Reg. ICA No. 811-08877
File No. 333-59083
AS FILED VIA EDGAR WITH THE SECRITIES AND EXCHANGE COMMISSION ON OCTOBER 30,
1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
THE RAMIREZ TRUST
(Exact Name of Registrant as Specified in Charter)
61 Broadway
New York, New York 10006
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: 1-877-RAM-6868
Peter J. O'Rourke, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(Name and Address of Agent for Service)
Copy to:
Samuel A. Ramirez
Ramirez Asset Management, Inc.
61 Broadway
New York, New York 10006
Approximate Date of Proposed Public Offering:
As soon as practicable after this registration statement becomes effective.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS-REFERENCE SHEET
(Pursuant to Rule 404 showing location in each form of Prospectus of
the responses to the Items in Part A and location in each form of Prospectus and
the Statement of Additional Information of the responses to the Items in Part B
of Form N-1A).
THE RAMIREZ TRUST
Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
------ ------------------ -------------------
1(a) Front Cover Page *
(b) Back Cover Page *
2(a) Fund Expenses *
(b) Investment Objective and *
Policies Common Investment
Practices of the Funds
(c) Risk Factors *
3 Fees and Expenses of the Fund *
4(a) Investment Limitations *
5 Not Applicable *
6(a) Management of The Trust *
(b) Not Applicable *
7(a) Purchase of Shares *
(b) Purchase Orders Placed *
through the Transfer Agent,
Purchase Orders placed
through Registered
Representatives
(c) Redemption of Shares *
Redemption Orders Placed
through the Transfer Agent,
Shareholder Services
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Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
------ ------------------ -------------------
(d) Finances - Dividends and *
Distributions
(e) Finances - Dividends and Tax *
Matters
(f) Not Applicable *
8(a) Not Applicable *
(b) Not Applicable *
(c) Not Applicable *
9 Financial Highlights *
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THE RAMIREZ TRUST
Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
------ ------------------ -------------------
10 * Front Cover Page
11 * Fund History
12(a) * Fund History
12(b)and (c) Investment Objectives and Policies
* Investment Objectives and Policies
12(d) * Additional Information on
Portfolio Instruments
12(e) Not Applicable
13(a)-(d) * Management of the Trust
13(e) * Not Applicable
14(a) * Not Applicable
14(b) * Management of the Trust
14(c) * Management of the Trust
15(a) Administration, Custody and
Transfer Agent Services
(b) * Not Applicable
(c) Administration, Custody and
Transfer Agent Services
(d) * Administration, Custody and
Transfer Agent Services
(e) * Not Applicable
(f) * Not Applicable
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Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
------ ------------------ -------------------
(g) * Not Applicable
(h) * Administration, Custody and
Transfer Agent Services
16 (a)-(c) * Portfolio Transactions
* Portfolio Transactions
(d) * Not Applicable
(e) * Not Applicable
17 (a) * Portfolio Transactions, Share-
holder Organizations
(b) * Not Applicable
18 (a) Shareholder Organizations
(b) * Not Applicable
(c) Shareholder Organizations
(d) * Not Applicable
19 (a) * Tax Matters
(b) * Tax Matters
20 (a) * Not Applicable
(b) * Not Applicable
(c) * Not Applicable
21 (a) * Yield and Other Performance
Information
(b) * Performance Information
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22 (a) * Financial Statements
(b) * Financial Statements
(c) * Financial Statements
* See Prospectus
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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<PAGE>
THE RAMIREZ TRUST
61 BROADWAY
NEW YORK, NEW YORK 10006
877-RAM-6868
RAMIREZ CASH MANAGEMENT MONEY MARKET FUND
RAMIREZ NEW YORK TAX-FREE
MONEY MARKET FUND
RAMIREZ U.S. TREASURY MONEY MARKET FUND
ADVISER:
RAMIREZ ASSET MANAGEMENT, INC.
PROSPECTUS
OCTOBER ___, 1998
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This Prospectus offers shares of the Ramirez Cash Management Money Market Fund
(the "Cash Management Fund"), the Ramirez New York Tax-Free Money Market Fund
(the "New York Tax-Free Fund"), and the Ramirez U.S. Treasury Money Market Fund
(the "U.S. Treasury Fund") (collectively, the "Funds"). Each Fund is a series
portfolio of The Ramirez Trust (the "Trust"), an open-end investment management
company. The Cash Management Fund and U.S. Treasury Fund are diversified Funds.
The New York Tax-Free Fund is a non-diversified Fund. Ramirez Asset Management,
Inc. serves as each Fund's investment adviser.
This Prospectus provides you with information about the Trust and each Fund
which you should know before investing in shares of a Fund. A Statement of
Additional Information, dated September , 1998, has been filed with the
Securities and Exchange Commission ("SEC") and is available free of charge by
contacting the Trust at 61 Broadway, New York, New York 10006 or by calling
(877) RAM-6868. The information contained in the Statement of Additional
Information, as amended from time to time, is incorporated by reference into
this prospectus. Additional information, including this Prospectus and the
Statement of Additional Information, may be obtained by accessing the website
maintained by SEC (http://www.sec.gov).
INVESTORS SHOULD READ AND RETAIN THIS
PROSPECTUS FOR FUTURE REFERENCE
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND 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 FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
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 NEW YORK TAX-FREE FUND MAY INVEST A SIGNIFICANT PERCENTAGE OF ITS ASSETS IN
THE SECURITIES OF A SINGLE ISSUER; ACCORDINGLY, AN INVESTMENT IN THE NEW YORK
TAX-FREE FUND MAY INVOLVE MORE RISK THAN INVESTMENTS IN OTHER TYPES OF MONEY
MARKET FUNDS.
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TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY..................................................... 1
FUND EXPENSES ......................................................... 2
INVESTMENT OBJECTIVE AND POLICIES...................................... 3
COMMON INVESTMENT PRACTICES OF THE FUNDS............................... 6
RISK FACTORS........................................................... 8
INVESTMENT LIMITATIONS................................................. 10
PURCHASE OF SHARES..................................................... 10
REDEMPTION OF SHARES................................................... 13
SHAREHOLDER SERVICES................................................... 16
DIVIDENDS AND DISTRIBUTIONS............................................ 16
MANAGEMENT OF THE TRUST................................................ 17
DISTRIBUTION PLANS..................................................... 19
SHAREHOLDER SERVICING PLAN............................................ 19
DIVIDENDS AND TAX MATTERS.............................................. 21
OTHER INFORMATION...................................................... 23
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PROSPECTUS SUMMARY
This prospectus offers shares of the Cash Management Fund, the New York Tax-Free
Fund and U.S. Treasury Fund of the Ramirez Trust. Each Fund is a money market
fund which seeks to retain a stable net asset value per share of $1.00.
CASH MANAGEMENT FUND. The Cash Management Fund's investment objective is to
provide a high level of current income while preserving capital and maintaining
liquidity. The Cash Management Fund seeks to achieve its objective by investing
in high quality, short-term U.S. dollar denominated money market instruments.
NEW YORK TAX-FREE FUND. The New York Tax-Free Fund's investment objective is to
provide a high level of current income exempt from federal, New York State and
New York City income taxes while preserving capital and maintaining liquidity.
The New York Tax-Free Fund seeks to achieve its investment objective by
investing primarily in short-term, fixed rate and variable rate municipal
obligations which are exempt from regular federal, New York State and New York
City income tax.
U.S. TREASURY FUND. The U.S. Treasury Fund's investment objective is to provide
a high level of current income consistent with maximum safety of principal and
maintenance of liquidity. The U.S. Treasury Fund seeks to achieve its objective
by investing only in direct obligations of the U.S. Treasury, including Treasury
bills, bonds and notes. The Fund May also invest in repurchase agreements
collateralized by these obligations.
INVESTMENT ADVISER. Each Fund's investment adviser is Ramirez Asset Management,
Inc. (the "Adviser"), 61 Broadway, New York, N.Y. 10006. See "Management of the
Trust" on page 16.
ADMINISTRATION AND DISTRIBUTION. The administrator of each Fund is Firstar Trust
Company. The statutory distributor of each Fund is Ramirez & Co., Inc., an
affiliate of the Adviser and a registered broker-dealer. See "Management of the
Trust" on page 16.
PURCHASES AND REDEMPTIONS. Investors may purchase and redeem shares of
beneficial interest in a Fund without any sales loads or other charges any day
the New York Stock Exchange is open ("Fund Business Day") by calling the Funds'
transfer agent at 1-877-RAM-6868. The minimum initial investment is $1,000. The
Trust and the transfer agent each reserve the right to waive this minimum
initial investment limitation. The minimum subsequent investment is $50. See
"Purchase of Shares" on page 10 and "Redemption of Shares" on page 13.
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FUND EXPENSES
The purpose of the following table is to assist an investor in understanding the
various costs and expenses that a shareholder of each Fund will bear, either
directly or indirectly. The "Annual Fund Operating Expenses" summary shows the
advisory fee, Rule 12b-1 fee, and other operating expenses expected to be
incurred by each Fund. The Adviser may, from time to time, voluntarily agree to
defer or waive fees or absorb some or all of the expenses of a Fund. To the
extent the Adviser should do so, it may seek repayment of such deferred fees or
absorbed expenses after this practice is discontinued. However, no repayment
will be made if the expense ratio of the relevant Fund would exceed 0.85%.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Maximum Deferred Sales Load None
Redemption Fees/1/ None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES (as a percentage of annual average net assets):
Cash U.S.
Management NY Tax Free Treasury
Fund Fund Fund
---- ---- ----
0.35% 0.35% 0.35%
Advisory Fees...................
12b-1 Fees...................... 0.25% 0.25% 0.25%
Other Expenses/2/,/3/........... 0.20% 0.20% 0.20%
---- ---- ----
Total Operating Expenses3....... 0.85% 0.85% 0.85%
==== ==== ====
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/1/ The Funds' transfer agent charges a $12.00 fee per wire redemption and a
$15.00 fee for an IRA distribution.
/2/ Includes a Shareholder Servicing Fee of 0.15%. Shareholder servicing agents
may charge fees for providing services in connection with their clients'
investments in a Fund's shares.
