fund a fee, payable
monthly, at the annual rate of 0.15% of each Fund's average daily net assets.
The Administrator receives a separate fee for providing fund accounting services
pursuant to the Administration Agreement.
The Administration Agreement is for a three-year term and renewal
thereof is subject to 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 Administration Agreement. The Administration
Agreement may be terminated in the event the Administrator has failed to meet
the performance standards set forth therein or pursuant to a breach of
performance under the Transfer Agency and Service Agreement.
For the period October 1, 1996 through September 22, 1997, BISYS earned
$81,351 and $54,419 for the U.S. Treasury Reserve Fund and Cash Reserve Fund of
which $70,042 and $42,564 were waived. For the period September 22, 1997 through
September 30, 1997, the Administrator earned $890 and $721 for the U.S. Treasury
Reserve Fund and Cash Reserve Fund.
SERVICE ORGANIZATIONS
The Trust also contracts with banks, trust companies, broker-dealers 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 additional 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.
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
ratings by at least two Nationally Recognized Statistical Rating Organizations
("NRSROs"), such as "A-l" 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 $1.00 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.
For the fiscal year ended September 30, 1997, the Funds did not pay any
brokerage commissions.
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
Each Fund has qualified for its most recent fiscal year and intends to
continue to qualify annually, and to continue to elect 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,
an electing Fund must: (a) 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; (b) diversify its holdings so that, at the
end of each quarter of the taxable year, (i) 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, except that such other securities of any one
issuer must be 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 (ii) 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), or of two or more issuers which the taxpayer controls and
which are determined to be engaged in the same or similar trades or businesses
or related trades or businesses. In August of this year, President Clinton
signed the Taxpayer Relief Act of 1997 which eliminated the so-called
"short/short test" for tax years beginning after the date of its enactment.
Therefore, up until a Fund's 1998 tax year, such Fund still must derive less
than 30% of its gross income from gains from the sale or other disposition of
securities or options, futures or forward contracts (other than options, futures
or forward contracts on foreign currencies) and foreign currencies (including
options, futures or forwards thereon) not directly related to the Fund's
business of investing in stock or securities, which are held for less than three
months.
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 provided that they distribute to their shareholders at least 90% of
their net investment income and tax-exempt income earned in each year. 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. This is
true for distributions from net gains on securities held for more than one year
but not more than 18 months and from net gains on securities held more than 18
months. 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 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.
As of November 30, 1997 the following shareholders owned 5% or more of
the Funds:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.S. Treasury Reserve Fund-Service Class First American Trust 86.70%
421 North Main Street
Santa Ana, CA 92701
TrustMark National Bank 6.22%
248 E. Capitol Street Rm 1030
Jackson, MS 39205
U.S. Treasury Reserve Fund-Institutional Class Land Title Insurance Company 82.22%
7600 Forsyth Blvd.
Clayton, MO 63105
The Trust Company of 17.73%
St. Louis County
7600 Forsyth Blvd.
Clayton, MO 63105
Cash Reserve Fund-Service Class First American Trust 99.91%
421 North Main Street
Santa Ana, CA 92701
Cash Reserve Fund-Institutional Class Maxine Haun 98.31%
1630 S. Pomona Avenue
Fullerton, CA 92832
</TABLE>
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.
First Data Investor Services Group, Inc. acts as transfer agent for the Funds.
EXPERTS
Price Waterhouse LLP has been selected as the independent accountants
for the Trust. Price Waterhouse LLP provides audit and tax services and
assistance in connection with certain SEC filings. Price Waterhouse LLP is
located at 160 Federal Street, Boston, MA 02110.
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.
For the period ended September 30, 1997, the seven-day yield for U.S.
Treasury Reserve Fund Institutional Class and Service Class were both 4.94%,
respectively. For the same seven-day period, the effective yield for both were
5.06%, respectively.
For the period ended September 30, 1997, the seven-day yield for the
Cash Reserve Fund Institutional Class and Service Class were both 5.31%,
respectively. For the same seven-day period, the effective yield for both was
5.45%, respectively.
In connection with communicating its yields to current or prospective
shareholders, 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.
FINANCIAL STATEMENTS
The financial statements for the Trust including the notes thereto,
dated September 30, 1997 have been audited by Price Waterhouse LLP and are
incorporated by reference in their entirety into this Statement of Additional
Information from the Annual Report of the Trust dated September 30, 1997.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
The Registrant's Annual Report for the fiscal year
ended September 30, 1997 and the Report of
Independent Auditors dated November 7, 1997, are
incorporated by reference to the Definitive 30b-2
filed (EDGAR Form N-30D) on December 9, 1997 as
Accession #0000927405-97-000478.
(b) Exhibits (the number of each exhibit relates to the exhibit
designation in Form N-1A):
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit
Number Description
(1) Trust Instrument 1
(2) ByLaws of Registrant 1
(3) None
(4) None
(5)(a) Form of Master Investment Advisory Agreement and Supplements between Registrant and
Adviser 2
(5)(b) Form of Master Administration Agreement and Supplements between Registrant and
Administrator 2
(5)(c) Administration Agreement between Registrant and First Data Investor Services Group, Inc.
is filed herein
(6)(a) Form of Master Distribution Contract and Supplements between Registrant and Distributor 2
(6)(b) Distribution Agreement between Registrant and First Data Distributors, Inc. is filed
herein
(7) None
(8) Form of Custodian Contract between Registrant and Custodian 2
(9)(a) Form of Transfer Agency and Service Agreement between Registrant and Transfer Agent 2
(9)(b) Transfer Agency and Service Agreement between Registrant and First Data Investor Services
Group, Inc. is filed herein
(10) Consent of Baker & McKenzie, counsel to Registrant 3
(11)(a) Consent of Independent Accountants is filed herein
(11)(b) Power of Attorney is filed herein
(12) None
(13) Subscription Agreement 2
(14) None
(15)(a) Form of Rule 12b-1 Distribution Plan and Agreement between Registrant and Distributor 2
(15)(b) Rule 12b-1 Distribution Plan and Agreement between Registrant and First Data
Distributors, Inc. if filed herein
(16) Schedule of Computation of Performance Calculation 3
(17) Financial Data Schedules are filed herein
(18) Rule 18f-3 Plan 2
<FN>
1. Previously filed with the initial registration statement on June 26,
1996 and incorporated by reference herein.
2. Previously filed with Pre-Effective Amendment No. l on September 12, 1996 and incorporated by reference herein.
3. Previously filed with Post-Effective Amendment No. 1 on April 30, 1997 and incorporated
by reference herein.
</FN>
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities at November 30, 1997
U.S. Treasury Reserve Fund 9
Cash Reserve Fund 4
Item 27. Indemnification
As permitted by Section 17(h) and (i) of the Investment Company Act of
1940, as amended (the " 1940 Act) and pursuant to Article X of the Registrant's
Trust Instrument (Exhibit I 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 3 of the Distribution
Agreement between Registrant and the Distributor (Exhibit 6(b) 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 3 of the Distribution Agreement
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 Agreement 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.
<PAGE>
Item 28. Business and Other Connections of the Investment 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:
<TABLE>
<CAPTION>
<S> <C> <C>
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 CastellaniChief 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.
<PAGE>
Randall L. Zaharia Senior Portfolio Manager ofthe
Adviser since December 1995; Vice President
of First American Trust Company, 2161 San
Josquin 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.
</TABLE>
Item 29. Principal Underwriters
(a) In addition to First Choice Funds Trust, First Data
Distributors, Inc. (the "Distributor") currently acts as distributor for BT
Insurance Funds Trust, The Galaxy Fund, The Galaxy VIP Fund, Galaxy Fund II,
Panorama Trust, CT&T Funds and the Wilshire Target Funds, Inc. The Distributor
is registered with the Securities and Exchange Commission as a broker-dealer and
is a member of the National Association of Securities Dealers. The Distributor
is a wholly-owned subsidiary of First Data Corporation and is located at 4400
Computer Drive, Westborough, MA 01581.
(b) The information required by this Item 29 (b) with respect to
each director, officer, or partner of First Data Distributors, Inc. is
incorporated by reference to Schedule A of Form BD filed by First Data
Distributors, Inc. with the Securities and Exchange Commission pursuant to the
Securities Act of 1934 (File No. 8-45467).
(c) Not Applicable.
Item 30. Location of Accounts and Records
All accounts books and other documents required to be maintained
by Registrant by Section 31(a) of the 1940 Act and the Rules thereunder will be
maintained at the offices of:
(1) First American Capital Management, Inc.
567 San Nicolas Drive
Suite 101
Newport Beach, California 92660
(2) First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581
(3) Investors Fiduciary Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105-1716
(4) First Data Investor Services Group, Inc.
One Exchange Place
Boston, MA 02109
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant will 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 hereby undertakes to call a meeting of its
shareholders for the purpose of voting upon the question of removal of a trustee
or trustees of Registrant when requested in writing to do so by the holders of
at least 10% of Registrant's outstanding shares. Registrant undertakes further,
in connection with the meeting, to comply with the provisions of Section 16(c)
of the 1940 Act, as amended, relating to communications with the shareholders of
certain common-law trusts.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that this Post-Effective Amendment No. 2 to the Registration Statement meets the
requirements for effectiveness pursuant to Rule 485(b) of the Securities Act of
1933, as amended, and the Registrant has duly caused this Post-Effective
Amendment No. 2 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and the Commonwealth of Massachusetts on this
15th day of December, 1997.
FIRST CHOICE FUNDS TRUST
By:________*___________
Neil Forrest, President
* By:
/s/ Coleen Downs Dinneen
Coleen Downs Dinneen
as Attorney-in-Fact
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 Dececmber 15, 1997
- -----------------
Neil Forrest
* Treasurer December 15, 1997
- -----------------
Diana Tarnow
* Trustee December 15, 1997
- -----------------
John J. Pileggi
* Trustee December 15, 1997
- -----------------
Dennis W. Draper
* Trustee December 15, 1997
- -----------------
Joseph N. Hankin
* Trustee December 15, 1997
Richard Wedemeyer
* By:
/s/ Coleen Downs Dinneen
Coleen Downs Dinneen
as Attorney-in-Fact
The Powers of Attorney are filed herein.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
(5)(c) Administration Agreement between Registrant
and First Data Investor Services Group, Inc.
(6)(b) Distribution Agreement between Registrant
and First Data Distributors, Inc.
(9)(b) Transfer Agency and Service Agreement
between Registrant and First Data Investor
Services Group, Inc.
(11)(a) Consent of Independent Accountants
(15)(b) Rule 12b-1 Distribution Plan and Agreement
between Registrant and First Data
Distributors, Inc.
(11)(b) Power of Attorney
(17) Financial Data Schedules
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of September 20,
1997 (the "Agreement"), by and between FIRST DATA INVESTOR
SERVICES GROUP, INC., a Massachusetts corporation ("FDISG"), and
FIRST CHOICE FUNDS TRUST, a Delaware business trust (the
"Company").
WHEREAS, the Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Company desires to retain FDISG to render
certain administrative services with respect to each investment
portfolio listed in Schedule A hereto, as the same may be amended
from time to time by the parties hereto (collectively, the
"Funds"), and FDISG is willing to render such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. Appointment. The Company hereby appoints FDISG to act
as Administrator of the Company on the terms set forth in this
Agreement. FDISG accepts such appointment and agrees to render
the services herein set forth for the compensation herein
provided. In the event that the Company decides to retain FDISG
to act as Administrator hereunder with respect to one or more
portfolios other than the Funds, the Company shall notify FDISG in
writing. If FDISG is willing to render such services, it shall
notify the Company in writing whereupon such portfolio shall
become a Fund hereunder.
2. Delivery of Documents. The Company has furnished
FDISG with copies properly certified or authenticated of each of
the following:
(a) Resolutions of the Company's Board of Trustees
authorizing the appointment of FDISG to provide certain
administrative services required by the Company for each Fund and
approving this Agreement;
(b) The Company's Declaration of Trust (the
"Declaration of Trust") filed with the State of Delaware and all
amendments thereto;
(c) The Company's By-Laws and all amendments thereto
(the "By-Laws");
(d) The Investment Advisory Agreement between First
American Capital Management, Inc. (the "Adviser") and the Company
dated as of August 23, 1997, and all amendments thereto (the
"Advisory Agreement");
(e) The Custody Agreement between IFTC (the "Custodian")
and the Company dated as of October 1, 1996, and all amendments
thereto (the "Custody Agreement");
(f) The Transfer Agency and Registrar Agreement
between First Data Investor Services Group, Inc. (the "Transfer
Agent") and the Company dated as of September 20, 1997, and all
amendments thereto;
(g) The Distribution Agreement between First Data
Distributors, Inc. (the "Distributor") and the Company dated as of
September 20, 1997, and all amendments thereto (the "Distribution
Agreement");
(h) The Company's Registration Statement on Form N-
1A (the "Registration Statement") under the Securities Act of 1933
and under the 1940 Act (File Nos. 33-07085 and 811-07681), as
declared effective by the Securities and Exchange Commission
("SEC") on October 1, 1996, relating to shares of the Company's
Shares of beneficial interest, $0.001 par value per share, and all
amendments thereto; and
(i) Each Fund's most recent prospectus and Statement
of Additional Information and all amendments and supplements
thereto (collectively, the "Prospectuses").