/3/ The Adviser has voluntarily agreed to defer, waive and/or reimburse
expenses during the current fiscal year so that each Fund's total ordinary
operating expenses will not exceed 0.85%. Should the Adviser decide during
the current fiscal year that such waiver, deferral and/or reimbursement
cannot be maintained, shareholders will receive 30 days advance notice of
the change. Without such waiver, deferral or reimbursement, Other Expenses
and Total Operating Expenses for the Ramirez Cash Management Money Market
Fund 0.69% and 1.45%, respectively; Other Expenses and Total Operating
Expenses for the Ramirez New York Tax-Free Money Market Fund would be 0.71%
and 1.46% respectively; and, Other Expenses and Total Operating Expenses
for the U.S. Treasury Money Market Fund would be 0.69% and 1.45%,
respectively.
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EXAMPLE
You would pay the following expenses on a $10,000 investment in the relevant
Fund, assuming a 5% annual return and
redemption at the end of each period: 1 Year 3 Years 5 Years 10 Years
Cash Management Fund........ $87 $94 $102 $125
New York Tax-Free Fund...... $87 $94 $102 $125
U.S. Treasury Fund.......... $87 $94 $102 $125
The examples above are based on the fees listed in each table and assumes the
reinvestment of dividends. The examples should not be considered a
representation of past or future expenses or performance. Actual expenses may be
greater or less than those shown.
INVESTMENT OBJECTIVE AND POLICIES
The descriptions that follow are designed to help you choose the Fund that best
fits your investment objectives. You are reminded that there are risks in an
investment in the Funds, and there can be no assurance that each Fund's
investment objective will be attained. An investor should not consider an
investment in any individual Fund to be a complete investment program.
OVERALL OBJECTIVE OF THE FUNDS. Each Fund seeks to maintain a net asset value of
$1.00 per share. The Funds invest only in U.S. dollar denominated high quality
obligations which are determined to present minimal credit risks. This credit
determination must be made in accordance with procedures established by the
Board of Trustees of the Trust (the "Board of Trustees") and in accordance with
Rule 2a-7 under the Investment Company Act of 1940, as amended (the "1940 Act").
Securities in which the Funds invest may not earn as high a level of current
income as long-term or lower quality securities.
The Funds may purchase only instruments which have or are deemed to have
remaining maturities of 397 days or less in accordance with federal regulations.
Certain securities held by each Fund may have remaining maturities in excess of
stated limitations if the securities provide for adjustments in their interest
rates not less frequently than such time limitations. Each Fund will also
maintain a dollar-weighted average portfolio maturity of 90 days or less.
Although each Fund seeks to be fully invested, at times each Fund may hold
uninvested cash reserves, which would adversely affect its yield.
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The investment objective of each Fund and related policies and activities are
not fundamental and may be changed by the Board of Trustees without the approval
of shareholders.
RAMIREZ CASH MANAGEMENT MONEY MARKET FUND.
INVESTMENT OBJECTIVE. The Cash Management Fund's investment objective is to
provide a high level of current income while preserving capital and maintaining
liquidity.
MANAGEMENT POLICIES. In pursuing its investment objective, the Cash Management
Fund invests in a broad range of short-term U.S. dollar denominated money market
instruments. The Cash Management Fund invests in (i) high quality commercial
paper and other short-term obligations, including floating and variable rate
master demand notes of U.S. and foreign corporations; (ii) obligations of
foreign governments and supranational agencies (e.g., the International Bank for
Reconstruction and Development); (iii) obligations issued or guaranteed by U.S.
banks with total assets exceeding $1 billion (including obligations of foreign
branches of such banks) and by foreign banks with total assets exceeding $10
billion (or the equivalent in other currencies) which have branches or agencies
in the U.S. (including U.S. branches of such banks); (iv) securities issued or
guaranteed as to principal and interest by the U.S. Government or by agencies or
instrumentalities thereof; and (v) repurchase agreements collateralized by the
above securities.
The Cash Management Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except for U.S. Government securities. In
addition, the Cash Management Fund may not invest more than 5% of its total
assets in eligible securities that have received a rating in the second highest
short-term rating category from the requisite Nationally Recognized Statistical
Rating Organizations ("NRSROs") and comparable unrated securities ("Second Tier
Securities") and may not invest more than 1% of its total assets in the Second
Tier Securities of any one issuer. The Cash Management Fund may invest more than
5% (but no more than 25%) of the then-current value of the Fund's total assets
in the securities of a single issuer for a period of up to three business days,
provided that (a) the securities either are rated by the requisite NRSROs in the
highest short-term rating category or are securities of issuers that have
received such rating with respect to other short-term debt securities and such
securities are similar in security and priority (or are comparable unrated
securities), and (b) the Fund does not make more than one such investment at any
one time.
The Cash Management Fund may purchase obligations of issuers in the banking
industry, such as commercial paper, notes, certificates of deposit, bankers
acceptances and time deposits and U.S. dollar denominated instruments issued or
supported by the credit of the bank. The Cash Management Fund will always invest
more than 25% of the current value of its total assets in bank obligations
(including bank obligations subject to repurchase agreements), except that if at
some future date adverse economic conditions prevail in the banking industry,
the Cash Management Fund may, for defensive purposes, temporarily invest less
than 25% of its assets in bank obligations.
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The Cash Management Fund may invest in commercial paper including 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 government agencies and instrumentalities (but
only in the case of taxable securities). Commercial paper purchased by the Cash
Management Fund is, at the time of investment, required to be rated (or issued
by an issuer with a similar security rated) in the highest short-term rating
category by two or more NRSROs or the only NRSRO rating the security (except
that up to 5% of the Fund's total assets in commercial paper rated in the second
highest rating category from the requisite highest short-term rating category
from the requisite NRSROs). If unrated, then the Adviser must determine the
security to be of comparable credit quality subject to subsequent ratification
by the Board of Trustees.
The Cash Management Fund may also invest in non-convertible corporate debt
securities such as bonds and debentures which have 397 days or less remaining to
maturity and which are rated "A" or better by Standard & Poor's Corporation
("S&P") and "A" or better by Moody's Investors Services ("Moody's") and of
comparable high quality ratings by other NRSROs that have rated such securities.
For a description of the ratings used in this Prospectus, see Appendix A to the
Statement of Additional Information.
RAMIREZ NEW YORK TAX-FREE MONEY MARKET FUND.
INVESTMENT OBJECTIVE. The New York Tax-Free Fund's objective is to provide a
high level of current income exempt from federal, New York State and New York
City income taxes while preserving capital and maintaining liquidity.
INVESTMENT POLICIES. The New York Tax-Free Fund invests in a non-diversified
portfolio of high quality fixed rate and variable rate municipal obligations
which are exempt from regular federal, New York State and New York City income
tax.
The New York Tax-Free Fund intends to invest in municipal obligations which are
triple tax exempt. That is, municipal obligations issued by or on behalf of the
State of New York and of Puerto Rico, or other U.S. territories and their
political subdivisions, the interest on which (in the opinion of bond counsel)
is exempt from federal, New York State and New York City personal income taxes
("New York Municipal Obligations"). However, the opinion of bond counsel does
not address whether the interest from the investment is also exempt from the
personal income taxes of any other state or whether the interest thereon
constitutes a preference item for purposes of the federal Alternative Minimum
Tax ("AMT").
Municipal obligations purchased by the New York Tax-Free Fund include municipal
bonds, notes and commercial paper. Municipal bonds generally have a maturity at
the time of issuance of more than a year, although the New York Tax-Free Fund
will purchase municipal bonds with a remaining maturity of 397 days or less.
Municipal notes generally have maturities at the time of issuance of two years
or less. Municipal commercial paper is a debt obligation with a stated
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maturity of one year or less which is issued to finance seasonal working capital
needs or as a short-term financing in anticipation of longer-term debt.
Investment in the New York Tax-Free Fund is not insured, although certain of the
municipal obligations purchased by the New York Tax-Free Fund may be insured as
to principal and interest by, among others, the Municipal Bond Insurance
Association. Insured obligations are identified in the New York Tax-Free Fund's
financial statements.
RAMIREZ U.S TREASURY MONEY MARKET FUND.
INVESTMENT OBJECTIVE. The U.S. Treasury Fund's objective is to provide maximum
current income consistent with maximum safety of principal and maintenance of
liquidity.
INVESTMENT POLICIES. The U.S. Treasury Fund seeks to achieve its objective by
investing only in direct obligations of the U.S. Treasury, including Treasury
bills, bonds and notes. The U.S. Treasury Fund may also repurchase agreements
collateralized by such instruments. The U.S. Treasury bills, bonds and notes
held by the U.S. Treasury Fund will differ principally only in their interest
rates, maturities and dates of issuance. The U.S. Treasury Fund will not
purchase securities issued or guaranteed by other agencies or instrumentalities
of the U.S. Government.
COMMON INVESTMENT PRACTICES OF THE FUNDS
The Funds may also engage in the following investment practices when consistent
with their overall objectives and policies. These practices, and certain
associated risks, are more fully described in the Statement of Additional
Information.
U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in direct obligations of the
U.S. Treasury. Each Fund, other than the U.S. Treasury Fund, may also invest in
other obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (collectively, "U.S. Government Obligations"). Certain U.S.
Government Obligations, such as U.S. Treasury securities and direct pass-through
certificates of the Government National Mortgage Association, are backed by the
"full faith and credit" of the U.S. Government. Other U.S. Government
Obligations, such as obligations of Federal Home Loan Banks and the Federal Home
Loan Mortgage Corporation, are not backed by the "full faith and credit" of the
U.S. Government. In the case of securities not backed by the "full faith and
credit" of the U.S. Government, the investor must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment, and may not be
able to assert a claim against the U.S. Government itself in the event the
agency or instrumentality does not meet its commitments.
REPURCHASE AGREEMENTS. 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 (usually within
7 days). Each Fund will enter into repurchase agreements only with dealers,
domestic banks or recognized financial institutions
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<PAGE>
which, in the opinion of the adviser, present minimal credit risks. Where the
securities underlying a repurchase agreement are not U.S. Government securities,
they must be of the highest quality at the time the repurchase agreement is
entered into (e.g., a long-term debt security would be required to be rated by
S&P as "AAA" or its equivalent).
In the event of default by the seller under the repurchase agreement, a 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.
FLOATING AND VARIABLE RATE SECURITIES; PARTICIPATION CERTIFICATES. Each Fund,
other than the U.S. Treasury Fund, may invest in floating rate securities, whose
interest rates adjust automatically whenever a specified interest rate changes,
and variable rate securities, whose interest rates are periodically adjusted.