The Company will furnish FDISG from time to time with
copies, properly certified or authenticated, of all amendments of
or supplements to the foregoing. Furthermore, the Company will
provide FDISG with any other documents that FDISG may reasonably
request and will notify FDISG as soon as possible of any matter
materially affecting the performance of FDISG of its services
under this Agreement.
3. Duties as Administrator. Subject to the supervision
and direction of the Board of Trustees of the Company, FDISG, as
Administrator, will assist in supervising various aspects of the
Company's administrative operations and undertakes to perform the
following specific services:
(a) Maintaining office facilities (which may be in
the offices of FDISG or a corporate affiliate) and furnishing
corporate officers for the Company;
(b) Performing the functions ordinarily performed by
a mutual fund group's internal legal department as described in
Schedule B to this Agreement, furnishing data processing services,
clerical services, and executive and administrative services and
standard stationery and office supplies in connection with the
foregoing;
(c) Accounting and bookkeeping services (including
the maintenance of such accounts, books and records of the Company
as may be required by Section 31(a) of the 1940 Act and the rules
thereunder);
(d) Internal auditing;
(e) Performing all functions ordinarily performed by
the office of a corporate treasurer, and furnishing the services
and facilities ordinarily incident thereto, including calculating
the net asset value of the shares in conformity with the fund(s)
prospectus;
(f) Preparing reports to the Company's shareholders
of record and the SEC including, but not necessarily limited to,
Annual Reports and Semi-Annual Reports on Form N-SAR;
(g) Preparing and filing various reports or other
documents required by federal, state and other applicable laws and
regulations, other than those filed or required to be filed by the
Adviser or Transfer Agent;
(h) Preparing and filing the Company's tax returns;
(i) Assisting the Adviser, at the Adviser's request,
in monitoring and developing compliance procedures for the Company
which will include, among other matters, procedures to assist the
Adviser in monitoring compliance with each Fund's investment
objective, policies, restrictions, tax matters and applicable laws
and regulations;
(j) Monitoring each Fund's compliance with certain
investment objectives, policies, restrictions, tax matters and
applicable rules and regulations as described in the Compliance
Matrix provided by FDISG to the Company;
(k) Performing all functions ordinarily performed by
the office of a corporate secretary, and furnishing the services
and facilities incident thereto, including all functions
pertaining to matters organic to the organization, existence and
maintenance of the corporate franchise of the Company, including
preparation for, conduct of, and recording trustees' meetings and
shareholder meetings;
(l) Performing "Blue Sky" compliance functions,
including maintaining notice filings, registrations or "Blue Chip"
exemptions (if available) in all U.S. jurisdictions requested by
the Company, monitoring sales of shares in all such jurisdictions
and filing such additional notice or applying for such additional
or amended registrations as may be reasonably anticipated to be
necessary to permit continuous sales of the shares of the Funds in
all such jurisdictions, filing sales literature and advertising
materials to the extent required, with such Blue Sky authorities,
and making and filing all other applications, reports, notices,
documents and exhibits in connection with the foregoing;
(m) Furnishing all other services identified on
Schedule B annexed hereto and incorporated herein which are not
otherwise specifically set forth above; and
(n) FDISG agrees to provide the services set forth
herein in accordance with performance standards annexed hereto as
Exhibit 1 of Schedule B and incorporated herein (the "Performance
Standards"). Such Performance Standards may be amended from time
to time upon written agreement by the parties.
In performing its duties under this Agreement, FDISG: (a)
will act in accordance with the Declaration of Trust, By-Laws,
Prospectuses and with the instructions and directions of the
Company and will conform to and comply with the requirements of
the 1940 Act and all other applicable federal or state laws and
regulations; and (b) will consult with legal counsel to the
Company, as necessary and appropriate. Furthermore, FDISG shall
not have or be required to have any authority to supervise the
investment or reinvestment of the securities or other properties
which comprise the assets of the Company or any of its Funds and
shall not provide any investment advisory services to the Company
or any of its Funds.
4. Compensation and Allocation of Expenses. FDISG shall
bear all expenses in connection with the performance of its
services under this Agreement, except as indicated below.
(a) FDISG will from time to time employ or associate
with itself such person or persons as FDISG may believe to be
particularly suited to assist it in performing services under this
Agreement. Such person or persons may be officers and employees
who are employed by both FDISG and the Company. The compensation
of such person or persons shall be paid by FDISG and no obligation
shall be incurred on behalf of the Company in such respect.
(b) FDISG shall not be required to pay any of the
following expenses incurred by the Company: membership dues in
the Investment Company Institute or any similar organization;
investment advisory expenses; costs of printing and mailing stock
certificates, prospectuses, reports and notices; interest on
borrowed money; brokerage commissions; stock exchange listing
fees; taxes and fees payable to Federal, state and other
governmental agencies; fees of Trustees of the Company who are not
affiliated with FDISG; outside auditing expenses; outside legal
expenses; or other expenses not specified in this Section 4 which
may be properly payable by the Company.
(c) The Company on behalf of each of the Funds will
compensate FDISG for the performance of its obligations hereunder
in accordance with the fees set forth in the written Fee Schedule
annexed hereto as Schedule C and incorporated herein. Schedule C
may be amended to add fee schedules for any additional Funds for
which FDISG has been retained as Administrator.
(d) The Company will compensate FDISG for its
services rendered pursuant to this Agreement in accordance with
the fees set forth above. Such fees do not include out-of-pocket
disbursements of FDISG for which FDISG shall be entitled to bill
separately. Out-of-pocket disbursements shall include the items
specified in Schedule D annexed hereto and incorporated herein.
5. Limitation of Liability.
(a) FDISG shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in
connection with the performance of its obligations and duties
under this Agreement, except a loss resulting from FDISG's willful
misfeasance, bad faith or negligence in the performance of such
obligations and duties, or by reason of its reckless disregard
thereof.
(b) Each party shall have the duty to mitigate damages for
which the other party may become responsible.
(c) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, IN NO EVENT SHALL EITHER PARTY TO THIS AGREEMENT, ITS
AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR SUBCONTRACTORS BE LIABLE FOR CONSEQUENTIAL DAMAGES.
6. Indemnification.
(a) The Company shall indemnify and hold FDISG
harmless from and against any and all claims, costs, expenses
(including reasonable attorneys' fees), losses, damages, charges,
payments and liabilities of any sort or kind which may be asserted
against FDISG or for which FDISG may be held to be liable in
connection with this Agreement or FDISG's performance hereunder (a
"Claim"), unless such Claim resulted from a negligent act or
omission to act or bad faith by FDISG in the performance of its
duties hereunder.
(b) FDISG shall indemnify and hold the Company
harmless from and against any and all claims, costs, expenses
(including reasonable attorneys' fees), losses, damages, charges,
payments and liabilities of any sort or kind which may be asserted
against the Company or for which the Company may be held to be
liable in connection with this Agreement (a "Claim"), provided
that such Claim resulted from a negligent act or omission to act,
bad faith, willful misfeasance or reckless disregard by FDISG in
the performance of its duties hereunder.
(c) In any case in which one party hereto (the
"Indemnifying Party") may be asked to indemnify or hold the other
party (the "Indemnified Party") harmless, the Indemnified Party
will notify the Indemnifying Party promptly after identifying any
situation which it believes presents or appears likely to present
a claim for indemnification against the Indemnifying Party
although the failure to do so shall not prevent recovery by the
Indemnified Party and shall keep the Indemnifying Party advised
with respect to all developments concerning such situation. The
Indemnifying Party shall have the option to defend Indemnified
Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so
elects, such defense shall be conducted by counsel chosen by the
Company and satisfactory to Indemnified Party, and thereupon the
Indemnifying Party shall take over complete defense of the Claim
and the Indemnified Party shall sustain no further legal or other
expenses in respect of such Claim. The Indemnified Party will not
confess any Claim or make any compromise in any case in which the
Indemnifying Party will be asked to provide indemnification,
except with the Indemnifying Party's prior written consent. The
obligations of the parties hereto under this Section 6 shall
survive the termination of this Agreement.
7. Termination of Agreement.
(a) This Agreement shall be effective on the date
first written above and shall continue for a period of three (3)
years (the "Initial Term"), unless earlier terminated pursuant to
the terms of this Agreement. Thereafter, this Agreement may be
terminated at any time without penalty on sixty (60) days prior
written notice.
(b) This Agreement may be terminated by the Company
prior to the expiration of the Initial Term in the event FDISG has
failed to meet the Performance Standards, as set forth in Exhibit
1 to Schedule D, in three consecutive quarters. The Company will
provide FDISG with sixty (60) days written notice after the third
consecutive quarter of FDISG's failure to meet the Performance
Standards if the Company intends to exercise this option under
this Section 7(b). Notwithstanding the foregoing, the Company's
right under this Section 7(b) shall not be effective until ninety
(90) days after FDISG has begun providing services under this
Agreement. In the event that the Transfer Agency and Services
Agreement dated September 20, 1997 (the "Transfer Ageny
Agreement"), between FDISG and the Company is terminated by the
Company because of a breach by FDISG of certain performance
standards as provided in Section 13.3 of the Transfer Agency
Agreement, this Agreement may be terminated by the Company upon
sixty (60) prior written notice to FDISG.
(c) In the event a termination notice is given by
the Company, all reasonable expenses associated with movement of
records and materials and conversion thereof ("Conversion Costs")
will be borne by the Company; provided, however, that in the event
that such termination notice is given as a result of a breach of
the Performance Standards by FDISG with respect to the services to
be provided under this Agreement as outlined in Section 7(b) of
this Agreement or Section 13.3 of the Transfer Agency Agreement or
a material breach by FDISG of its duties and obligations hereunder
as outlined in Section 7(d) of this Agreement or Section 13.5 of
the Transfer Agency Agreement, the Conversion Costs shall not
exceed $15,000.
(d) If a party hereto is guilty of a material
failure to perform its duties and obligations hereunder (a
"Defaulting Party") resulting in a material loss to the other
party, such other party (the "Non-Defaulting Party") may give
written notice thereof to the Defaulting Party, and if such
material breach shall not have been remedied within thirty (30)
days after such written notice is given, then the Non-Defaulting
Party may terminate this Agreement by giving thirty (30) days
written notice of such termination to the Defaulting Party. If
FDISG is the Non-Defaulting Party, its termination of this
Agreement shall not constitute a waiver of any other rights or
remedies of FDISG with respect to services performed prior to such
termination or rights of FDISG to be reimbursed for out-of-pocket
expenses. In all cases, termination by the Non-Defaulting Party
shall not constitute a waiver by the Non-Defaulting Party of any
other rights it might have under this Agreement or otherwise
against the Defaulting Party.
8. Modifications and Waivers. No change, termination,
modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. A party's
waiver of a breach of any term or condition in the Agreement shall
not be deemed a waiver of any subsequent breach of the same or
another term or condition.
9. No Presumption Against Drafter. FDISG and the Company
have jointly participated in the negotiation and drafting of this
Agreement. The Agreement shall be construed as if drafted jointly
by the Company and FDISG, and no presumptions arise favoring any
party by virtue of the authorship of any provision of this
Agreement.
10. Publicity. Neither FDISG nor the Company shall
release or publish news releases, public announcements,
advertising or other publicity relating to this Agreement or to
the transactions contemplated by it without prior review and
written approval of the other party; provided, however, that
either party may make such disclosures as are required by legal,
accounting or regulatory requirements after making reasonable
efforts in the circumstances to consult in advance with the other
party.
11. Severability. The parties intend every provision of
this Agreement to be severable. If a court of competent
jurisdiction determines that any term or provision is illegal or
invalid for any reason, the illegality or invalidity shall not
affect the validity of the remainder of this Agreement. In such
case, the parties shall in good faith modify or substitute such
provision consistent with the original intent of the parties.