Certain of these instruments permit the holder to demand payment of principal
and accrued interest upon a specified number of days' notice from either the
issuer or a third party. The securities in which the New York Tax-Free Fund and
the Cash Management Fund may invest include participation certificates and
certificates of indebtedness. Participation certificates are pro rata interests
in securities held by others. Certificates of indebtedness of safekeeping are
documentary receipts for such original securities held in custody by others. As
a result of the floating or variable rate nature of these investments, a Fund's
yield may decline and it may forego the opportunity for capital appreciation
during periods when interest rates decline; however, during periods when
interest rates increase, a Fund's yield may increase and it may have reduced
risk of capital depreciation. Demand features on certain floating or variable
rate securities may obligate a fund to pay a "tender fee" to a third party.
Demand features provided by foreign banks involve certain risks associated with
foreign investments.
LENDING OF FUND SECURITIES. Each Fund may lend its securities if such loans are
secured continuously by cash or equivalent collateral or by a letter of credit
in favor of the Fund at least equal at all times to 102% of the market value of
the securities loaned plus interest or dividends. While such securities are on
loan, the borrower will pay the Fund the amount of any income accruing thereon
or, in some cases, a separate fee. A Fund will not lend securities having a
value which exceeds 10% of the current value of its total assets. There may be a
risk of delay in receiving additional collateral or in recovering the securities
loaned or even a loss of rights in the collateral should the borrower of the
securities fail financially. In determining whether to lend a security to a
particular broker, dealer or financial institution, the Adviser will consider
all relevant facts and circumstances, including the creditworthiness of the
broker, dealer or financial institution and whether the income to be earned the
loan justifies the attendant risks.
FORWARD COMMITMENTS AND WHEN ISSUED SECURITIES. Each Fund may purchase
securities for delivery at a future date, which may increase its overall
investment exposure and involves a risk of loss if the value of the securities
declines prior to the settlement date. These transactions involve some risk to a
Fund if the other party should default on its obligation and the Fund is delayed
or prevented from recovering the collateral or completing the transaction.
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<PAGE>
BORROWINGS AND REVERSE REPURCHASE AGREEMENTS. Each Fund may borrow money from
banks for temporary or short-term purposes, but will not borrow for leveraging
purposes. Each Fund may also sell and simultaneously commit to repurchase a
portfolio security at an agreed-upon price and time, to avoid selling securities
during unfavorable market conditions in order to meet redemptions. Whenever a
Fund enters into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets on a daily basis in an amount at
least equal to the repurchase price (including accrued interest). A Fund would
be required to pay interest on amounts obtained through reverse repurchase
agreements, which are considered borrowings under federal securities laws.
OTHER MUTUAL FUNDS. Each Fund other than the U.S. Treasury Fund may invest in
shares of other open-end management investment companies that are money market
funds reasonably believed to comply with Rule 2a-7 under the Investment
Company's 1940 Act, subject to the limitations of the Investment Company's 1940
Act and subject to such investment being consistent with the overall objective
and policies of the Fund, provided that any such purchases will be limited to
shares of unaffiliated investment companies. 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.
RISK FACTORS
GENERAL. There can be no assurance that any of the Funds will be able to
maintain a stable net asset value. Changes in interest rates may affect the
value of the obligations held by the Funds. The value of fixed income securities
varies inversely with changes in prevailing interest rates, although money
market instruments are generally less sensitive to changes in interest rates
than are longer-term securities.
CASH MANAGEMENT FUND. The Cash Management Fund will normally invest more than
25% of its total assets in obligations of domestic banks (including their
foreign branches), and in obligations of foreign issuers. The ability to
concentrate in the banking industry may involve certain credit risks, such as
defaults or downgrades, if at some future date adverse economic conditions
prevail in such industry. U.S. banks are subject to extensive governmental
regulations which may limit both the amount and types of loans which may be made
and interest rates which may be charged. In addition, the profitability of the
banking industry is largely dependent upon the availability and cost of funds
for the purpose of financing lending operations under prevailing money market
conditions. General economic conditions as well as exposure to credit losses
arising from possible financial difficulties of borrowers play a important part
in the operations of this industry.
Securities issued by foreign banks, foreign branches of U.S. banks and foreign
governmental and foreign private issuers involve investment risks in addition to
those of obligations of domestic
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issuers. Such risks include those relating to future political and economic
developments, limited liquidity of foreign obligations compared to domestic
obligations, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign assets, and the possible
establishment of exchange controls or other restrictions. Other risks include
less publicly available information concerning foreign issuers, difficulties in
obtaining or enforcing a judgment against a foreign issuer (including branches),
and different accounting, auditing and financial reporting standards and
practices from those applicable to U.S. issuers. In addition, foreign banks are
not subject to regulations comparable to U.S. banking regulations.
NEW YORK TAX-FREE FUND. The New York Tax-Free Fund may invest in municipal
obligations secured by letters of credit or guarantees from U.S. banks
(including their foreign branches), and may also invest in municipal obligations
backed by foreign institutions, subject to Guarantee Diversification
Requirements under Rule 2a-7 of the 1940 Act. These investments are subject to
the considerations discussed in the preceding paragraphs relating to the Cash
Management Fund. Changes in the credit quality of banks or other financial
institutions backing the Funds' municipal obligations could cause losses the
Fund and affect its share price. Credit enhancements which are supplied by
foreign or domestic banks are not subject to federal deposit insurance.
The New York Tax-Free Fund is "non-diversified," which may make the value of its
shares more susceptible to developments affecting issuers in which the Fund
invests. In addition, more than 20% of the assets of the Fund may be invested in
securities to be paid from revenue of similar projects, which may cause the Fund
to be more susceptible to similar economic, political, or regulatory
developments.
The New York Tax-Free Fund will invest primarily in obligations issued by
states, cities, public authorities and other municipal issuers. Therefore, the
New York Tax-Free Fund is susceptible to factors affecting New York State and
its political subdivisions. Investments in the New York Tax-Free Fund may be
riskier than an investment in other types of money market funds because of its
concentration of investments in New York State or entities within the State. A
number of municipal issuers, including the State of New York and New York City
have a recent history of significant financial and fiscal difficulties and New
York State's credit rating is one of the lowest in the country. See the
Statement of Additional Information for further information.
YEAR 2000 RISK. Like other mutual funds, each of the Funds could be adversely
affected if the computer systems used by their service providers, including
shareholder servicing agents, do not properly process and calculate date-related
information. The Funds' service providers have been actively updating their
systems to be able to process year 2000 data. However, there can be no assurance
that these steps will be adequate to avoid a temporary service disruption or any
adverse impact on the Funds.
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<PAGE>
INVESTMENT LIMITATIONS
The Funds may not (1) issue senior securities, borrow money or pledge or
mortgage its assets, except that each Fund may borrow from banks up to 10% of
the current value of the total net assets of that Fund for temporary purposes
only in order to meet redemptions, and those borrowings may be secured by the
pledge of not more than 10% of the current value of the total net assets of that
Fund (but investments may not be purchased by that fund while such borrowings
exceed 5% of the Fund's net assets); (2) make loans, except that the Funds may
make loans of portfolio securities, and each Fund may purchase or make deposits
with banks and enter into repurchase agreements with respect to its portfolio
securities; or (3) invest more than 5% of the current value of its total assets
in the securities of any one issuer, other than obligations of the United States
Government, its agencies or instrumentalities or securities which are backed by
the full faith and credit of the United States, except that up to 25% of the
value of the Cash Management and New York Tax-Free Fund's total assets may be
invested without regard to this limitation consistent with its investment
objectives and policies. In addition, the New York Tax-Free Fund may not invest
less than 80% of its net assets in New York Municipal Obligations except when,
in the opinion of the Adviser, it is advisable for the Fund to invest
temporarily up to 100% of its total assets in taxable securities to maintain a
"defensive" posture because of market conditions.
The Funds' diversification tests are measured at the time of an acquisition of a
security and calculated as specified in Rule 2a-7 of the Investment Company's
1940 Act, which may allow the Funds to exceed the limits specified in this
Prospectus for certain securities subject to guarantee or demand features. The
Funds will be deemed to satisfy the maturity requirements described in this
Prospectus to the extent that the Funds satisfy Rule 2a-7's maturity
requirements.
For each Fund, the foregoing investment restrictions and those described in the
Statement of Additional Information are fundamental policies which may be
changed only when permitted by law and approved by the holders of a majority of
the outstanding voting securities of that fund, as described in the Statement of
Additional Information.
PURCHASE OF SHARES
Shares of the Funds are continuously offered for sale without a sales load at
the net asset value next determined through the distributor for the Funds,
Ramirez & Co., Inc. (the "Distributor"), which is an affiliate of the Adviser or
from the Funds' transfer agent, Firstar Trust Company (the "Transfer Agent").
The Distributor is a registered broker-dealer with offices at 61 Broadway, New
York, New York, 10006.
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<PAGE>
The minimum initial investment for shares in a fund is $1,000; with the
exception of IRAs, which have a minimum initial investment of $100. The minimum
subsequent investment is $50. The minimum initial investment will be $50 if you
participate in the Periodic Investment Plan.
PURCHASE ORDERS. Investors may purchase shares of the Funds through registered
representatives of organizations that have entered into distribution or
servicing agreements with the Funds ("Shareholder Servicing Agents") or directly
with the Funds' transfer agent. All checks must be drawn on a bank located
within the United States and must be payable in U.S. dollars to the particular
fund in which you intend to invest. Subsequent investments in an existing
account in a Fund may be made at any time by sending to the address below a
check or money order payable to the Fund in which the investment is being made,
along with a letter stating the amount of the investment, the name of the Fund
and the account number in which the investment is to be made. A $20 fee will be
imposed by the Funds' transfer agent if any check used for investment in an
account does not clear, and the investor involved will be responsible for any
loss incurred by a Fund.
PURCHASE ORDERS PLACED THROUGH THE TRANSFER AGENT
To Open an Account To Add to an Account
------------------ --------------------
BY MAIL Complete an application and Make your check payable to
mail it along with a check [Name of Fund]. Please
payable to include your sixteen digit
[Name of Fund], P.O. Box account number on your check
701, Milwaukee, WI 53201- and mail it to the address on
0701. your statement.
OVERNIGHT Complete an application and Make your check payable to
DELIVERY deliver it along with a check [name of Fund]. Please
payable to include your sixteen digit
[Name of Fund], 615 E. account number on your check
Michigan St., Milwaukee, WI and deliver it to the address at
53202. the left.