Without limiting the generality of this paragraph, if a court
determines that any remedy stated in this Agreement has failed of
its essential purpose, then all other provisions of this
Agreement, including the limitations on liability and exclusion of
damages, shall remain fully effective.
13. Miscellaneous.
(a) Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Company
or FDISG shall be sufficiently given if addressed to the party and
received by it at its office set forth below or at such other
place as it may from time to time designate in writing.
To the Company:
First Choice Funds Trust
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to:
Baker & McKenzie
805 Third Avenue, 30th Floor
New York, New York 10022
Attention: Steven R. Howard
To FDISG:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to FDISG's General Counsel
(b) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and permitted assigns and is not intended to confer
upon any other person any rights or remedies hereunder. This
Agreement may not be assigned or otherwise transferred by either
party hereto, without the prior written consent of the other
party, which consent shall not be unreasonably withheld. With the
prior written consent of the Company, FDISG may engage
subcontractors to perform any of the obligations contained in this
Agreement to be performed by FDISG.
(c) The laws of the Commonwealth of Massachusetts,
excluding the laws on conflicts of laws, shall govern the
interpretation, validity, and enforcement of this Agreement. All
actions arising from or related to this Agreement shall be brought
in the state and federal courts sitting in the City of Boston, and
FDISG and the Company hereby submit themselves to the exclusive
jurisdiction of those courts.
(d) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
which collectively shall be deemed to constitute only one
instrument.
(e) The captions of this Agreement 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.
(f) The Company and FDISG agree that the obligations
of the Company under the Agreement shall not be binding upon any
of the Trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Company
individually, but are binding only upon the assets and property of
the Company, as provided in the Declaration of Trust. The
execution and delivery of this Agreement have been authorized by
the Trustees of the Company, and signed by an authorized officer
of the Company, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them or any
shareholder of the Company individually or to impose any liability
on any of them or any shareholder of the Company personally, but
shall bind only the assets and property of the Company as provided
in the Declaration of Trust.
13. Confidentiality.
(a) The parties agree that the Proprietary
Information (defined below) and the contents of this Agreement
(collectively "Confidential Information") are confidential
information of the parties and their respective licensers. The
Company and FDISG shall exercise reasonable care to safeguard the
confidentiality of the Confidential Information of the other. The
Company and FDISG may each use the Confidential Information only
to exercise its rights or perform its duties under this Agreement.
The Company and FDISG shall not duplicate, sell or disclose to
others the Confidential Information of the other, in whole or in
part, without the prior written permission of the other party. The
Company and FDISG may, however, disclose Confidential Information
to its employees who have a need to know the Confidential
Information to perform work for the other, provided that each
shall use reasonable efforts to ensure that the Confidential
Information is not duplicated or disclosed by its employees in
breach of this Agreement. The Company and FDISG may also disclose
the Confidential Information to independent contractors, auditors
and professional advisors and as legally required or requested by
regulators. Notwithstanding the previous sentence, in no event
shall either the Company or FDISG disclose the Confidential
Information to any competitor of the other without specific, prior
written consent.
(b) Proprietary Information means:
(i) any data or information that is completely
sensitive material, and not generally known to the public,
including, but not limited to, information about product plans,
marketing strategies, finance, operations, customer relationships,
customer profiles, sales estimates, business plans, and internal
performance results relating to the past, present or future
business activities of the Company or FDISG, their respective
subsidiaries and affiliated companies and the customers, clients
and suppliers of any of them;
(ii) any scientific or technical information,
design, process, procedure, formula, or improvement that is
commercially valuable and secret in the sense that its
confidentiality affords the Company or FDISG a competitive
advantage over its competitors; and
(iii) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software,
source code, object code, flow charts, databases, inventions,
know-how, show-how and trade secrets, whether or not patentable or
copyrightable.
(c) Confidential Information includes, without
limitation, all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models, and any other tangible
manifestation of the foregoing of either party which now exist or
come into the control or possession of the other.
(d) Each party acknowledges that breach of the
restrictions on use, dissemination or disclosure of any
Confidential Information of the other party would result in
immediate and irreparable harm, and money damages would be
inadequate to compensate the other party for that harm. Each party
shall be entitled to equitable relief, in addition to all other
available remedies, to redress any such breach.
14. Force Majeure. No party shall be liable for any
default or delay in the performance of its obligations under this
Agreement if and to the extent such default or delay is caused,
directly or indirectly, by (i) fire, flood, elements of nature or
other acts of God; (ii) any outbreak or escalation of hostilities,
war, riots or civil disorders in any country, (iii) any act or
omission of the other party or any governmental authority; (iv)
any labor disputes (whether or not the employees' demands are
reasonable or within the party's power to satisfy); or (v)
nonperformance by a third party or any similar cause beyond the
reasonable control of such party, including without limitation,
failures or fluctuations in telecommunications or other equipment.
In any such event, the non-performing party shall be excused from
any further performance and observance of the obligations so
affected only for so long as such circumstances prevail and such
party continues to use commercially reasonable efforts to
recommence performance or observance as soon as practicable.
15. Entire Agreement. This Agreement, including all
Schedules hereto, constitutes the entire Agreement between the
parties with respect to the subject matter hereof and supersedes
all prior and contemporaneous proposals, agreements, contracts,
representations, and understandings, whether written or oral,
between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed and delivered by their duly
authorized officers as of the date first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:NEIL FORREST
Name:Neil Forrest
Title:Vice President and General Manager
FIRST CHOICE FUNDS TRUST
By:JOHN J. PILEGGI
Name: John J. Pileggi
Title:Trustee
SCHEDULE A
U.S. Treasury Reserve Fund
Cash Reserve Fund
SCHEDULE B
Fund Accounting and Administrative Services
Routine Projects
Daily, Weekly, and Monthly Reporting
Portfolio and General Ledger Accounting
Daily Pricing of all Securities
Daily Valuation and NAV Calculation
Comparison of NAV to market movement
Review of price tolerance/fluctuation report
Research items appearing on the price exception report
Weekly cost monitoring along with market-to-market
valuations in accordance with Rule 2a7
Preparation of monthly ex-dividend monitor
Daily cash reconciliation with the custodian bank
Daily updating of price and rate information to the Transfer
Agent/Insurance Agent
Daily support and report delivery to Portfolio Management
Daily calculation of fund advisor fees and waivers
Daily calculation of distribution rates
Daily maintenance of each fund's general ledger including
expense accruals
Daily price notification to other vendors as required
Calculation of 30-day adjusted SEC yields
Preparation of month-end reconciliation package
Monthly reconciliation of Fund expense records
Preparation of monthly pay down gain/loss summaries
Preparation of all annual and semi-annual audit work papers
Preparation and Printing of Financial Statements
Providing Shareholder Tax Information to Transfer Agent
Producing Drafts of IRS and State Tax Returns
Treasury Services including:
Provide Officer for the Fund
Expense Accrual Monitoring
Determination of Dividends
Prepare materials for review by the Board, e.g., 2a-
7,10f-3, 17a-7, 17e-1, Rule 144a
Tax and Financial Counsel
Monthly Compliance Testing including Section 817H
SCHEDULE B (continued)
Legal, Regulatory and Board of Trustees Support
Routine Legal Services
Corporate Secretarial
* Assist in maintaining corporate records and good standing
status of Fund in its state of organization
* Provide Secretary/Assistant Secretary for Fund
* Develop and maintain calendar of annual and quarterly board
approvals and regulatory filings
* Prepare notice, agenda, memoranda, resolutions and
background materials for legal approval at quarterly and special
board meetings; attend meetings; make presentations where
appropriate; prepare minutes; follow up on issues
Regulatory/Filings
* Prepare and file annual Post-Effective Amendment
* Assist in preparation of Fund Registration Statement
* Prepare and file Rule 24f-2 and Rule 24e-2 Notices
* Prepare and file proxy materials (including merger
documents) (one in a two year period)
* Review and file Form N-SAR
* Review and file Annual and Semi-Annual Financial Reports
* Prepare prospectus supplements as needed
Miscellaneous Routine Legal Services
* Communicate significant regulatory or legislative
developments to Fund management and directors and provide related
planning assistance where needed
* Consult with Fund management regarding portfolio compliance
and Fund corporate and regulatory issues as needed
* Maintain effective communication with outside counsel and
review legal bills of outside counsel
* Coordinate the printing and mailing process with outside
printers for all shareholder publications
* Assist in managing SEC audits of Funds
* Review sales material and advertising for Fund SEC and NASD
compliance
* Assist in conversion
Coordinate time and responsibility schedules
Draft notice, agenda, memoranda, resolutions and
background materials for board
approval
* Assist in new fund start-up (to the extent requested)
Coordinate time and responsibility schedules
Prepare Fund corporate documents (MTA/by-laws)
Draft/file registration statement (including investment
objectives/policies and
prospectuses)
Respond to and negotiate SEC comments
Draft notice, agenda and resolutions for organizational
meeting; attend board meeting;
make presentations where appropriate; prepare
minutes and follow up on issues
* Arrange D&O/E&O insurance and fidelity bond coverage for
Fund
* Assist in monitoring Fund Code of Ethics reporting and
provide such reports to Adviser
* Assist in developing compliance guidelines and procedures to
improve overall compliance by Fund and service providers
* Prepare notice, agenda, memoranda and background materials
for special board meetings, make presentations where appropriate,
prepare minutes and follow up on issues
* Prepare PEA for special purposes (e.g., new funds or
classes, changes in advisory relationships, mergers,
restructurings)
* Prepare special prospectus supplements where needed
* Assist in preparation of exemptive order applications (one
per year)
Exhibit 1 to Schedule B
Performance Standards
Pursuant to Section 3(n) of this Agreement, FDISG has agreed
to perform the services described in this Agreement in accordance
with the Performance Standards set forth in this Exhibit 1 to
Schedule B. The parties agree that the measurement of the
Performance Standards will not begin until ninety (90) days after
FDISG has begun providing services under this Agreement. The
parties agree that each quarterly period, as described below, will
be measured on a rolling three calendar month period. The parties
agree that such Performance Standards, which are described below,
may be revised from time to time upon the mutual agreement of the
parties. The parties agree that any new Funds that may be added
to the Company from time to time will be entitled to similar
Performance Standards and measuring periods.
(a) In the event that FDISG fails to meet a particular
Performance Standard (except any failure due to circumstances
beyond its control) in any particular quarter, the Company will
provide FDISG with written notice of such failure, and FDISG
agrees to take appropriate corrective action as soon as reasonably
possible.
(b) In the event that FDISG fails to meet a particular
Performance Standard (except for any failure due to circumstances
beyond its control) in two (2) consecutive quarters, the fee
payable to FDISG hereunder for such service shall be reduced by
ten percent (10%) for the second of those two quarters.
(c) In the event that FDISG fails to meet a particular
Performance Standard (except for any failure due to circumstances
beyond its control) for any three (3) consecutive quarters, the
Company shall have the right to terminate this Agreement upon
sixty (60) days' written notice to FDISG.
(d) Compliance with the Performance Standards shall be
measured quarterly based on the average performance during that
quarter. In the event that the number of Funds shall increase to
five (5), compliance with the Performance Standards shall then be
measured monthly based on the average performance during that
month, except with respect to those services which are provided
only on a quarterly basis. A month shall be defined as a calendar
month.
(e) The Performance Standards shall be as follows:
Fund Accounting
1) Accounting and reported numbers are accurate at least 98% of
the time.
2) Mispricings of assets occurs less than 2% of the time unless
incorrect information is received from the pricing services or the
custodian.
3) A call for accurate final First Choice US Treasury Reserve
investable cash total will be delivered no later than 12:15 EST
(9:15 PST) if trades are received by fund close of 12 noon EST
(9:00 am PST). Followed by a faxed investable cash total sent no
later than 12:40 EST (9:40 PST).
4) A call for accurate final First Choice Cash Reserve
investable cash total delivered no later than 3:15 EST (12:15 PST)
if trades are received by fund close of 3:00 EST (12 noon PST).
Followed by a faxed investable cash total sent no later than 3:40
EST (12:40 PST).
5) Call for initial preliminary FC Cash Reserve investable cash
total will be delivered by 1:00 EST (10:00 PST)
6) Daily individual issuer classification and individual issue
outstanding percentages and totals monitored with 98% accuracy.
7) Daily industry classification of issuer and overall industry
outstanding percentages and totals monitored with 98% accuracy.
8) Daily pricings, yields, asset reports, and other daily
reports sent by fax one hour after fund close or final portfolio
trade, whichever is later.
9) Weekly mark-to-market NAV pricing one hour after fund
receives transmission from pricing vendor on Tuesdays.
10) Standardize month end reports factor by close of business
5:00 PM EST (2:00 PM PST) the first business day of the month.
Reports to be provided will be mutually determined at a future
date.
11) Daily rate factor sheet one hour after fund close or final
portfolio trade, whichever is later to First American Trust
Company or any client larger than 5% of the fund's total market
value.
12) Monthly advisory management rate factor by close of business
5:00 PM EST (2:00 PM EST) the first business day of the month.
Standards involving quarterly or semi-annual actions
13) Draft minutes of meeting to directors within 30 days after
meeting.
14) Keep advisor and Board apprised of latest compliance
regulations.
15) Board notification four (4) weeks in advance of meeting.
16) Board material to Board ten (10) business days before
meeting.
17) Request for materials needed from Advisor three (3) weeks in
advance of Board meeting.
18) All information on semi-annual and annual reports will
reflect accurate descriptions, as well as accurate coupons or
purchase discount rates.
SCHEDULE C
FEE SCHEDULE
For the services to be rendered, the facilities to be
furnished and the payments to be made by FDISG, as provided for in
this Agreement, the Company, on behalf of each Fund, will pay
FDISG on the first business day of each month a fee for the
previous month at the rates listed below. The fee for the period
from the effective date of this Agreement to the end of such month
shall be prorated according to the proportion that 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.
Fund Accounting Services:
$30,000 per Fund per annum, plus
$5,000 per class per annum
Fund Administration Services:
FDISG shall be paid an annual administration fee at
the annual rate as follows:
0.15% of the Funds' combined average daily net
assets.
FDISG shall be entitled to collect all out-of-pocket fees
described in Schedule D.
SCHEDULE D
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include the following:
- - Postage of Board meeting materials and other materials to
the Company's
Board members and service providers (including overnight or
other courier
services)
- - Telecommunications charges (including FAX) with respect to
communications with the Company's directors, officers and
service
providers
- - Duplicating charges with respect to filings with federal and
state authorities
and Board meeting materials
- - Courier services
- - Pricing services
- - Forms and supplies for the preparation of Board meetings and
other
materials for the Company
- - Vendor set-up charges for Blue Sky services
- - Customized programming requests
- - Such other expenses as are agreed to by FDISG and the
Company
- -20-
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 20th day of September, 1997 (the
"Agreement") by and between First Choice Funds Trust, a Delaware
business trust (the "Company") and First Data Distributors, Inc. (the
"Distributor"), a Massachusetts corporation.
WHEREAS, the Company is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"); and is currently offering units of
beneficial interest (such units of all series are hereinafter called the
"Shares"), representing interests in investment portfolios of the
Company identified on Schedule A hereto (the "Funds") which are
registered with the Securities and Exchange Commission (the "SEC")
pursuant to the Company's Registration Statement on Form N-1A (the
"Registration Statement"); and
WHEREAS, the Company desires to retain the Distributor as
distributor for the Funds to provide for the sale and distribution of
the Shares of the Funds identified on Schedule A and for such additional
classes or series as the Company may issue, and the Distributor is
prepared to provide such services commencing on the date first written
above.
NOW THEREFORE, in consideration of the premises and mutual
covenants set forth herein and intending to be legally bound hereby the
parties hereto agree as follows:
1. Service as Distributor
1.1 The Distributor will act on behalf of the Company for the
distribution of the Shares covered by the Registration Statement under
the Securities Act of 1933, as amended (the "1933 Act"). The
Distributor will have no liability for payment for the purchase of
Shares sold pursuant to this Agreement or with respect to redemptions or
repurchases of Shares.
1.2 The Distributor agrees to use efforts deemed appropriate by the
Distributor 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. To the extent that the Distributor
receives shareholder services fees under any shareholder services plan
adopted by the Company, the Distributor agrees to furnish, and/or enter
into arrangements with others for the furnishing of, personal and/or
account maintenance services with respect to the relevant shareholders
of the Company as may be required pursuant to such plan. It is
contemplated that the Distributor will enter into sales or servicing
agreements with securities dealers, financial institutions and other
industry professionals, such as investment advisers, accountants and
estate planning firms.
1.3 The Company understands that the Distributor is now, and may in
the future be, the distributor of the shares of several investment
companies or series (collectively, the "Investment Entities"), including
Investment Entities having investment objectives similar to those of the
Company. The Company further understands that investors and potential
investors in the Company may invest in shares of such other Investment
Entities. The Company agrees that the Distributor's duties to such
Investment Entities shall not be deemed in conflict with its duties to
the Company under this Section 1.3.
1.4 The Distributor shall not utilize any materials in connection with
the sale or offering of Shares except the Company's prospectus and
statement of additional information and such other materials as the
Company shall provide or approve.
1.5 All activities by the Distributor and its employees, as
distributor of the Shares, shall comply with all applicable laws, rules
and regulations, including, without limitation, all rules and
regulations made or adopted by the SEC or the National Association of
Securities Dealers.
1.6 The Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent for the
Company.
1.7 Whenever in its judgment such action is warranted by unusual
market, economic or political conditions or abnormal circumstances of
any kind, the Company may decline to accept any orders for, or make any
sales of, the Shares until such time as the Company deems it advisable
to accept such orders and to make such sales, and the Company advises
the Distributor promptly of such determination.
1.8 The Company agrees to pay all reasonable costs and expenses in
connection with the registration of Shares under the Securities Act of
1933, as amended, and all reasonable expenses in connection with
maintaining facilities for the issue and transfer of Shares and for
supplying information, prices and other data to be furnished by the Fund
hereunder, and all reasonable expenses in connection with the
preparation and printing of the Fund's prospectuses and statements of
additional information for regulatory purposes and for distribution to
shareholders.
1.9 The Company 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 the Distributor
may designate. The Company shall notify the Distributor in writing of
the states in which the Shares may be sold and shall notify the
Distributor in writing of any changes to the information contained in
the previous notification.
1.10 The Company shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the
Company and the Shares as the Company may reasonably request; and the
Company warrants that the statements contained in any such information
shall fairly show or represent what they purport to show or represent.
The Company shall also furnish the Distributor upon request with: (a)
audited annual statements and unaudited semi-annual statements of a
Fund's books and accounts prepared by the Company, (b) quarterly
earnings statements prepared by the Company, (c) a monthly itemized list
of the securities in the Funds, and (d) monthly balance sheets as soon
as practicable after the end of each month.
1.11 The Company represents to the Distributor that all Registration
Statements and prospectuses filed by the Company with the SEC under the
1933 Act with respect to the Shares have been prepared in conformity
with the requirements of the 1933 Act and the rules and regulations of
the SEC thereunder. As used in this Agreement, the term "Registration
Statement" shall mean any Registration Statement and any prospectus and
any statement of additional information relating to the Company filed
with the SEC and any amendments or supplements thereto at any time filed
with the SEC. Except as to information included in the Registration
Statement in reliance upon information provided to the Company by the
Distributor or any affiliate of the Distributor expressly for use in the
Registration Statement, the Company represents and warrants to the
Distributor that any Registration Statement, when such Registration
Statement becomes effective, will contain statements required to be
stated therein in conformity with the 1933 Act and the rules and
regulations of the SEC; that all statements of fact contained in any
such Registration Statement will be true and correct when such
Registration Statement becomes effective; and that no Registration
Statement when such Registration Statement becomes effective will
include an untrue statement of a material fact or omit 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
Distributor 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 Distributor's counsel, be
necessary or advisable. The Company shall promptly notify the
Distributor of any advice given to it by its counsel regarding the
necessity or advisability of amending or supplementing such Registration
Statement. If the Company shall not propose such amendment or
amendments and/or supplement or supplements within fifteen days after
receipt by the Company of a reasonable written request from the
Distributor to do so, the Distributor may, at its option, terminate this
Agreement. The Company shall not file any amendment to any Registration
Statement or supplement to any prospectus without giving the Distributor
reasonable notice thereof in advance; provided, however, that nothing
contained in this Agreement shall in any way limit the Company's right
to file at any time such amendments to any Registration Statements
and/or supplements to any prospectus, of whatever character, as the
Company may deem advisable, such right being in all respects absolute
and unconditional.
1.12 The Company authorizes the Distributor to use in connection with
the sale of the Shares any prospectus or statement of additional
information in the form furnished from time to time. The Company agrees
to indemnify and hold harmless the Distributor, its officers, directors,
and employees, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless (a) from and
against any and all claims, costs, expenses (including reasonable
attorneys' fees) losses, damages, charges, payments and liabilities of
any sort or kind which the Distributor, its officers, directors,
employees or any such controlling person may incur under the 1933 Act,
under any other statute, at common law or otherwise, arising out of or
based upon: (i) any untrue statement, or alleged untrue statement, of a
material fact contained in the Company's Registration Statement,
prospectus, statement of additional information, or sales literature
(including amendments and supplements thereto), or (ii) any omission, or
alleged omission, to state a material fact required to be stated in the
Company's Registration Statement, prospectus, statement of additional
information or sales literature (including amendments or supplements
thereto), necessary to make the statements therein not misleading,
provided, however, that insofar as losses, claims, damages, liabilities
or expenses arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made in reliance on and
in conformity with information furnished to the Company by the
Distributor or its affiliated persons for use in the Company's
Registration Statement, prospectus, or statement of additional
information or sales literature (including amendments or supplements
thereto), such indemnification is not applicable; and (b) from and
against any and all such claims, demands, liabilities and expenses
(including such costs and counsel fees) which you, your officers and
directors, or such controlling person, may incur in connection with this
Agreement or the Distributor's performance hereunder (but excluding such
claims, demands, liabilities and expenses (including such costs and
counsel fees) 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),
unless such claims, demands, liabilities and expenses (including such
costs and counsel fees) arise by reason of the Distributor's willful
misfeasance, bad faith or negligence in the performance of the
Distributor's duties hereunder. The Company acknowledges and agrees
that in the event that the Distributor, at the request of the Company,
is required to give indemnification comparable to that set forth in
clause (a) of this Section 1.12 to any broker-dealer selling Shares of
the Company and such broker-dealer shall make a claim for
indemnification against the Distributor, the Distributor shall make a
similar claim for indemnification against the Company.
1.13 The Distributor agrees to indemnify and hold harmless the Company,
its several officers and Trustees and each person, if any, who controls
a Fund within the meaning of Section 15 of the 1933 Act against any and
all claims, costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or kind
which the Company, its officers, Trustees or any such controlling person
may incur under the 1933 Act, under any other statute, at common law or
otherwise, but only to the extent that such liability or expense
incurred by the Company, its officers or Trustees, or any controlling
person resulting from such claims or demands arise out of the
acquisition of any Shares by any person which may be based upon any
untrue statement, or alleged untrue statement, of a material fact
contained in the Company's Registration Statement, prospectus or
statement of additional information (including amendments and
supplements thereto), or any omission, or alleged omission, to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished or confirmed in writing to
the Company by the Distributor or its affiliated persons (as defined in
the 1940 Act) or in connection with the Distributor's willful
misfeasance, bad faith or negligence.
1.14 In any case in which one party hereto (the "Indemnifying Party")
may be asked to indemnify or hold the other party hereto (the
"Indemnified Party") harmless, the Indemnified Party will notify the
Indemnifying Party promptly after identifying any situation which it
believes presents or appears likely to present a claim for
indemnification (an "Indemnification Claim") against the Indemnifying
Party, although the failure to do so shall not prevent recovery by the
Indemnified Party, and shall keep the Indemnifying Party advised with
respect to all developments concerning such situation. The Indemnifying
Party shall have the option to defend the Indemnified Party against any
Indemnification Claim which may be the subject of this indemnification,
and, in the event that the Indemnifying Party so elects, such defense
shall be conducted by counsel chosen by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party, and thereupon the
Indemnifying Party shall take over complete defense of the
Indemnification Claim and the Indemnified Party shall sustain no further
legal or other expenses in respect of such Indemnification Claim. The
Indemnified Party will not confess any Indemnification Claim or make any
compromise in any case in which the Indemnifying Party will be asked to
provide indemnification, except with the Indemnifying Party's prior
written consent. The obligations of the parties hereto under this
Section 1.14 and Section 3.1 shall survive the termination of this
Agreement.