AUTOMATICAL Complete a Periodic Investment Call 1-877-RAM-6868 to
LY Plan Application. change the amount or
frequency of an Automatic
Investment Plan. Any change
to banking information must be
made in writing.
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<PAGE>
BY WIRE Complete an application and Call 1-877-RAM-6868 prior to
call 1-877-RAM-6868 prior to sending the wire in order to
sending the wire in order to obtain a confirmation number
obtain a confirmation number and to ensure prompt and
and to ensure prompt and accurate handling of funds.
accurate handling of funds. Ask your bank to transmit
Ask your bank to transmit immediately available funds by
immediately available funds by wire as described at the left.
wire in the amount of your Please also include your sixteen
purchase to: Firstar Bank digit account number. The
Milwaukee, N.A., ABA # Funds and their transfer agent
0750-00022, Firstar Trust are not responsible for the
Company Account consequences of delays
#112-952-137 for further credit resulting from the banking or
to [name of Fund] [name/title Federal Reserve Wire system,
on the account]. The Funds or for incomplete wiring
and their transfer agent are not instructions.
responsible for the
consequences of delays
resulting from the banking or
Federal Reserve Wire system,
or from incomplete wiring
instructions.
BY Call 1-877-RAM-6868 to Call 1-877-RAM-6868 to
TELEPHONE exchange from another exchange from another Ramirez
EXCHANGE Ramirez Fund account with the Fund account with the same
same registration including registration including name,
name, address and taxpayer ID address and taxpayer ID
number. number.
Investors making initial investments by wire must complete a Purchase
Application prior to effecting the wire. Please call the Fund's transfer agent
at 1-877-RAM-6868 for instructions on establishing an account by telephone.
Purchase orders for Funds that are received by the transfer agent before 12:00
p.m. Eastern Time on a business day will be executed at that time, provided the
securities dealer or financial institution placing the order undertakes to pay
for its order in immediately available funds wired to the transfer agent by the
close of regular trading hours on The New York Stock Exchange (the "Exchange")
the same day, or in the case of orders placed by other investors, payment in
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<PAGE>
such form and by such time is guaranteed by a creditworthy financial institution
at the time the order is placed. Purchase orders that are received before 12:00
p.m. Eastern Time on a business day when payment is made in any form other than
by a same day wire of immediately available funds, as well as orders received
after 12:00 p.m. Eastern Time or on non-business days, and orders for which
payment is not received by the close of regular trading hours on the Exchange,
on a business day, will be executed on the next business day after receipt of
both the order and payment in proper form by the transfer agent.
The Funds will not accept payment in cash or third party checks for the purchase
of shares. Federal regulations require that each investor provide a social
security number or other certified taxpayer identification number upon opening
or reopening an account. The Funds reserve the right to reject applications
without such a number or an indication that a number has been applied for. If a
number has been applied for, the number must be provided and certified within
sixty days of the date of the application. Any accounts opened without a proper
number will be subject to backup withholding and may be liquidated and
distributed to the owner(s) of record on or after the first business day
following the sixtieth day of investment, net of the backup withholding tax.
Certificates for shares will not be issued. The Funds reserve the right to
reject any purchase order. Payment for shares of a Fund in the amount of
$1,000,000 or more may, at the discretion of the Adviser, be made in the form of
securities that are permissible investments for the respective Fund. For further
information see the SAI or contact the Fund's transfer agent, Firstar Trust
Company at 1-877-RAM-6868.
PURCHASE ORDERS PLACED THROUGH REGISTERED REPRESENTATIVES. You may purchase
shares of the Funds through your registered representative. Any such purchase
generally will not be effective until the order is received by the Fund's
transfer agent.
REDEMPTION OF SHARES
Redemption orders for the Funds are effected at the net asset value per share
next determined after receipt of the order by the transfer agent. If a
redemption order is received by phone (as described below) before 12:00 p.m.
Eastern Time on a business day, Fund shares will be redeemed at the net asset
value at the close of business on that business day. Redemption orders which are
received after 12:00 p.m. Eastern Time, or on non-business days, will be
executed on the next business day.
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<PAGE>
REDEMPTION ORDERS PLACED THROUGH THE TRANSFER AGENT.
BY PHONE. Call the Fund's transfer agent at 1-877-RAM-6868 with your account
name, sixteen digit account number and amount of redemption (minimum $500).
Redemption proceeds will only be sent to a shareholder's address or bank account
of a commercial bank located within the United States as shown on the transfer
agent's records. Available only if telephone redemptions have been authorized on
the account application and if there has been no change of address by telephone
within the preceding 15 days.
In order to arrange for telephone redemptions after an account has been opened
or to change the bank or account designated to receive redemption proceeds, a
written request must be sent to the Fund's transfer agent, Firstar Trust
Company, at P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or contact your
registered representative. The request must be signed by each shareholder of the
account. Further documentation may be requested from corporations, executors,
administrators, trustees and guardians.
BY MAIL, OVERNIGHT DELIVERY OR IN PERSON. Mail your instructions to the Fund's
transfer agent, Firstar Trust Company, P.O. Box 701, Milwaukee, WI 53201-0701,
or deliver them (via overnight delivery or in person) to 615 E. Michigan Street,
Milwaukee, Wisconsin 53202. Include the number of shares or the amount to be
redeemed, your sixteen digit account number and social security number or other
taxpayer identification number. Your instructions must be signed by all persons
required to sign for transactions exactly as their names appear on the account.
If the redemption amount exceeds $50,000, or if the proceeds are to be sent
somewhere other than the address of record, or the address of record has been
changed within the preceding 15 days, each signature must be guaranteed in
writing by either a commercial bank that is a member of the FDIC, a trust
company, a credit union, a savings association, a member firm of a national
securities exchange or other eligible guarantor institution.
SYSTEMATIC WITHDRAWAL. Call the Fund's transfer agent at 1-877-RAM-6868 for a
Systematic Withdrawal Plan application ($5,000 account minimum and $50 minimum
per transaction).
Guarantees must be signed by an eligible guarantor institution and "Signature
Guaranteed" must appear with the signature. The Funds may also require
additional supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians. A redemption request will not be deemed
to be properly received until the transfer agent receives all required documents
in proper form.
The transfer agent charges a $12.00 fee for each payment made by wire of
redemption proceeds, which will be deducted from the sharehoder's account. The
transfer agent also charges a $15.00 fee for each IRA distribution (unless it is
part of a Systematic Withdrawal Plan), which will be deducted from the
shareowner's account.
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<PAGE>
The Funds reserve the right to refuse a telephone redemption if they believe it
is advisable to do so. Procedures for redeeming shares by telephone may be
modified or terminated by the Funds at any time upon notice to shareholders.
During periods of substantial economic or market change, telephone redemptions
may be difficult to implement. If a shareholder is unable to contact the
transfer agent by telephone, shares may also be redeemed by delivering the
redemption request to the transfer agent.
In an effort to prevent unauthorized or fraudulent purchase and redemption
requests by telephone, Firstar and the transfer agent will employ reasonable
procedures specified by a Fund to confirm that such instructions are genuine.
Among the procedures used to determine authenticity, investors electing to
purchase, redeem or exchange by telephone will be required to provide their
account number (unless opening a new account). All such telephone transactions
will be tape recorded. Statements of accounts shall be conclusive if not
objected to in writing within 10 days after transmitted by mail. The Funds may
also implement other procedures from time to time. If reasonable procedures are
not implemented, the Funds and/or the transfer agent may be liable for any loss
due to unauthorized or fraudulent transactions. In all other cases, the
shareholder is liable for any loss for unauthorized transactions.
CHECK WRITING PRIVILEGES. An investor may request on the purchase application or
by later written request that a Fund provide draft Checkbooks ("Checks") drawn
on the Fund in which the investor has made an investment. Checks will be sent
only to the registered owner(s) and only to the address of record. Checks may be
made payable to the order of any person in the amount of $500 or more. Dividends
are earned until the Check clears the transfer agent. When a Check is presented
to the transfer agent for payment, the transfer agent, as the investor's agent,
will cause the particular Fund involved to redeem a sufficient number of the
investor's shares to cover the amount of the Check. Checks written against
shares purchased by check during the previous 12 days will be returned unpaid
due to uncollected funds. Checks will not be returned to shareholders after
clearance. There is no charge to the investor for the use of the Checks;
however, the transfer agent will impose a $20 charge for stopping payment of a
Check upon the request of the investor, or if the transfer agent cannot honor a
Check due to insufficient funds or other valid reason. Because dividends on each
Fund accrue daily, Checks may not be used to close an account, as a small
balance is likely to result.
REDEMPTION ORDERS PLACED THROUGH REGISTERED REPRESENTATIVES. You may redeem
shares of the Funds through your registered representative. Any such redemption
generally will not be effective until the request is received by the Fund's
transfer agent.
OTHER REDEMPTION INFORMATION. The Fund will make payment for redeemed shares
typically within one or two business days, but no later than the seventh day
after receipt by the transfer agent of a request in proper form, except as
provided by SEC rules. HOWEVER, IF ANY PORTION OF THE SHARES TO BE REDEEMED
REPRESENTS AN INVESTMENT MADE BY CHECK, THE FUNDS MAY DELAY
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<PAGE>
THE PAYMENT OF THE REDEMPTION PROCEEDS UNTIL THE TRANSFER AGENT IS REASONABLY
SATISFIED THAT THE CHECK HAS BEEN COLLECTED, WHICH MAY TAKE UP TO TWELVE DAYS
FROM THE PURCHASE DATE. During the period prior to the time the shares are
redeemed, dividends on such shares will accrue and be payable, and an investor
will be entitled to exercise all other rights of beneficiary ownership. An
investor must have filed a purchase application before any redemption requests
can be paid.
Questions concerning the proper form for redemption requests should be directed
to the Fund's transfer agent at 1-877-RAM-6868.
SHAREHOLDER SERVICES
The services and privileges described below are available to shareholders of the
Funds. These may be modified or terminated at any time upon notice to
shareholders.
SHAREHOLDER REPORTS. Shareholders will be provided with a report showing
portfolio investments and other information at least semiannually; and after the
close of the Fund's fiscal year, which ends August 31, with an annual report
containing audited financial statements. To eliminate unnecessary duplication,
only one copy of shareholder reports will be sent to shareholders with the same
mailing address. Shareholders who desire a duplicate copy of shareholder reports
to be mailed to their residence should call the Fund's transfer agent at
1-877-RAM-6868, or write to the address listed above.