In the event that the Indemnifying Party does not elect to assume
the defense of any such suit, or in case the Indemnified Party
reasonably does not approve of counsel chosen by the Indemnifying Party,
or in case there is a conflict of interest between the Indemnifying
Party or the Indemnified Party, the Indemnifying Party will reimburse
the Indemnified Party, its officers, directors and employees, or the
controlling person or persons named as defendant or defendants in such
suit, for the reasonable fees and expenses of any counsel retained by
the Indemnified Party or them. The Indemnifying Party's indemnification
agreement contained in this Section 1.14 and Section 3.1 and the
Indemnifying Party'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 the Indemnified Party, its
officers, directors and employees, or any controlling person, and shall
survive the delivery of any Shares. This agreement of indemnity will
inure exclusively to the Indemnified Party's benefit, to the benefit of
its several officers, directors and employees, and their respective
estates and to the benefit of the controlling persons and their
successors. The Indemnifying Party agrees promptly to notify the
Indemnified Party of the commencement of any litigation or proceedings
against the Indemnifying Party or any of its officers or directors in
connection with the issue and sale of any Shares.
1.15 No Shares shall be offered by either the Distributor or the
Company under any of the provisions of this Agreement and no orders for
the purchase or sale of Shares hereunder shall be accepted by the
Company if and so long as effectiveness of the Registration Statement
then in effect or any necessary amendments thereto shall be suspended
under any of the provisions of the 1933 Act, or if and so long as a
current prospectus as required by Section 5(b)(2) of the 1933 Act is not
on file with the SEC; provided, however, that nothing contained in this
Section 1.15 shall in any way restrict or have any application to or
bearing upon the Company's obligation to redeem Shares tendered for
redemption by any shareholder in accordance with the provisions of the
Company's Registration Statement, Declaration of Company, or bylaws.
1.16 The Company agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the SEC for amendments to the Registration
Statement, prospectus or statement of additional information then in
effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement, prospectus
or statement of additional information then in effect or the initiation
by service of process on the Company 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, prospectus or
statement of additional information then in effect or that requires the
making of a change in such Registration Statement, prospectus or
statement of additional information in order to make the statements
therein not misleading; and
(d) of all actions of the SEC with respect to any amendments to any
Registration Statement, prospectus or statement of additional
information which may from time to time be filed with the SEC.
For purposes of this section, informal requests by or acts of the
Staff of the SEC shall not be deemed actions of or requests by the SEC.
2. Term
2.1 This Agreement shall become effective on the date first written
above and, unless sooner terminated as provided herein, shall continue
for an initial two-year term and thereafter shall be renewed for
successive one-year terms, provided such continuance is specifically
approved at least annually by (i) the Company's Board of Trustees or
(ii) by a vote of a majority (as defined in the 1940 Act and Rule 18f-2
thereunder) of the outstanding voting securities of the Company,
provided that in either event the continuance is also approved by a
majority of the Trustees who are not parties to this Agreement and who
are not interested persons (as defined in the 1940 Act) of any party to
this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable
without penalty, on at least sixty days' written notice, by the
Company's Board of Trustees, by vote of a majority (as defined in the
1940 Act and Rule 18f-2 thereunder) of the outstanding voting securities
of the Company, or by the Distributor. This Agreement will also
terminate automatically in the event of its assignment (as defined in
the 1940 Act and the rules thereunder).
2.2 In the event a termination notice is given by the Company, all
reasonable expenses associated with movement of records and materials
and conversion thereof will be borne by the Company.
3. Limitation of Liability
3.1 Each party to this Agreement shall not be liable to the other
party for any error of judgment or mistake of law or for any loss
suffered by the other party in connection with the performance of its
obligations and duties under this Agreement, except a loss resulting
from the such party's willful misfeasance, bad faith or negligence in
the performance of such obligations and duties, or by reason of its
reckless disregard thereof. Each party (the "Indemnifying Party") will
indemnify the other party (the "Indemnified Party") against and hold it
harmless from any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of
any sort or kind which may be asserted against the Indemnified Party for
which the Indemnified Party may be held to be liable in connection with
this Agreement or the Indemnified Party's performance hereunder (a
"Section 3.1 Claim"), unless such Section 3.1 Claim resulted from a
negligent act or omission to act or bad faith by the Indemnified Party
in the performance of its duties hereunder. The provisions of Section
1.14 shall apply to any indemnification provided by the Indemnifying
Party pursuant to this Section 3.1. The obligations of the parties
hereto under this Section 3.1 shall survive termination of this
Agreement.
3.2 Each party shall have the duty to mitigate damages for which the
other party may become responsible.
3.5 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR
CONSEQUENTIAL DAMAGES.
4. Modifications and Waivers
No change, termination, modification, or waiver of any term or condition
of the Agreement shall be valid unless in writing signed by each party.
A party's waiver of a breach of any term or condition in the Agreement
shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
5. No Presumption Against Drafter
The Distributor and the Company have jointly participated in the
negotiation and drafting of this Agreement. The Agreement shall be
construed as if drafted jointly by the Company and the Distributor, and
no presumptions arise favoring any party by virtue of the authorship of
any provision of this Agreement.
6. Publicity
Neither the Distributor nor the Company shall release or publish
news releases, public announcements, advertising or other publicity
relating to this Agreement or to the transactions contemplated by it
without prior review and written approval of the other party; provided,
however, that either party may make such disclosures as are required by
legal, accounting or regulatory requirements after making reasonable
efforts in the circumstances to consult in advance with the other party.
7. Severability
The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any
term or provision is illegal or invalid for any reason, the illegality
or invalidity shall not affect the validity of the remainder of this
Agreement. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the
parties. Without limiting the generality of this paragraph, if a court
determines that any remedy stated in this Agreement has failed of its
essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall
remain fully effective.
8. Force Majeure
No party shall be liable for any default or delay in the
performance of its obligations under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire,
flood, elements of nature or other acts of God; (ii) any outbreak or
escalation of hostilities, war, riots or civil disorders in any country,
(iii) any act or omission of the other party or any governmental
authority; (iv) any labor disputes (whether or not the employees'
demands are reasonable or within the party's power to satisfy); or (v)
nonperformance by a third party or any similar cause beyond the
reasonable control of such party, including without limitation, failures
or fluctuations in telecommunications or other equipment. In any such
event, the non-performing party shall be excused from any further
performance and observance of the obligations so affected only for so
long as such circumstances prevail and such party continues to use
commercially reasonable efforts to recommence performance or observance
as soon as practicable.
9. Miscellaneous
9.1 Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Company or the Distributor shall
be sufficiently given if addressed to the party and received by it at
its office set forth below or at such other place as it may from time to
time designate in writing.
To the Company:
First Choice Funds Trust
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to:
Baker & McKenzie
805 Third Avenue, 30th Floor
New York, New York 10022
Attention: Steven R. Howard
To the Distributor:
First Data Distributors, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to the Distributor's Chief Legal Officer
9.2 The laws of the Commonwealth of Massachusetts, excluding the laws
on conflicts of laws, and the applicable provisions of the 1940 Act
shall govern the interpretation, validity, and enforcement of this
Agreement. To the extent the provisions of Massachusetts law or the
provisions hereof conflict with the 1940 Act, the 1940 Act shall
control. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston,
and the Distributor and the Company hereby submit themselves to the
exclusive jurisdiction of those courts.
9.3 This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and which collectively shall
be deemed to constitute only one instrument.
9.4 The captions of this Agreement 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.
9.5 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and is not
intended to confer upon any other person any rights or remedies
hereunder.
10. Confidentiality
10.1 The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their
respective licensers. The Company and the Distributor shall exercise
reasonable care to safeguard the confidentiality of the Confidential
Information of the other. The Company and the Distributor may each use
the Confidential Information only to exercise its rights or perform its
duties under this Agreement. The Company and the Distributor shall not
duplicate, sell or disclose to others the Confidential Information of
the other, in whole or in part, without the prior written permission of
the other party. The Company and the Distributor may, however, disclose
Confidential Information to its employees who have a need to know the
Confidential Information to perform work for the other, provided that
each shall use reasonable efforts to ensure that the Confidential
Information is not duplicated or disclosed by its employees in breach of
this Agreement. The Company and the Distributor may also disclose the
Confidential Information to independent contractors, auditors and
professional advisors and as required by law or regulatory authorities.
Notwithstanding the previous sentence, in no event shall either the
Company or the Distributor disclose the Confidential Information to any
competitor of the other without specific, prior written consent.
10.2 Proprietary Information means:
(a) any data or information that is completely sensitive material, and
not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance,
operations, customer relationships, customer profiles, sales estimates,
business plans, and internal performance results relating to the past,
present or future business activities of the Company or the Distributor,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or the
Distributor a competitive advantage over its competitors: and
(c) all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable or copyrightable.
10.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment,
prototypes and models, and any other tangible manifestation of the
foregoing of either party which now exist or come into the control or
possession of the other.
10.4 Each party acknowledges that breach of the restrictions on use,
dissemination or disclosure of any Confidential Information of the other
party would result in immediate and irreparable harm, and money damages
would be inadequate to compensate the other party for that harm. Each
Party shall be entitled to equitable relief, in addition to all other
available remedies, to redress any such breach.
11. The Company and the Distributor agree that the obligations of the
Company under the Agreement shall not be binding upon any of the
Trustees, shareholders, nominees, officers, employees or agents, whether
past, present or future, of the Company individually, but are binding
only upon the assets and property of the Company, as provided in the
Declaration of Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of the Company, and signed by an
authorized officer of the Company, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them or any
shareholder of the Company individually or to impose any liability on
any of them or any shareholder of the Company personally, but shall bind
only the assets and property of the Company as provided in the
Declaration of Trust.
12. Entire Agreement
This Agreement, including all Schedules hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous proposals, agreements,
contracts, representations, and understandings, whether written or oral,
between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed all as of the day and year first above written.
FIRST CHOICE FUNDS TRUST
By:JOHN J. PILEGGI
Name:John J. Pileggi
Title:Trustee
FIRST DATA DISTRIBUTORS, INC.
By:SCOTT M. HACKER
Name:Scott M. Hacker
Title:Vice President and Treasurer
SCHEDULE A
Name of Funds
U.S. Treasury Reserve Fund
Cash Reserve Fund
A-1
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 20th day of September, 1997
between FIRST CHOICE FUNDS TRUST (the "Fund"), a Delaware business
trust having its principal place of business at 4400 Computer
Drive, Westborough, Massachusetts 01581, and FIRST DATA INVESTOR
SERVICES GROUP, INC. ("FDISG"), a Massachusetts corporation with
principal offices at 4400 Computer Drive, Westboro, Massachusetts
01581.
WITNESSETH
WHEREAS, the Fund is authorized to issue Shares in separate
series, with each such series representing interests in a separate
portfolio of securities or other assets.
WHEREAS, the Fund initially intends to offer Shares in those
Portfolios identified in the attached Exhibit 1, each such
Portfolio, together with all other Portfolios subsequently
established by the Fund shall be subject to this Agreement in
accordance with Article 14;
WHEREAS, the Fund on behalf of the Portfolios, desires to appoint
FDISG as its transfer agent, dividend disbursing agent and agent
in connection with certain other activities and FDISG desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and
promises hereinafter set forth, the Fund and FDISG agree as
follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar
organizational document as the case may be, of the Fund as the
same may be amended from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not
such person is an officer or employee of the Fund, duly authorized
to give Oral Instructions or Written Instructions on behalf of the
Fund as indicated in writing to FDISG from time to time.
(c) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or
account of such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, all as
amended from time to time.
(g) "1940 Act" shall mean the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder, all as amended
from time to time.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by FDISG from a person
reasonably believed by FDISG to be an Authorized Person;
(i) "Portfolio" shall mean each separate series of shares
offered by the Fund representing interests in a separate portfolio
of securities and other assets;
(j) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(k) "Shares" refers collectively to such shares of capital stock
or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Fund as may be issued from time
to time.
(l) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.
(m) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by FDISG to be an
Authorized Person and actually received by FDISG. Written
Instructions shall include manually executed originals and
authorized electronic transmissions, including telefacsimile of a
manually executed original or other process.
Article 2 Appointment of FDISG.
The Fund, on behalf of the Portfolios, hereby appoints and
constitutes FDISG as transfer agent and dividend disbursing agent
for Shares of each respective Portfolio of the Fund and as
shareholder servicing agent for the Fund, and FDISG hereby accepts
such appointments and agrees to perform the duties hereinafter set
forth.
Article 3 Duties of FDISG.
3.1 FDISG shall be responsible for:
(a) Administering and/or performing the customary services of a
transfer agent; acting as service agent in connection with
dividend and distribution functions; and for performing
shareholder account and administrative agent functions in
connection with the issuance, transfer and redemption or
repurchase (including coordination with the Custodian) of Shares
of each Portfolio, as more fully described in the written schedule
of Duties of FDISG annexed hereto as Schedule A and incorporated
herein, and in accordance with the terms of the Prospectus of the
Fund on behalf of the applicable Portfolio, applicable law and the
procedures established from time to time between FDISG and the
Fund.
(b) Recording the issuance of Shares and maintaining pursuant to
Rule 17Ad-10(e) of the 1934 Act a record of the total number of
Shares of each Portfolio which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. FDISG
shall provide the Fund on a regular basis with the total number of
Shares of each Portfolio which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares or to
take cognizance of any laws relating to the issue or sale of such
Shares, which functions shall be the sole responsibility of the
Fund.
(c) In addition to providing the foregoing services, the Fund
hereby engages FDISG as its exclusive service provider with
respect to the Print/Mail Services as set forth in Schedule B for
the fees also identified in Schedule B. FDISG agrees to perform
the services and its obligations subject to the terms and
conditions of this Agreement.
(d) Notwithstanding any of the foregoing provisions of this
Agreement, FDISG shall be under no duty or obligation to inquire
into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to
be received therefor; (ii) the legality of the redemption of any
Shares, or the propriety of the amount to be paid therefor; (iii)
the legality of the declaration of any dividend by the Board of
Directors, or the legality of the issuance of any Shares in
payment of any dividend; or (iv) the legality of any
recapitalization or readjustment of the Shares.
3.2 In addition, the Fund shall (i) identify to FDISG in writing
those transactions and assets to be treated as exempt from blue
sky reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of FDISG for the Fund's blue sky State registration
status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.
3.3 FDISG agrees to provide the services set forth herein
in accordance with the performance standards annexed hereto as
Exhibit 1-A of Schedule A and incorporated herein (the
"Performance Standards"). Such Performance Standards may be
amended from time to time upon written agreement of the parties.
3.4 In addition to the duties set forth herein, FDISG shall
perform such other duties and functions, and shall be paid such
amounts therefor, as may from time to time be agreed upon in
writing between the Fund and FDISG.
Article 4 Recordkeeping and Other Information.
4.1 FDISG shall create and maintain all records required of it
pursuant to its duties hereunder and as set forth in Schedule A in
accordance with all applicable laws, rules and regulations,
including records required by Section 31(a) of the 1940 Act.
Where applicable, such records shall be maintained by FDISG for
the periods and in the places required by Rule 31a-2 under the
1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, FDISG
agrees that all such records prepared or maintained by FDISG
relating to the services to be performed by FDISG hereunder are
the property of the Fund and will be preserved, maintained and
made available in accordance with such section, and will be
surrendered promptly to the Fund on and in accordance with the
Fund's request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, FDISG will endeavor to notify the
Fund of such request and secure Written Instructions as to the
handling of such request. FDISG reserves the right, however, to
exhibit the Shareholder records to any person whenever it is
advised by its counsel that it may be held liable for the failure
to comply with such request.
Article 5 Fund Instructions.
5.1 FDISG will have no liability when acting upon Written or
Oral Instructions reasonably believed to have been executed or
orally communicated by an Authorized Person and will not be held
to have any notice of any change of authority of any person until
receipt of a Written Instruction thereof from the Fund. FDISG
will also have no liability when processing Share certificates
which it reasonably believes to bear the proper manual or
facsimile signatures of the officers of the Fund and the proper
countersignature of FDISG.
5.2 At any time, FDISG may request Written Instructions from the
Fund and may seek advice from legal counsel for the Fund, or its
own legal counsel, with respect to any matter arising in
connection with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it reasonably and in good
faith in accordance with such Written Instructions or in
accordance with the opinion of counsel for the Fund or for FDISG.
Written Instructions requested by FDISG will be provided by the
Fund within a reasonable period of time.
5.3 FDISG, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said
representative is an Authorized Person. The Fund agrees that all
Oral Instructions shall be followed within one business day by
confirming Written Instructions, and that the Fund's failure to so
confirm shall not impair in any respect FDISG's right to rely on
Oral Instructions.
Article 6 Compensation.
6.1 The Fund on behalf of each of the Portfolios will compensate
FDISG for the performance of its obligations hereunder in
accordance with the fees set forth in the written Fee Schedule
annexed hereto as Schedule B and incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above,
the Fund on behalf of each of the Portfolios agrees to pay, and
will be billed separately for, out-of-pocket expenses incurred by
FDISG in the performance of its duties hereunder. Out-of-pocket
expenses shall include the items specified in the written schedule
of out-of-pocket charges annexed hereto as Schedule C and
incorporated herein. Schedule C may be modified by written
agreement between the parties. Out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by
FDISG in the performance of its obligations hereunder.
6.3 The Fund on behalf of each of the Portfolios agrees to pay
all fees and out-of-pocket expenses to FDISG by Federal Funds Wire
within fifteen (15) business days following the receipt of the
respective invoice unless further verification or documentation is
required.
6.4 Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule B, a revised Fee Schedule
executed and dated by the parties hereto.
Article 7 Documents.
In connection with the appointment of FDISG, the Fund shall, on or
before the date this Agreement goes into effect, but in any case
within a reasonable period of time for FDISG to prepare to perform
its duties hereunder, deliver or caused to be delivered to FDISG
the documents set forth in the written schedule of Fund Documents
annexed hereto as Schedule D.
Article 8 Transfer Agent System.
8.1 FDISG shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions,
discoveries, patentable or copyrightable matters, concepts,
expertise, patents, copyrights, trade secrets, and other related
legal rights utilized by FDISG in connection with the services
provided by FDISG to the Fund herein (the "FDISG System").
8.2 FDISG hereby grants to the Fund a limited license to the
FDISG System for the sole and limited purpose of having FDISG
provide the services contemplated hereunder and nothing contained
in this Agreement shall be construed or interpreted otherwise and
such license shall immediately terminate with the termination of
this Agreement.
8.3 In the event that the Fund, including any affiliate or agent
of the Fund or any third party acting on behalf of the Fund, is
provided with direct access to the FDISG System for either account
inquiry or to transmit transaction information, including but not
limited to maintenance, exchanges, purchases and redemptions, such
direct access capability shall be limited to direct entry to the
FDISG System by means of on-line mainframe terminal entry or PC
emulation of such mainframe terminal entry, and any other non-
conforming method of transmission of information to the FDISG
System is strictly prohibited without the prior written consent of
FDISG.
Article 9 Representations and Warranties.
9.1 FDISG represents and warrants to the Fund that:
(a) it is a corporation duly organized, existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory agency
as a transfer agent and such registration will remain in effect
for the duration of this Agreement; and
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to FDISG that:
(a) it is duly organized, existing and in good standing under
the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to
authorize it to enter into this Agreement;
(d) a registration statement under the Securities Act of 1933,
as amended, and the 1940 Act on behalf of each of the Portfolios
is currently effective and will remain effective, and all
appropriate state securities law filings have been made and will
continue to be made, with respect to all Shares of the Fund being
offered for sale; and
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance
with the terms of the Fund's Articles of Incorporation and its
Prospectus with respect to each Portfolio, such Shares shall be
validly issued, fully paid and non-assessable.
Article 10 Indemnification.
10.1 FDISG shall not be responsible for and the Fund on behalf of
each Portfolio shall indemnify and hold FDISG harmless from and
against any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and
liabilities of any sort or kind which may be asserted against
FDISG or for which FDISG may be held to be liable (a "Claim")
arising out of or attributable to any of the following:
(a) any actions of FDISG required to be taken pursuant to this
Agreement unless such Claim resulted from a negligent act or
omission to act or bad faith by FDISG in the performance of its
duties hereunder;
(b) FDISG's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not
limited to magnetic tapes, computer printouts, hard copies and
microfilm copies) received by FDISG from the Fund, or any
authorized third party acting on behalf of the Fund, including but
not limited to the prior transfer agent for the Fund, in the
performance of FDISG's duties and obligations hereunder;
(c) the reasonable reliance on, or the implementation of, any
Written or Oral Instructions or any other instructions or requests
of the Fund on behalf of the applicable Portfolio;
(d) the offer or sales of shares in violation of any requirement
under the securities laws or regulations of any state that such
shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect
to the offer or sale of such shares in such state; and
(e) the Fund's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the Fund's
negligence or misconduct or the breach of any representation or
warranty of the Fund made herein.
10.2 The Fund shall not be responsible for and FDISG shall
indemnify and hold the Fund harmless from and against any and all
claims, costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or
kind which may be asserted against the Fund or for which the Fund
may be held to be liable (a "Claim") arising out of or
attributable to any of the following:
(a) any actions of FDISG required to be taken pursuant to this
Agreement provided that such Claim resulted from a negligent act
or omission to act, bad faith, willful misfeasance or reckless
disregard by FDISG in the performance of its duties hereunder; and
(b) FDISG's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the FDISG's negligence
or misconduct or the breach of any representation or warranty of
FDISG made herein.
10.3 In any case in which the one party (the "Indemnifying
Party") may be asked to indemnify or hold the other party (the
"Indemnified Party") harmless, the Indemnified Party will notify
the Indemnifying Party promptly after identifying any situation
which it believes presents or appears likely to present a claim
for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified
Party and shall keep the Indemnifying Party advised with respect
to all developments concerning such situation. The Indemnifying
Party shall have the option to defend the Indemnified Party
against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so
elects, such defense shall be conducted by counsel chosen by the
Indemnifying Party and satisfactory to the Indemnified Party, and
thereupon the Indemnifying Party shall take over complete defense
of the Claim and the Indemnified Party shall sustain no further
legal or other expenses in respect of such Claim. The Indemnified
Party will not confess any Claim or make any compromise in any
case in which the Indemnifying Party will be asked to provide
indemnification, except with the Indemnifying Party's prior
written consent. The obligations of the parties hereto under this
Article 10 shall survive the termination of this Agreement.
10.4 Any claim for indemnification under this Agreement must be
made prior to the earlier of:
(a) one year after the Indemnifying Party becomes aware of the
event for which indemnification is claimed; or
(b) one year after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law
(and injunctive or provisional relief), the provisions of this
Article 10 shall be FDISG's sole and exclusive remedy for claims
or other actions or proceedings to which the Fund's
indemnification obligations pursuant to this Article 10 may apply.
Article 11 Standard of Care.
11.1 FDISG shall at all times act in good faith and agrees to use
its best efforts within commercially reasonable limits to ensure
the accuracy of all services performed under this Agreement, but
assumes no responsibility for loss or damage to the Fund unless
said errors are caused by FDISG's own negligence, bad faith or
willful misconduct or that of its employees.
11.2 Each party shall have the duty to mitigate damages for which
the other party may become responsible.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE
FOR CONSEQUENTIAL DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first
written above and shall continue for a period of three (3) years
(the "Initial Term"), unless earlier terminated pursuant to the
terms of this Agreement.
13.2 Either party may terminate this Agreement at the end
of the Initial Term upon not than less than sixty (60) days or
more than one hundred-eighty (180) days prior written notice to
the other party.
13.3 This Agreement may be terminated by the Fund prior to
the expiration of the Initial Term in the event FDISG has failed
to meet the Performance Standards, as set forth in Exhibit 1-A to
Schedule A, in three consecutive quarters. The Fund will provide
FDISG with sixty (60) days written notice after the third
consecutive quarter of FDISG's failure to meet the Performance
Standards if the Fund intends to exercise this option under this
Section 13.3. Notwithstanding the foregoing, the Fund's right
under this Section 13.3 shall not be effective until ninety (90)
days after FDISG has begun providing services under this
Agreement. In the event that the Administration Agreement dated
September 20, 1997 (the "Administration Agreement"), between FDISG
and the Fund is terminated by the Fund because of a breach by
FDISG of certain performance standards as provided in Section 7(b)
of the Administration Agreement, this Agreement may be terminated
by the Fund upon sixty (60) prior written notice to FDISG.
13.4 In the event a termination notice is given by the Fund, all
reasonable expenses associated with movement of records and
materials and conversion thereof to a successor transfer agent
("Conversion Costs") will be borne by the Fund; provided, however,
that in the event that such termination notice is given as a
result of a breach of the Performance Standards by FDISG with
respect to the services to be provided under this Agreement as
outlined in Section 13.3 of this Agreement or Section 7(b) of the
Administration Agreement or a material breach by FDISG of its
duties and obligations hereunder as outlined in Section 13.5 of
this Agreement or Section 7(d) of the Administration Agreement,
the Conversion Costs shall not exceed $15,000.