Account statements will be mailed to shareholders monthly, summarizing all
transactions including purchases, reinvestment of dividends and redemptions.
AUTOMATED TELERESPONSE SERVICE. Shareholders using a touch-tone telephone can
access information on the Funds twenty-four hours a day, seven days a week. When
calling the Fund's Customer Service Center at 1-877-RAM-6868 shareholders may
choose to use the automated information feature or, during regular business
hours (7:00 a.m. to 6:00 p.m. Eastern Time, Monday through Friday), speak with a
Fund representative.
The Funds reserve the right to reject any exchange request with prior notice to
a shareholder and the exchange privilege may be modified or terminated at any
time. At least sixty days' notice will be given to shareholders of any material
modification or termination except where notice is not required under SEC
regulations. The responsibility of the Funds and their transfer agent for the
authenticity of telephone exchange instructions is limited as described above
under "Redemption of Shares."
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<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The net investment income of each class of shares of each Fund is declared as a
dividend to the shareholders each Fund Business Day. Dividends are declared as
of the time of day which corresponds to the latest time on that day that a
Fund's net asset value is determined. Shares begin accruing dividends on the day
they are purchased. Dividends are distributed monthly. Unless a shareholder
arranges to receive dividends in cash or by Automated Clearing House ("ACH")
transfer to a pre-established bank account, dividends are distributed in the
form of additional shares. Dividends that are otherwise taxable are still
taxable to you whether received in cash or additional shares. Net realized
short-term capital gains, if any, will be distributed at least annually. The
Funds do not expect to realize net long-term capital gains.
Net investment income for each Fund consists of all interest accrued and
discounts earned, less amortization of any market premium on the portfolio
assets of the Fund and the accrued expenses of the Fund.
MANAGEMENT OF THE TRUST
The property, affairs and business of the Trust are managed by the Board of
Trustees. The Board of Trustees elect officers who are charged with the
responsibility for the day-to-day operations of the Trust and the execution of
policies formulated by the Board of Trustees. Information about the Board of
Trustees, as well as the Trust's executive officers may be found in the
Statement of Additional Information under the heading "Management-Trustees and
Officers".
ADVISORY SERVICES. The Trust has retained Ramirez Asset Management, Inc. (the
"Adviser") to act as the investment adviser for each of the Funds. The Adviser
is an affiliate of the Fund's distributor, Ramirez & Co., Inc., and is located
at 61 Broadway, New York, New York 10006. The Adviser is a newly-registered
investment Adviser and therefore does not have an operating history as an
investment manager of mutual funds, but the Adviser's officers and employees are
persons with extensive experience in managing investment portfolios and
investment companies.
For its services, the Adviser receives a fee at an annual rate equal to 0.35% of
each Fund's average daily net assets. The Adviser is responsible for payment of
salaries of its portfolio manager and staff as well as other expenses necessary
to the performance of its duties under the Investment Advisory Agreement. The
Adviser may, at its own expense and from its own resources, compensate certain
persons who provide services in connection with the sale or expected sale of
shares of the Fund without reimbursement from the Trust. The Trust, on behalf of
the Fund, is responsible for all expenses other than those expressly borne by
the Adviser under the Investment Advisory Agreement. The expenses borne by the
Trust include, but are not
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<PAGE>
limited to, the Investment Advisory fee, administration fee, transfer agent fee,
fund accounting fee, and custodian fee, costs of preparing, printing and
delivering to shareholders the Trust's prospectuses, statements of additional
information, and shareholder reports, legal fees, auditing and tax fees, taxes,
blue sky fees, SEC fees, compliance expenses, insurance expenses, and
compensation of certain of the Trust's Board of Trustees, officers and employees
and other personnel performing services for the Trust.
The Adviser may enter into separate agreements with third parties that provide
various services to those shareholders of the Trust who purchase shares of a
Fund. For these services, the Adviser, at its own expense and from its own
resources, may pay a fee which would not increase the amount of any advisory
fees paid to the Adviser by the Fund.
ADMINISTRATIVE SERVICES. Firstar Trust Company is each Fund's Administrator. The
Administrator has agreed to provide the following administrative services for
the Funds: (1) assist in maintaining office facilities for the Funds; (2)
furnish clerical and certain other services required by the Funds; (3) compile
data for and prepare notices to the SEC; (4) prepare semiannual reports to the
SEC and current shareowners and filings with state securities commissions; (5)
coordinate federal and state tax returns; (6) monitor the arrangements
pertaining to the Funds' agreements with shareowner organizations; (7) monitor
the Funds' expense accruals; (8) monitor compliance with the Funds' investment
policies and limitations; and (9) generally assist the Funds' operations.
DISTRIBUTOR. Ramirez & Co., Inc. (the "Distributor") serves as distributor of
each Fund's shares pursuant to a Distribution Agreement with the Trust, and as
the agent of the Trust in connection with the offering of shares of the Funds.
The Distributor is an affiliate of the Investment Adviser.
The Distributor is reimbursed for all costs and expenses incurred in this
capacity but receives no further compensation for its services under the
Distribution Agreement. The Distributor may enter into arrangements with banks,
broker-dealers or other financial institutions ("Selected Dealers") through
which investors may purchase or redeem shares. The Distributor may compensate
certain persons who provide services in connection with the sale or expected
sale of shares of the Funds. INVESTORS PURCHASING SHARES OF THE FUND THROUGH
ANOTHER FINANCIAL INSTITUTION SHOULD READ ANY MATERIALS AND INFORMATION PROVIDED
BY THE FINANCIAL INSTITUTION TO ACQUAINT THEMSELVES WITH ITS PROCEDURES AND ANY
FEES THAT IT MAY CHARGE.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND ACCOUNTING SERVICES
AGENT. Firstar Trust Company provides transfer agency and dividend disbursing
agency services for the Funds and custodial and accounting services for the
Funds. Additional information regarding the fees payable by the Funds to Firstar
Trust Company for these services is provided in the Statement
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<PAGE>
of Additional Information. Inquiries to the transfer agent may be sent to the
following address: Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin
53201-0701.
DISTRIBUTION PLANS
The Funds' distributor is Ramirez & Co., Inc. Each Fund has adopted a Rule 12b-1
distribution plan which provides that such Fund will pay distribution fees at
annual rates of up to 0.25% of the average daily net assets attributable to its
shares. Payments under the distribution plan shall be used to compensate or
reimburse the Funds' distributor for services provided and expenses incurred in
connection with the sale of shares, and are not tied to the amount of actual
expenses incurred. Some activities intended to promote the sale of shares will
be conducted generally by Ramirez Family of Funds, and activities intended to
promote Fund's shares may also benefit other Ramirez Funds.
SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Servicing Plan on behalf of each Fund. In
accordance with the Shareholder Servicing Plan, the Fund or the Distributor may
enter into Shareholder Servicing Agreements from time to time with certain
shareholder servicing agents, including affiliates of the Adviser, providing for
certain support and/or distribution services to their customers who are the
beneficial owners of shares of the Funds.
Under the Shareholder Servicing Agreements, shareholder servicing agents agree
to provide certain support services to their customers, including (1) assisting
investors in processing purchase, exchange and redemption requests; (2)
processing dividend and distribution payments from the Funds; (3) providing
information periodically to customers showing their positions in Fund shares;
and (4) furnishing customer statements, transmitting shareholder reports and
communication to customers and (5) other similar shareholder liaison services.
For their services, shareholder servicing agents are entitled to receive fees
from a Fund at annual rates of up to 0.15% of the average daily net asset value
of the shares covered by their agreements. Under the terms of their agreements
with the Fund's distributor, shareholder servicing agents are required to
provide a schedule of any fees that they charge to their customers relating to
the investment of their assets in shares covered by the agreement. Investors
should read this Prospectus in light of such fee schedules and under the terms
of their shareholder servicing agents' Agreement. In addition, investors should
contact their shareholder servicing agent with respect to the availability of
shareholder services and the particular shareholder servicing agent's procedures
for purchasing and redeeming shares. It is the responsibility of shareholder
servicing agent to transmit purchase and redemption orders and record those
orders in customers' accounts on a timely basis in accordance with their
agreements with customers. At the request of a
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<PAGE>
shareholder servicing agent, the transfer agent's charge of $12.00 for each
payment made by wire of redemption proceeds may be billed directly to the
shareholder servicing agent.
The Glass-Steagall Act and other applicable laws, among other things, prohibit
banks from engaging in the business of underwriting securities. Accordingly,
banks will be engaged only to perform the administrative and investor servicing
functions above, and will represent that in no event will the services provided
by them under the agreements be primarily intended to result in the sale of Fund
shares.
Conflict-of-interest restrictions may apply to the receipt of compensation by a
shareholder servicing agent in connection with the investment of fiduciary funds
in Fund shares. Institutions, including banks regulated by the Comptroller of
the Currency and investment advisors and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state securities
commissions, are urged to consult legal counsel before entering into agreements
with the Fund's distributor.
SERVICING AGREEMENTS. Under separate agreements, the Adviser (not the Funds) may
make supplementary payments from its own revenues to a shareholder servicing
agent that handles recordkeeping and provides certain administrative services
for its customers who invest in the Funds through Omnibus accounts maintained by
that shareholder servicing agent. These services include maintaining account
records, processing orders to purchase, redeeming or exchanging Fund shares,
responding to customer inquiries, and, if required by law, distributing the
Fund's shareholder reports and proxy statements. The payments may be more or
less than the fees payable to Firstar Trust Company for the services it provides
pursuant to the Transfer Agency Agreement for similar services. Firstar Trust
Company will not receive any compensation as transfer or dividend disbursing
agent with respect to the subaccounts maintained by shareholder servicing
agents.
Investors who purchase and redeem shares of the Funds through a customer account
maintained at a shareholder servicing agent may be charged one or more of the
following types of fees, as agreed upon by the shareholder servicing agent and
the investor, with respect to the customer services provided by the shareholder
servicing agent: 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 dividend paid on
those assets).
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<PAGE>
DIVIDENDS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS.
DIVIDENDS. Dividends are declared daily and paid monthly, following the close of
the last Fund Business Day of the month. Shares purchased by wire before 12:30
p.m. (Eastern Time) begin earning dividends that day. Dividends are
automatically reinvested on payment dates in additional shares of the Fund
unless cash payments are requested by an investor. The election to reinvest
dividends and distributions or receive them in cash may be changed at any time
upon written notice to the transfer agent. All dividends and other distributions
are treated in the same manner for federal income tax purposes whether received
in cash or reinvested in shares of the Fund. If no election is made, all
dividends and distributions will be reinvested.