13.4 If a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party") the
other party (the "Non-Defaulting Party") may give written notice
thereof to the Defaulting Party, and if such material breach shall
not have been remedied within thirty (30) days after such written
notice is given, then the Non-Defaulting Party may terminate this
Agreement by giving thirty (30) days written notice of such
termination to the Defaulting Party. If FDISG is the
Non-Defaulting Party, its termination of this Agreement shall not
constitute a waiver of any other rights or remedies of FDISG with
respect to services performed prior to such termination of rights
of FDISG to be reimbursed for out-of-pocket expenses. In all
cases, termination by the Non-Defaulting Party shall not
constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the
Defaulting Party.
Article 14 Additional Portfolios
14.1 In the event that the Fund establishes one or more
Portfolios in addition to those identified in Exhibit 1, with
respect to which the Fund desires to have FDISG render services as
transfer agent under the terms hereof, the Fund shall so notify
FDISG in writing, and if FDISG agrees in writing to provide such
services, Exhibit 1 shall be amended to include such additional
Portfolios.
Article 15 Confidentiality.
15.1 The parties agree that the Proprietary Information
(defined below) and the contents of this Agreement (collectively
"Confidential Information") are confidential information of the
parties and their respective licensers. The Fund and FDISG shall
exercise reasonable care to safeguard the confidentiality of the
Confidential Information of the other. The Fund and FDISG may
each use the Confidential Information only to exercise its rights
or perform its duties under this Agreement. The Fund and FDISG
shall not duplicate, sell or disclose to others the Confidential
Information of the other, in whole or in part, without the prior
written permission of the other party. The Fund and FDISG may,
however, disclose Confidential Information to its employees who
have a need to know the Confidential Information to perform work
for the other, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or
disclosed by its employees in breach of this Agreement. The Fund
and FDISG may also disclose the Confidential Information to
independent contractors, auditors and professional advisors and as
legally required or requested by regulators. Notwithstanding the
previous sentence, in no event shall either the Fund or FDISG
disclose the Confidential Information to any competitor of the
other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is completely
sensitive material, and not generally known to the public,
including, but not limited to, information about product plans,
marketing strategies, finance, operations, customer relationships,
customer profiles, sales estimates, business plans, and internal
performance results relating to the past, present or future
business activities of the Fund or FDISG, their respective
subsidiaries and affiliated companies and the customers, clients
and suppliers of any of them;
(b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially
valuable and secret in the sense that its confidentiality affords
the Fund or FDISG a competitive advantage over its competitors;
and
(c) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software,
source code, object code, flow charts, databases, inventions,
know-how, show-how and trade secrets, whether or not patentable or
copyrightable.
15.3 Confidential Information includes, without limitation,
all documents, inventions, substances, engineering and laboratory
notebooks, drawings, diagrams, specifications, bills of material,
equipment, prototypes and models, and any other tangible
manifestation of the foregoing of either party which now exist or
come into the control or possession of the other.
15.4 Each party acknowledges that breach of the
restrictions on use, dissemination or disclosure of any
Confidential Information of the other party would result in
immediate and irreparable harm, and money damages would be
inadequate to compensate the other party for that harm. Each party
shall be entitled to equitable relief, in addition to all other
available remedies, to redress any such breach.
Article 16 Force Majeure.
No party shall be liable for any default or delay in the
performance of its obligations under this Agreement if and to the
extent such default or delay is caused, directly or indirectly, by
(i) fire, flood, elements of nature or other acts of God; (ii) any
outbreak or escalation of hostilities, war, riots or civil
disorders in any country, (iii) any act or omission of the other
party or any governmental authority; (iv) any labor disputes
(whether or not the employees' demands are reasonable or within
the party's power to satisfy); or (v) nonperformance by a third
party or any similar cause beyond the reasonable control of such
party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the
non-performing party shall be excused from any further performance
and observance of the obligations so affected only for as long as
such circumstances prevail and such party continues to use
commercially reasonable efforts to recommence performance or
observance as soon as practicable.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may
not be assigned or otherwise transferred by either party hereto,
without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, however,
that FDISG may, in its sole discretion, assign all its right,
title and interest in this Agreement to an affiliate, parent or
subsidiary, or to the purchaser of substantially all of its
business. With the consent of the Fund, FDISG may engage
subcontractors to perform any of the obligations contained in this
Agreement to be performed by FDISG.
Article 18 Arbitration.
18.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration
administered by the American Arbitration Association in Boston,
Massachusetts in accordance with its applicable rules, except that
the Federal Rules of Evidence and the Federal Rules of Civil
Procedure with respect to the discovery process shall apply.
18.2 The parties hereby agree that judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction.
18.3 The parties acknowledge and agree that the performance of
the obligations under this Agreement necessitates the use of
instrumentalities of interstate commerce and, notwithstanding
other general choice of law provisions in this Agreement, the
parties agree that the Federal Arbitration Act shall govern and
control with respect to the provisions of this Article 18.
Article 19 Notice.
Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or FDISG, shall be
sufficiently given if addressed to that party and received by it
at its office set forth below or at such other place as it may
from time to time designate in writing.
To the Fund:
First Choice Funds Trust
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to:
Baker & McKenzie
805 Third Avenue, 30th Floor
New York, New York 10022
Attention: Steven R. Howard
To FDISG:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to FDISG's General Counsel
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws
on conflicts of laws, shall govern the interpretation, validity,
and enforcement of this agreement. All actions arising from or
related to this Agreement shall be brought in the state and
federal courts sitting in the City of Boston, and FDISG and Client
hereby submit themselves to the exclusive jurisdiction of those
courts.
Article 21 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original; but such counterparts
shall, together, constitute only one instrument.
Article 22 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
Article 23 Publicity.
Neither FDISG nor the Fund shall release or publish news releases,
public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without
the prior review and written approval of the other party;
provided, however, that either party may make such disclosures as
are required by legal, accounting or regulatory requirements after
making reasonable efforts in the circumstances to consult in
advance with the other party.
Article 24 Relationship of Parties.
24.1 The parties agree that they are independent contractors and
not partners or co-venturers and nothing contained herein shall be
interpreted or construed otherwise.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits
hereto, constitutes the entire Agreement between the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous proposals, agreements, contracts, representations,
and understandings, whether written or oral, between the parties
with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of
the Agreement shall be valid unless in writing signed by each
party. A party's waiver of a breach of any term or condition in
the Agreement shall not be deemed a waiver of any subsequent
breach of the same or another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that
any term or provision is illegal or invalid for any reason, the
illegality or invalidity shall not affect the validity of the
remainder of this Agreement. In such case, the parties shall in
good faith modify or substitute such provision consistent with the
original intent of the parties. Without limiting the generality
of this paragraph, if a court determines that any remedy stated in
this Agreement has failed of its essential purpose, then all other
provisions of this Agreement, including the limitations on
liability and exclusion of damages, shall remain fully effective.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers, as of the day
and year first above written.
FIRST CHOICE FUNDS TRUST
JOHN J. PILEGGI
By:John J. Pileggi
Title: Trustee
FIRST DATA INVESTOR SERVICES GROUP, INC.
NEIL FORREST
By: Neil Forrest
Title:Vice President and General Manager
Exhibit 1
LIST OF PORTFOLIOS
U.S. Treasury Reserve Fund
Cash Reserve Fund
Schedule A
DUTIES OF FDISG
1. Shareholder Information. FDISG shall maintain a record
of the number of Shares held by each Shareholder of record which
shall include name, address, taxpayer identification and which
shall indicate whether such Shares are held in certificates or
uncertificated form.
2. Shareholder Services. FDISG shall respond as appropriate
to all inquiries and communications from Shareholders relating to
Shareholder accounts with respect to its duties hereunder and as
may be from time to time mutually agreed upon between FDISG and
the Fund.
3. Share Certificates.
(a) At the expense of the Fund, the Fund shall supply FDISG with
an adequate supply of blank share certificates to meet FDISG
requirements therefor. Such Share certificates shall be properly
signed by facsimile. The Fund agrees that, notwithstanding the
death, resignation, or removal of any officer of the Fund whose
signature appears on such certificates, FDISG or its agent may
continue to countersign certificates which bear such signatures
until otherwise directed by Written Instructions.
(b) FDISG shall issue replacement Share certificates in lieu of
certificates which have been lost, stolen or destroyed, upon
receipt by FDISG of properly executed affidavits and lost
certificate bonds, in form satisfactory to FDISG, with the Fund
and FDISG as obligees under the bond.
(c) FDISG shall also maintain a record of each certificate
issued, the number of Shares represented thereby and the
Shareholder of record. With respect to Shares held in open
accounts or uncertificated form (i.e., no certificate being issued
with respect thereto) FDISG shall maintain comparable records of
the Shareholders thereof, including their names, addresses and
taxpayer identification. FDISG shall further maintain a stop
transfer record on lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials.
FDISG will address and mail to Shareholders of the Fund, all
reports to Shareholders, dividend and distribution notices and
proxy material for the Fund's meetings of Shareholders. In
connection with meetings of Shareholders, FDISG will prepare
Shareholder lists, mail and certify as to the mailing of proxy
materials, process and tabulate returned proxy cards, report on
proxies voted prior to meetings, act as inspector of election at
meetings and certify Shares voted at meetings.
5. Sales of Shares
(a) FDISG shall not be required to issue any Shares of the Fund
where it has received a Written Instruction from the Fund or
official notice from any appropriate authority that the sale of
the Shares of the Fund has been suspended or discontinued. The
existence of such Written Instructions or such official notice
shall be conclusive evidence of the right of FDISG to rely on such
Written Instructions or official notice.
(b) In the event that any check or other order for the payment of
money is returned unpaid for any reason, FDISG will endeavor to:
(i) give prompt notice of such return to the Fund or its designee;
(ii) place a stop transfer order against all Shares issued as a
result of such check or order; and (iii) take such actions as
FDISG may from time to time deem appropriate.
6. Transfer and Repurchase
(a) FDISG shall process all requests to transfer or redeem Shares
in accordance with the transfer or repurchase procedures set forth
in the Fund's Prospectus.
(b) FDISG will transfer or repurchase Shares upon receipt of Oral
or Written Instructions or otherwise pursuant to the Prospectus
and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as FDISG reasonably may
deem necessary.
(c) FDISG reserves the right to refuse to transfer or repurchase
Shares until it is satisfied that the endorsement on the
instructions is valid and genuine. FDISG also reserves the right
to refuse to transfer or repurchase Shares until it is satisfied
that the requested transfer or repurchase is legally authorized,
and it shall incur no liability for the refusal, in good faith, to
make transfers or repurchases which FDISG, in its good judgment,
deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such
transfer or repurchase.
(d) When Shares are redeemed, FDISG shall, upon receipt of the
instructions and documents in proper form, deliver to the
Custodian and the Fund or its designee a notification setting
forth the number of Shares to be repurchased. Such repurchased
shares shall be reflected on appropriate accounts maintained by
FDISG reflecting outstanding Shares of the Fund and Shares
attributed to individual accounts.
(e) FDISG shall upon receipt of the monies provided to it by the
Custodian for the repurchase of Shares, pay such monies as are
received from the Custodian, all in accordance with the procedures
described in the written instruction received by FDISG from the
Fund.
(f) FDISG shall not process or effect any repurchase with respect
to Shares of the Fund after receipt by FDISG or its agent of
notification of the suspension of the determination of the net
asset value of the Fund.
7. Dividends
(a) Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund with respect to
Shares of the Fund, the Fund shall furnish or cause to be
furnished to FDISG Written Instructions setting forth the date of
the declaration of such dividend or distribution, the ex-dividend
date, the date of payment thereof, the record date as of which
Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date,
the total amount payable on the payment date and whether such
dividend or distribution is to be paid in Shares at net asset
value.
(b) On or before the payment date specified in such resolution of
the Board of Directors, the Fund will provide FDISG with
sufficient cash to make payment to the Shareholders of record as
of such payment date.
(c) If FDISG does not receive sufficient cash from the Fund to
make total dividend and/or distribution payments to all
Shareholders of the Fund as of the record date, FDISG will, upon
notifying the Fund, withhold payment to all Shareholders of record
as of the record date until sufficient cash is provided to FDISG.