CAPITAL GAINS DISTRIBUTIONS. Net realized short-term capital gains, if any, will
be distributed whenever the Board of Trustees determine that such distributions
would be in the best interest of the shareholders, which would be at least once
per year. The Trust does not anticipate that any Fund would realize any
long-term capital gains, but should they occur, they also will be distributed at
least once every 12 months.
TAX MATTERS.
Each Fund is treated as a separate entity for federal income tax purposes. Each
Fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), including requirements with respect to diversification of assets,
distribution of income and sources of income. It is each Fund's policy to
distribute to shareholders all of its investment income (net of expenses) and
any capital gains (net of capital losses) in accordance with the timing
requirements imposed by the Code, so that the Funds will each satisfy the
distribution requirement of Subchapter M and will not be subject to federal
income tax or the 4% excise tax.
If a Fund fails to satisfy any of the Code requirements for qualification as a
regulated investment company, it will be taxed at regular corporate tax rates on
all its taxable income (including capital gains) without any deduction for
distributions to shareholders, and distributions to shareholders will be taxable
as ordinary dividends (even if derived from the Fund's net long-term capital
gains) to the extent of the Fund's current and accumulated earnings and profits.
Distributions by the New York Tax-Free Fund of its tax-exempt interest income
are designated as exempt-interest dividends, which are excludable from gross
income for federal income tax purposes. However, shareholders are required to
report the receipt of exempt-interest dividends, together with other tax-exempt
interest, on their federal income tax returns. In addition, these
exempt-interest dividends may be subject to the federal alternative minimum tax
and will be
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taken into account in determining the portion, if any, of Social Security
benefits received which must be included in gross income for federal income tax
purposes. Further, interest or indebtedness incurred or continued to purchase or
carry shares of the New York Tax-Free Fund (which indebtedness likely need not
be directly traceable to the purchase or carrying of such shares) will not be
deductible for federal income tax purposes. Finally, a shareholder who is (or is
related to) a "substantial user" of a facility financed by industrial
development bonds held by the New York Tax-Free Fund will likely be subject to
tax on dividends paid by such Fund that are derived from interest on such bonds.
The New York Tax-Free Fund may invest in securities the interest on which is
(and the dividends paid by the Fund derived from such interest are) subject to
federal income tax, but such taxable securities will not exceed 20% of the value
of the New York Tax-Free Fund's total assets. The percentage of dividends which
constitute exempt-interest dividends, and the percentage thereof (if any) which
constitutes an item of tax preference, will be determined annually and will be
applied uniformly to all dividends of the New York Tax-Free Fund declared during
that year. These percentages may differ from the actual percentages for any
particular day.
Distributions by a Fund of its taxable net investment income and the excess, if
any, of its net short-term capital gain over its net long-term capital loss are
taxable to shareholders as ordinary income. Such distributions are treated as
dividends for federal income tax purposes but are not expected to qualify for
the 70% dividends-received deduction for corporate shareholders. Distributions
by a Fund of the excess, if any, of its net long-term capital gain over its net
short-term capital loss are designated as capital gains dividends and are
taxable to shareholders as long-term capital gains, regardless of the length of
time shareholders have held their shares.
Tax-exempt interest on specified private activity bonds issued after August 7,
1986, is treated as a tax preference item for purposes of the federal
alternative minimum tax ("AMT"). Thus, corporate and individual shareholders of
the New York Tax-Free Fund may incur an AMT liability as a result of receiving
exempt-interest dividends from such Fund to the extent such dividends are
attributable to interest from such private activity bonds. In addition, because
all exempt-interest dividends are included in a corporate shareholder's adjusted
current earnings (which is used in computing a separate preference item for
corporations), corporate shareholders may incur an AMT liability as a result of
receiving any exempt-interest dividends from the New York Tax-Free Fund.
Distributions to shareholders will be treated in the same manner for federal
income tax purposes whether received in cash or reinvested in additional shares
of a Fund. In general, distributions by a Fund are taken into account by the
shareholders in the year in which they are made. However, certain distributions
made during January will be treated as having been paid by a Fund and received
by the shareholders on December 31 of the preceding year.
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<PAGE>
A shareholder will recognize gain or loss upon the sale or redemption of shares
of a Fund in an amount equal to the difference between the proceeds of the sale
or redemption and the shareholder's adjusted tax basis in the shares. However,
as long as a Fund's net asset value per share does not deviate from $1.00, there
will be no gain or loss upon the sale or redemption of shares of a Fund. Any
loss realized upon a taxable disposition of shares within six months from the
date of their purchase will be treated as a long-term capital loss to the extent
of any capital gain dividends received on such shares. All or a portion of any
loss realized upon a taxable disposition of shares of a Fund may be disallowed
if other shares of the Fund are purchased within 30 days before or after such
disposition.
If a shareholder is a non-resident alien or foreign entity shareholder, ordinary
income dividends paid to such shareholder generally will be subject to United
States withholding tax at a rate of 30% (or lower applicable treaty rate). We
urge non-United States shareholders to consult their own tax adviser concerning
the applicability of the United States withholding tax.
Under the backup withholding rules of the Code, certain shareholders may be
subject to 31% withholding of federal income tax on ordinary income dividends
paid by a Fund. In order to avoid this backup withholding, a shareholder must
provide the Fund with a correct taxpayer identification number (which for most
individuals is his or her Social Security number) or certify that it is a
corporation or otherwise exempt from or not subject to backup withholding.
The exclusion from gross income for federal income tax purposes of
exempt-interest dividends does not necessarily result in exclusion under the
income or other tax laws of any state or local taxing authority.
The foregoing discussion of federal income tax consequences is based on tax laws
and regulations in effect on the date of this Prospectus, and is subject to
change by legislative, judicial or administrative action. As the foregoing
discussion is for general information only, a prospective shareholder should
also review the more detailed discussion of federal income tax considerations
relevant to the Funds that is contained in the Statement of Additional
Information. In addition, each prospective shareholder should consult with his
or her own tax adviser as to the tax consequences of investments in the Funds,
including the application of state and local taxes which may differ from the
federal income tax consequences described above.
OTHER INFORMATION
PERFORMANCE. Each Fund may advertise its yield, which is based on historical
results and is not intended to indicate future performance. Yield shows the rate
of income the Fund has earned on its investments as a percentage of the Fund's
share price. To calculate yield, the Fund takes the interest income it earned
from its portfolio of investments for a seven-day period (net of
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<PAGE>
expenses), divides it by the average number of shares entitled to receive
dividends, and expresses the result as an annualized percentage rate based on
the Fund's share price at the end of the seven-day period. The Fund's compounded
annualized yield assumes the reinvestment of dividends paid by the Fund, and
therefore will be somewhat higher than the annualized yield for the same period.
Each Fund's advertisements may refer to ratings and rankings among similar funds
by independent evaluators such as Morningstar, Lipper Analytical Services, Inc.
or IBC/Donoghue, Inc. In addition, the performance of a Fund may be compared to
recognized indices of market performance. The comparative material found in a
Fund's advertisements, sales literature, or reports to shareholders may contain
performance ratings. This material is not to be considered representative or
indicative of future performance.
DETERMINATION OF NET ASSET VALUE. The net asset value per share of each Fund is
determined at the close of trading on the Exchange on each Fund Business Day.
The net asset value is determined by subtracting total liabilities from total
assets and dividing the remainder by the number of shares outstanding. Each
Fund's securities are valued at their amortized cost which does not take into
account unrealized gains or losses on securities. This method involves initially
valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any premium paid or accreting discount received. The
amortized cost method minimizes changes in the market value of the securities
held by the Fund and helps it maintain a stable price of $1.00 per share.
LEGAL COUNSEL. Legal counsel to the Trust is provided by Kramer Levin Naftalis
& Frankel LLP, New York, New York.
INDEPENDENT ACCOUNTANTS. The independent accountants for the Trust is
PricewaterhouseCoopers.
THE TRUST, ITS SHARES AND CLASSES. The Trust is registered with the SEC as an
open-end management investment company and was organized as a business trust
under the laws of the State of Delaware on June 30, 1998. The Board has the
authority to issue an unlimited number of shares of beneficial interest of
separate series with .001 par value per share and to create classes of shares
within each series. If shares of separate series are issued, each share of each
series would be entitled to participate equally in dividends and other
distributions and the proceeds of any liquidation of that series. Voting rights
would not be cumulative and the shares of each series of the Trust would be
voted separately except when an aggregate vote is required by law.
Each Fund of the Trust currently offers only one class of shares. The Board of
Trustees may authorize the Trust to issue additional classes of shares in the
future. To the extent one class
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bears expenses different from the other classes, the amount of dividends and
other distributions it receives, and its performance, will differ. Shareholders
of one class will have the same voting rights as shareholders of the other
classes, except that separate votes are taken by each class of the Fund if the
interests of one class differ from the interests of the others.
Delaware law does not require a registered investment company to hold annual
meetings of shareholders, and it is anticipated that shareholder meetings will
be held only when specifically required by federal or state law. Shareholders
have available procedures for requiring the Board of Board of Trustees to call a
meeting and for removing Board of Trustees. Shares issued by the Trust have no
conversion, subscription or preemptive rights. See "OTHER INFORMATION The Trust
and its Shareholders" in the Statement of Additional Information.
As of the date of this propectus the Board of Trustees and officers of the Trust
in the aggregate owned less than one percent of the outstanding shares of the
Trust.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement of
Additional Information and each Fund's official sales literature in connection
with the offering of the Fund's shares, and if given or made, such information
or representations must not be relied upon as having been authorized by the
Trust. This Prospectus does not constitute an offer in any state in which, or to
any person to whom, such offer may not lawfully be made.
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<PAGE>
THE RAMIREZ TRUST
ADVISER:
Ramirez Asset Management, Inc.
61 Broadway
New York, NY 10006
ADMINISTRATOR/CUSTODIAN/TRANSFER AGENT:
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
DISTRIBUTOR:
Ramirez & Co., Inc.
61 Broadway
New York, NY 10006
LEGAL COUNSEL:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
INDEPENDENT PUBLIC ACCOUNTANT:
PricewaterhouseCoopers
<PAGE>
THE RAMIREZ TRUST
61 Broadway
New York, New York 10006
1-877-RAM-6868
STATEMENT OF ADDITIONAL INFORMATION
For the
RAMIREZ CASH MANAGEMENT MONEY MARKET FUND
RAMIREZ NEW YORK TAX-FREE MONEY MARKET FUND
RAMIREZ U.S. TREASURY MONEY MARKET FUND
OCTOBER ___, 1998
This Statement of Additional Information ("SAI") is meant to be read in
conjunction with The Ramirez Trust's prospectus ("Prospectus") dated September
__, 1998 for the Ramirez Cash Management Money Market Fund, the Ramirez New York
Tax-Free Money Market Fund and Ramirez U.S. Treasury Money Market Fund
(collectively referred to as the "Funds"), and is incorporated by reference in
its entirety into the Prospectus. Because this SAI is not itself a prospectus,
no investment in shares of these Funds should be made solely upon the
information contained herein. Copies of the Prospectus for the Funds may be
obtained from your account representative or by writing to the Fund's
Administrator, Firstar Trust Company at 615 East Michigan Street, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701 or by calling 1- 887-RAM- 6868. Capitalized
terms used but not defined herein have the same meanings as in the Prospectus.
SHARES OF THE FUNDS ARE NOT BANK DEPOSITS, AND ARE NEITHER ENDORSED BY, INSURED
BY, GUARANTEED BY, OBLIGATIONS OF, NOR OTHERWISE SUPPORTED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER BANK, OR OTHER GOVERNMENTAL AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
<PAGE>
TABLE OF CONTENTS
PAGE
THE RAMIREZ TRUST ........................................................ 3
INVESTMENT OBJECTIVES AND POLICIES......................................... 3
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS............................ 5
ADDITIONAL INVESTMENT LIMITATIONS ......................................... 16
NET ASSET VALUE............................................................ 19
DESCRIPTION OF SHARES...................................................... 21
ADDITIONAL INFORMATION CONCERNING TAXES .................................. 22
MANAGEMENT OF THE TRUST.................................................... 29
PORTFOLIO TRANSACTIONS..................................................... 34
INDEPENDENT ACCOUNTANTS.................................................... 38
COUNSEL.................................................................... 38
YIELD AND OTHER PERFORMANCE INFORMATION.................................... 39
APPENDIX A
APPENDIX B
DESCRIPTION OF RATINGS..................................................... A-1
ADDITIONAL INFORMATION CONCERNING NEW YORK ISSUERS......................... B-1
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<PAGE>
THE RAMIREZ TRUST
The Ramirez Trust (the "Trust") is a Delaware business trust which was
formed on June 30, 1998 as a management investment company. The Trust is
authorized to issue separate classes of shares of Common Stock representing
interests in separate investment portfolios. This SAI pertains to three
portfolios, the Ramirez Cash Management Money Market Fund (the "Cash Management
Fund"), the Ramirez New York Tax-Free Money Market Fund (the "New York Tax-Free
Fund") and the Ramirez U.S. Treasury Fund (the "U.S. Treasury Fund")
(collectively, the "Funds"). For information concerning these portfolios,
contact your account representative or the Funds' transfer agent, Firstar Trust
Company at 615 East Michigan Street, P.O. Box 701, Milwaukee, Wisconsin
53201-0701 or by calling 1-887-RAM-6868.
INVESTMENT OBJECTIVES AND POLICIES
CASH MANAGEMENT FUND. The Cash Management Fund's investment objective is to
provide a high level of current income while preserving capital and maintaining
liquidity. The Cash Management Fund seeks to achieve its objective by investing
in high quality, short-term U.S. dollar denominated money market instruments.
NEW YORK TAX-FREE FUND. The New York Tax-Free Fund's investment objective is to
provide a high level of current income exempt from federal, New York State and
New York City income taxes while preserving capital and maintaining liquidity.
The New York Tax-Free Fund seeks to achieve its investment objective by
investing primarily in short-term, fixed rate and variable rate municipal
obligations which are exempt from regular federal, New York State and New York
City income tax.
U.S. TREASURY FUND. The U.S. Treasury Fund's investment objective is to provide
a high level of current income consistent with maximum safety of principal and
maintenance of liquidity. The U.S. Treasury Fund seeks to achieve its objective
by investing in direct obligations of the U.S. Treasury, including Treasury
bills, bonds and notes, and repurchase agreements collateralized by these
obligations.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees, the Adviser is
responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for each Fund.
Securities purchased and sold by each Fund are generally traded in the
over-the-counter market on a net basis (i.e., without commission) through
dealers, or otherwise involve transactions directly with the issuer of an
instrument. The cost of securities purchased from underwriters includes an
underwriting commission or concession, and the prices at which securities are
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<PAGE>
purchased from and sold to dealers include a dealer's mark-up or mark-down. With
respect to over-the-counter transactions, the Adviser will normally deal
directly with dealers who make a market in the instruments involved except in
those circumstances where more favorable prices and execution are available
elsewhere.
The Funds may participate, if and when practicable, in bidding for the purchase
of portfolio securities directly from an issuer in order to take advantage of
the lower purchase price available to members of a bidding group. The Funds will
engage in this practice, however, only when the Adviser, in its sole discretion,
believes such practice to be in the Funds' interests.
The Investment Advisory Agreement between the Trust and the Adviser provides
that, in executing portfolio transactions and selecting brokers or dealers, the
Adviser will seek to obtain the best overall terms available. In assessing the
best overall terms available for any transaction, the Adviser shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In addition, the Agreement
authorizes the Adviser to cause the Funds to pay a broker-dealer which furnishes
brokerage and research services a higher commission than that which might be
charged by another broker-dealer for effecting the same transaction, provided
that the Adviser determines in good faith that such commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Adviser to the Funds. Such brokerage and
research services might consist of reports and statistics relating to specific
companies or industries, general summaries of groups of stocks or bonds and
their comparative earnings and yields, or broad overviews of the stock, bond and
government securities markets and the economy.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Adviser and does not reduce
the advisory fees payable to it by the Funds. The Trustees will periodically
review the commissions paid by the Funds to consider whether the commissions
paid over representative periods of time appear to be reasonable in relation to
the benefits inuring to the Funds. It is possible that certain of the
supplementary research or other services received will primarily benefit one or
more other investment companies or other accounts for which investment
discretion is exercised. Conversely, a Fund may be the primary beneficiary of
the research or services received as a result of portfolio transactions effected
for such other account or investment company.
Portfolio securities will not be purchased from or sold to (and savings deposits
will not be made in and repurchase and reverse repurchase agreements will not be
entered into with) the Adviser, the Distributor or an affiliated person of
either of them (as such term is defined in the 1940 Act) acting as principal. In
addition, the Funds will not purchase securities during the existence of any
underwriting or selling group relating thereto of which the Distributor or the
Adviser, or
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<PAGE>
an affiliated person of either of them, is a member, except to the extent
permitted by the Securities and Exchange Commission ("SEC").
Investment decisions for the Funds are made independently from those for other
investment companies and accounts advised or managed by the Adviser. Such other
investment companies and accounts may also invest in the same securities as the
Funds. When a purchase or sale of the same security is made at substantially the
same time on behalf of a Fund and another investment company or account, the
transaction will be averaged as to price and available investments allocated as
to amount, in a manner which the Adviser believes to be equitable to the Fund
and such other investment company or account. In some instances, this investment
procedure may adversely affect the price paid or received by a Fund or the size
of the position obtained or sold by the Fund. To the extent permitted by law,
the Adviser may aggregate the securities to be sold or purchased for a Fund with
those to be sold or purchased for other investment companies or accounts in
executing transactions.
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS
RATINGS. Subsequent to its purchase by a Fund, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by a Fund. The Board of Trustees or the Adviser, pursuant to guidelines
adopted by the Board, will, in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended (the "1940 Act"), consider such an event in
determining whether the Fund involved should continue to hold the security. In
addition, it is possible that unregistered securities purchased by a Fund in
reliance upon Rule 144A under the Securities Act of 1933 could have the effect
of increasing the level of the Fund's illiquidity to the extent that qualified
institutional buyers become, for a period, uninterested in purchasing these
securities.
VARIABLE AND FLOATING RATE INSTRUMENTS. With respect to the variable and
floating rate instruments that may be acquired by the Funds, the Adviser will
consider the earning power, cash flows and other liquidity ratios of the issuers
and guarantors of such instruments and, if the instrument is subject to a demand
feature, will monitor their financial status to meet payment on demand. In
determining average weighted portfolio maturity, an instrument will usually be
deemed to have a maturity equal to the longer of the period remaining to the
next interest rate adjustment or the time the Fund involved can recover payment
of principal as specified in the instrument. Variable U.S. Government
obligations held by a Fund, however, will be deemed to have maturities equal to
the period remaining until the next interest rate adjustment.
The variable and floating rate demand instruments that the New York Tax-Free
Fund may purchase include participations in municipal obligations purchased from
and owned by financial institutions, primarily banks. Participation interests
provide the Fund with a specified undivided interest (up to 100%) in the
underlying obligation and the right to demand payment of the unpaid principal
balance plus accrued interest on the participation interest from the institution
upon a specified number of days' notice, not to exceed thirty days. Each
participation interest is backed
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<PAGE>
by an irrevocable letter of credit or guarantee of a bank that the Adviser has
determined meets the prescribed quality standards for the Fund. The bank
typically retains fees out of the interest paid on the obligation for servicing
the obligation, providing the letter of credit and issuing the repurchase
commitment.
U.S. GOVERNMENT OBLIGATIONS. Examples of the types of U.S. government
obligations that may be acquired by the Funds include U.S. Treasury bonds, notes
and bills. The Cash Management Fund and the New York Tax Free Fund may also
invest in other U.S. Government obligations such as, but not limited to: Federal
Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of the
United States, Small Business Administration, Government National Mortgage
Association, Federal National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Maritime Administration, and
Resolution Trust Corp.
STRIPPED U.S. GOVERNMENT OBLIGATIONS AND GOVERNMENT-BACKED TRUSTS. Each Fund
other than the U.S. Treasury Fund may acquire U.S. government obligations and
their unmatured interest coupons which have been separated ("stripped") by their
holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including Treasury
Income Growth Receipts ("TIGRs") and Certificate of Accrual on Treasury
Securities ("CATs"). The stripped coupons are sold separately from the
underlying principal, which is sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. Purchasers of
stripped securities acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury
Department sells itself. The underlying U.S. Treasury bonds and notes themselves
are held in book-entry form at the Federal Reserve Bank or, in the case of
bearer securities (i.e., unregistered securities which are owned ostensibly by
the bearer or holder), in trust on behalf of the owners. Counsel to the
underwriters of these certificates or other evidences of ownership of the U.S.