8. In addition to and neither in lieu nor in contravention of
the services set forth above, FDISG shall: (i) perform all the
customary services of a transfer agent, registrar, dividend
disbursing agent and agent of the dividend reinvestment and cash
purchase plan as described herein consistent with those
requirements in effect as at the date of this Agreement. The
detailed definition, frequency, limitations and associated costs
(if any) set out in Schedule B, include but are not limited to:
maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, tabulating proxies, mailing
Shareholder reports to current Shareholders, withholding taxes on
U.S. resident and non-resident alien accounts where applicable,
preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders.
Schedule B
FEE SCHEDULE
1. Standard Fees
$15.00 per account with a $6,000 minimum fee per Fund per
annum
After the one year anniversary of the effective date of this
Agreement, FDISG may adjust the above fees once per calendar year,
upon thirty (30) days prior written notice in an amount not to
exceed the cumulative percentage increase in the Consumer Price
Index for All Urban Consumers (CPI-U) U.S. City Average, All items
(unadjusted) - (1982-84=100), published by the U.S. Department of
Labor since the last such adjustment in the Client's monthly fees
(or the Effective Date absent a prior such adjustment).
2. Programming Costs
(a) Dedicated Team:
Programmer $100,000 per annum
BSA $ 85,000 per annum
Tester $ 65,000 per annum
(b) System Enhancements (Non Dedicated Team):
Programmer $135.00 per hour
The above rates are subject to an annual 5% increase after the one
year anniversary of the effective date of this Agreement.
3. PRINT/MAIL CHARGES
1. Daily Output
(a) Shareholder Statements:
Base stock, laser printing, folding, inserting and mailing,
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
Set up Fee: $15.00 per work
order
(b) Combined Statements (Householding multiple statements in one
envelope):
Base stock, laser printing, folding, inserting and mailing,
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.135 per
image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
Set up Fee: $15.00 per work
order
(c) Combined Exchange Statements (To and from exchange on one
confirm):
Base stock, laser printing, folding, inserting and mailing
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
2. Dividend Output
(a) Shareholder Statements:
Base stock, laser printing, folding, inserting and mailing,
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
(b) Dividend Checks:
Base stock, laser printing, folding, inserting and mailing,
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.179 per image
3,500 - 10,000 $.169 per
image
10,001 and above $.16 per image
Minimum Charge $25.00 per work
order
3. Consolidated Statements
Shareholder & Dealer Statements:
Base stock, laser printing, folding, inserting and mailing
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
Selective Inserting Charges $.03 per
envelope
(minimum $250)
4. On-Request 'Super Select* Statements
Shareholder Statements:
Base stock, laser printing, folding inserting and mailing,
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
Set up Fee: $15.00 per work
order
5. New Account Letters
Base stock, laser printing, folding, inserting and mailing,
(excluding postage and envelopes)
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
Set up Fee: $15.00 per work
order
6. T.I.N. Solicitations
Daily Statements, Educational TIN, B-Notice, Second B-notice:
Base stock, laser printing, folding, inserting and mailing
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
(excluding postage and envelopes) $15.00 per
work order
7. Wire Order Invoice Statements
Base stock, laser printing, folding, inserting and mailing
Number of Items Per Fund Price
1 - 3,500 $.135 per image
3,501 - 10,000 $.125 per
image
10,001 - and above $.12 per
image
Minimum Charge $25.00 per work
order
(excluding postage and envelopes) $15.00 per
work order
8. Label List Mailings
Cheshire labeling and mail first class
$29.00/thousand
Labeling, inserting and mailing $50.00
set up charge
(excludes postage and envelopes)
9. Miscellaneous Services
Charge Per Unit
1 Additional Insert $20
1,000
2 Additional Inserts $40
1,000
3 Additional Inserts $60
1,000
4 Additional Inserts $80
1,000
5 Additional Inserts $100
1,000
6 Additional Inserts $120
1,000
7 Additional Inserts $140
1,000
8 Additional Inserts $160
1,000
Folding $20
1,000
Manual Processing $25 Per Hour
NOTE: Costs of all materials used are in addition to all prices.
Postage is in addition, (50-50 split of postal savings).
After the one year anniversary of the effective date of this
Agreement, FDISG may adjust the above fees once per calendar year,
upon thirty (30) days prior written notice in an amount not to
exceed the cumulative percentage increase in the Consumer Price
Index for All Urban Consumers (CPI-U) U.S. City Average, All items
(unadjusted) - (1982-84=100), published by the U.S. Department of
Labor since the last such adjustment in the Client's monthly fees
(or the Effective Date absent a prior such adjustment).
Schedule C
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable
out-of-pocket expenses, including the following items:
Microfiche/microfilm production
Magnetic media tapes and freight
Printing costs, including certificates, envelopes, checks and
stationery
Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
Due diligence mailings
Telephone and telecommunication costs, including all lease,
maintenance and line costs
Ad hoc reports as approved by the Fund
Proxy solicitations, mailings and tabulations
Daily & Distribution advice mailings
Shipping, Certified and Overnight mail and insurance
Year-end form production and mailings
Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
Duplicating services
Courier services
Incoming and outgoing wire charges
Federal Reserve charges for check clearance
Overtime, as approved by the Fund
Temporary staff, as approved by the Fund
Travel and entertainment, as approved by the Fund
Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
Third party audit reviews
Ad hoc SQL time as approved by the Fund
The Fund agrees that postage and mailing expenses will be paid on
the day of or prior to mailing as agreed with FDISG. In addition,
the Fund will promptly reimburse FDISG for any other unscheduled
expenses incurred by FDISG whenever the Fund and FDISG mutually
agree that such expenses are not otherwise properly borne by FDISG
as part of its duties and obligations under the Agreement.
Schedule D
FUND DOCUMENTS
Certified copy of the Articles of Incorporation of the Fund, as
amended
Certified copy of the By-laws of the Fund, as amended,
Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
Specimens of the certificates for Shares of the Fund, if
applicable, in the form approved by the Board of Directors of the
Fund, with a certificate of the Secretary of the Fund as to such
approval
All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by
the Fund
Certified list of Shareholders of the Fund with the name, address
and taxpayer identification number of each Shareholder, and the
number of Shares of the Fund held by each, certificate numbers and
denominations (if any certificates have been issued), lists of any
accounts against which stop transfer orders have been placed,
together with the reasons therefore, and the number of Shares
redeemed by the Fund
All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation or
By-laws of the Fund or as required by law and shall perform such
other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
Exhibit 1-A to Schedule A
Performance Standards
Pursuant to Section 3.3 of this Agreement, FDISG has agreed
to perform the services described in this Agreement in accordance
with the Performance Standards set forth in this Exhibit 1 to
Schedule A. The parties agree that the measurement of the
Performance Standards will not begin until ninety (90) days after
FDISG has begun providing services under this Agreement. The
parties agree that each quarterly period, as described below, will
be measured on a rolling three calendar month period. The parties
agree that such Performance Standards, which are described below,
may be revised from time to time upon the mutual agreement of the
parties. The parties agree that any new Funds that may be added
to the Fund from time to time will be entitled to similar
Performance Standards and measuring periods.
(a) In the event that FDISG fails to meet a particular
Performance Standard (except any failure due to circumstances
beyond its control) in any particular quarter, the Fund will
provide FDISG with written notice of such failure, and FDISG
agrees to take appropriate corrective action as soon as reasonably
possible.
(b) In the event that FDISG fails to meet a particular
Performance Standard (except for any failure due to circumstances
beyond its control) in two (2) consecutive quarters, the fee
payable to FDISG hereunder for such service shall be reduced by
thirty percent (30%) for the second of those two quarters.
(c) In the event that FDISG fails to meet a particular
Performance Standard (except for any failure due to circumstances
beyond its control) for any three (3) consecutive quarters, the
Fund shall have the right to terminate this Agreement upon sixty
(60) days' written notice to FDISG.
(d) Compliance with the Performance Standards shall be
measured quarterly based on the average performance during that
quarter. In the event that volumes shall exceed 500 wires per
day, compliance with the Performance Standards shall then be
measured monthly based on the average performance during that
month. A month shall be defined as a calendar month.
(e) The Performance Standards shall be as follows:
Wire Room and Operations
1)
Redemption
call in by
Wires
pulled by
First Data
Wires Sent
out by
First Data
12:00 pm
Eastern
(9:00 am
Pacific)
12:20 pm
Eastern
(9:20 am
Pacific)
1:00 pm
Eastern
(10:00 am
Pacific)
2:00 pm
Eastern
(11:00 am
Pacific)
2:20 pm
Eastern
(11:20 am
Pacific)
3:00 pm
Eastern
(12:00 pm
Pacific)
3:00 pm
Eastern
(12:00 pm
Pacific)
3:15 pm
Eastern
(12:15 pm
Pacific)
4:00 pm
Eastern
(1:00 pm
Pacific)
2) Accurate ACH and wires sent to correct location 98% of the
time.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 2 under the Securities
Act of 1933 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated November 7, 1997,
relating to the financial statements and financial highlights
appearing in the September 30, 1997 Annual Report to Shareholders
of First Choice Funds Trust, which are also incorporated by
reference into the Registration Statement. We also consent to the
references to us under the headings "Financial Highlights" in the
Prospectus and under the headings "Experts" and "Financial
Statements" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Price Waterhouse LLP
Boston, Massachusetts
December 12, 1997
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 Neil
Forrest and Coleen Downs Dinneen, 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 and 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,
of any of them, 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 21st day of November, 1997.
DENNIS W. DRAPER
Dennis W. Draper
JOSEPH N. HANKIN
Joseph N. Hankin
JOHN J. PILEGGI
John J. Pileggi
RICHARD A. WEDEMEYER_
Richard A. Wedemeyer
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
FIRST CHOICE FUNDS TRUST
September 20, 1997
First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581
Dear Sirs or Madams:
This will confirm the agreement between First Choice
Funds Trust (the "Trust") and First Data Distributors, Inc. (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 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 First Data Distributors, Inc. 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.
7. 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:
FIRST DATA DISTRIBUTORS,
INC.
By:
Title:
U.S. TREASURY RESERVE FUND
A Series of First Choice Funds Trust
September 20, 1997
First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581
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 First Data Distributors, Inc. (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 intermediar-
ies 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:
FIRST DATA DISTRIBUTORS, INC.
By:
Title:
CASH RESERVE FUND
A Series of First Choice Funds Trust
September 20, 1997
First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581
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 First Data Distributors, Inc. (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 Money Market 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:
FIRST DATA DISTRIBUTORS, INC.
By:
Title:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NUMBER> 2
<NAME> FIRST CHOICE CASH RESERVE FUND - SERVICE CLASS
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[ARTICLE] 6
[SERIES]
[NUMBER] 2
[NAME] FIRST CHOICE CASH RESERVE FUND - INST CLASS
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEP-30-1997
[PERIOD-END] SEP-30-1997
[INVESTMENTS-AT-COST] 58,201,565
[INVESTMENTS-AT-VALUE] 58,201,565
[RECEIVABLES] 74,316
[ASSETS-OTHER] 61,582
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[PAID-IN-CAPITAL-COMMON] 58,008,377
[SHARES-COMMON-STOCK] 61,352
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 390
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 58,007,987
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2,103,563
[OTHER-INCOME] 0
[EXPENSES-NET] 132,093
[NET-INVESTMENT-INCOME] 1,971,470
[REALIZED-GAINS-CURRENT] (390)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 1,971,080
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 344
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 60,000
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 352
[NET-CHANGE-IN-ASSETS] 57,957,987
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[ARTICLE] 6
[SERIES]
[NUMBER] 1
[NAME] FIRST CHOICE U.S. TREASURY RESERVE FUND - SERVICE CLASS
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEP-30-1997
[PERIOD-END] SEP-30-1997
[INVESTMENTS-AT-COST] 74,573,880
[INVESTMENTS-AT-VALUE] 74,573,880
[RECEIVABLES] 1,298,774
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[OTHER-ITEMS-ASSETS] 0
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[REALIZED-GAINS-CURRENT] 958
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[NUMBER-OF-SHARES-SOLD] 214,827,431
[NUMBER-OF-SHARES-REDEEMED] 141,299,196
[SHARES-REINVESTED] 2,468
[NET-CHANGE-IN-ASSETS] 75,525,604
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[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[SERIES]
[NUMBER] 1
[NAME] FIRST CHOICE U.S. TREASURY RESERVE FUND - INST CLASS
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEP-30-1997
[PERIOD-END] SEP-30-1997
[INVESTMENTS-AT-COST] 74,573,880
[INVESTMENTS-AT-VALUE] 74,573,880
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[NET-INVESTMENT-INCOME] 2,765,083
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</TABLE>