Treasury securities have stated that, in their opinion, purchasers of the
stripped securities, such as the Funds, most likely will be deemed the
beneficial holders of the underlying U.S. government obligations for federal tax
and security purposes. The SEC staff believes that participations in CATs and
TIGRs and other similar trusts are not U.S. government securities.
The Treasury Department has also facilitated transfers of ownership of zero
coupon securities by accounting separately for the beneficial ownership of
particular interest coupon and principal payments on Treasury securities through
the Federal Reserve book-entry record-keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under the
STRIPS program, a Fund will be able to have its beneficial ownership of zero
coupon securities recorded directly in the book-entry record-keeping system in
lieu of having to hold certificates or other evidences of ownership of the
underlying U.S. Treasury securities.
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<PAGE>
The Cash Management Fund may also invest in certificates issued by
government-backed trusts. Such certificates represent an undivided fractional
interest in the respective government-backed trust's assets. The assets of each
government-backed trust consist of (i) a promissory note issued by a foreign
government (the "Note"), (ii) a guaranty by the U.S. Government, acting through
the Defense Security Assistance Agency of the Department of Defense, of the due
and punctual payment of 90% of all principal and interest due on such Note and
(iii) a beneficial interest in a government securities trust holding U.S.
Treasury bills, notes and other direct obligations of the U.S. Treasury
sufficient to provide the Trust with funds in an amount equal to at least 10% of
all principal and interest payments due on the Note. No more than 35% of the
value of a Fund's total assets will be invested in stripped securities not
purchased through the Federal Reserve's STRIPS program and government-backed
trusts.
INVESTMENT COMPANIES. Each Fund other than the U.S Treasury Fund currently may
invest in securities issued by other investment companies. Each such Fund
intends to limit its investments in securities issued by other investment
companies so that, as determined immediately after a purchase of such securities
is made: (i) not more than 5% of the value of the Fund's total assets will be
invested in the securities of any one investment company; (ii) not more than 10%
of the value of its total assets will be invested in the aggregate in securities
of investment companies as a group; and (iii) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the Fund
or by the Trust as a whole.
REPURCHASE AGREEMENTS. Each Fund may agree to purchase securities from financial
institutions subject to the seller's agreement to repurchase them at an
agreed-upon time and price ("Repurchase Agreements"). During the term of the
agreement, the Adviser will continue to monitor the creditworthiness of the
seller and will require the seller to maintain the value of the securities
subject to the agreement at not less than 102% of the repurchase price. Default
or bankruptcy of the seller would, however, expose the Fund to possible loss
because of adverse market action or delay in connection with the disposition of
the underlying securities. The securities held subject to a repurchase agreement
may have stated maturities exceeding thirteen months, provided the repurchase
agreement itself matures in less than one year.
The repurchase price under the repurchase agreements described in the Prospectus
generally equals the price paid by a Fund plus interest negotiated on the basis
of current short-term rates (which may be more or less than the rate on the
securities underlying the repurchase agreement). Securities subject to
repurchase agreements will be held by the Funds' custodian (or sub-custodian) or
in the Federal Reserve/Treasury book-entry system or other authorized securities
depository. Repurchase agreements are considered to be loans under the 1940 Act.
While the maturity of the underlying securities in a repurchase agreement
transaction may be more than one year, the term of the repurchase agreement is
always less than thirteen months. The maturities of the underlying securities
will have to be taken into account in calculating the Fund's dollar weighted
average portfolio maturities if the seller of the repurchase agreement fails to
perform under such agreement. In these transactions, the securities acquired by
each Fund
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<PAGE>
are held by the Fund's custodian bank until they are repurchased. The Adviser
will continually monitor the value of the underlying securities to ensure that
their value always equals or exceeds the repurchase price plus accrued interest.
Repurchase agreements are considered to be loans collateralized by the
underlying securities under the 1940 Act.
Repurchase agreements may involve certain risks. If the seller in the
transaction becomes insolvent and subject to liquidation or reorganization under
the Bankruptcy Code, recent amendments to the Code permit the Funds to exercise
a contractual right to liquidate the underlying securities. However, if the
seller is a stockbroker or other entity not afforded protection under the Code,
an agency having jurisdiction over the insolvent entity may determine that a
Fund does not have the immediate right to liquidate the underlying securities.
If the seller defaults, a Fund might incur a loss if the value of the underlying
securities declines. A Fund may also incur disposition costs in connection with
the liquidation of the securities. While the Funds' management acknowledges
these risks, it is expected that they can be controlled through selection
criteria established by the Board of Trustees and careful monitoring procedures.
Income from repurchase agreements is taxable.
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements are considered to
be borrowings under the 1940 Act. At the time a Fund enters into a reverse
repurchase agreement (an agreement under which a Fund sells portfolio securities
and agrees to repurchase them at an agreed-upon date and price), it will place
in a segregated custodial account U.S. government securities or other liquid
high-grade debt securities having a value equal to or greater than the
repurchase price (including accrued interest), and will subsequently monitor the
account to insure that such value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price of the securities it is obligated to repurchase.
SECURITIES LENDING. To increase return on portfolio securities, the Funds may
lend their portfolio securities to broker/dealers and other institutional
investors pursuant to agreements requiring that the loans be secured by
collateral equal in value to at least the market value of the securities loaned.
Collateral for such loans may include cash, securities of the U.S. Government,
its agencies or instrumentalities, or an irrevocable letter of credit issued by
a bank which meets the investment standards of the Fund or any combination
thereof. Such loans will not be made, if, as a result, the aggregate of all
outstanding loans of the Fund exceeds 30% of the value of its total assets.
There may be risks of delay in receiving additional collateral or in recovering
the securities loaned or even a loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will be made only to
borrowers deemed by the Adviser to be of good standing and when, in the
Adviser's judgment, the income to be earned from the loan justifies the
attendant risks. When a Fund lends its securities, it continues to receive
interest or dividends on the securities loaned and may simultaneously earn
interest on the investment of the cash collateral which will be invested in
readily marketable, high-quality, short-term obligations. Although voting
rights, or rights to consent, attendant to securities on
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loan pass to the borrower, such loans may be called at any time and will be
called so that the securities may be voted by a Fund if a material event
affecting the investment is to occur.
Securities lending arrangements with broker/dealers require that the loans be
secured by collateral equal in value to at least the market value of the
securities loaned. During the term of such arrangements, a Fund will maintain
such value by the daily marking-to-market of the collateral.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. Each Fund may, without
restriction, purchase securities on a when-issued basis or forward commitment,
in which case delivery and payment normally take place 15 to 45 days after the
date of the commitment to purchase. A Fund will make commitments only to
purchase securities on a when-issued basis with the intention of actually
acquiring the securities but may sell them before the settlement date if it is
deemed advisable. The when-issued securities are subject to market fluctuation
and no interest accrues to the purchaser during this period. The payment
obligation and the interest rate that will be received on the securities are
each fixed at the time the purchaser enters into the commitment. Purchasing
securities on a when-issued basis is a form of leveraging and can involve a risk
that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself, in which case
there could be an unrealized loss at the time of delivery.
A Fund will maintain liquid assets in segregated accounts in an amount at least
equal in value to the Fund's commitments to purchase when-issued securities. If
the value of these assets declines, the Fund will place additional liquid assets
in the account on a daily basis so that the value of the assets in the account
is equal to the amount of such commitments.
OTHER INVESTMENT CONSIDERATIONS - CASH MANAGEMENT FUND
BANK OBLIGATIONS -- Investments by the Cash Management Fund in short-term debt
securities include investments in obligations (including certificates of
deposits and bankers' acceptances) of those U.S. banks which have total assets
at the time of purchase in excess of $1 billion and the deposits of which are
insured by either the Bank Insurance Fund or the Savings and Loan Insurance Fund
of the Federal Deposit Insurance Corporation.
The Cash Management Fund may also make interest-bearing savings deposits in
commercial and savings bank in amounts not in excess of 5% of its total assets
in any one institution. Bank obligations include certificates of deposit, time
deposits and bankers' acceptances issued or guaranteed by a U.S. bank (including
their foreign branches) and foreign banks (including their U.S. branches). These
obligations may be general obligations of the parent bank or may be limited to
the issuing branch by the terms of the specific obligations or by government
regulation.
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The Cash Management Fund limits its investments in United States bank
obligations to obligations of United States banks (including foreign branches)
which have more than $1 billion in total assets at the time of investment and
are members of the Federal Reserve System or are examined by the Comptroller of
the currency or whose deposits are insured by the Federal Deposit Insurance
Corporation. The Cash Management Fund limits its investment in foreign bank
obligations to United States dollars denominated obligations of foreign banks
(including United States branches) which at the time of investment (i) have more
than $10 billion, or the equivalent in other currencies, in total assets; (ii)
have branches or agencies in the United States; and (iii) in the opinion of the
Fund's investment adviser, are of an investment quality comparable to
obligations of the United States banks which may be purchased by the Fund and
present minimal credit risk.
The Cash Management Fund may not invest in fixed time deposits subject to
withdrawal penalties maturing in more than seven calendar days. 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. Investments in fixed time deposits subject
to withdrawal penalties maturing from two business days through seven calendar
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
like exchange controls may be adopted which might adversely affect the payment
of principal and interest on those obligations and that the selection of those
obligations may be more difficult because there may be less publicly available
information concerning foreign banks or the accounting, auditing and financial
reporting standards, practices and requirements applicable to foreign banks may
differ from those applicable to United States banks. In that connection, foreign
banks are not subject to examination by any United States Government agency or
instrumentalities. There is no limitation on the amount Cash Management Fund
assets which may be invested in obligations of foreign banks which meet the
conditions set forth above.
SECURITIES OF FOREIGN GOVERNMENTS AND SUPRANATIONAL AGENCIES. The Fund intends
to invest from time to time in securities of foreign governments and
supranational agencies. Obligations of supranational agencies, such as the
International Bank for Reconstruction and Development (also known as the World
Bank) are supported by subscribed, but unpaid, commitments of member countries.
There is no assurance that these commitments will be undertaken or complied with
in the future, and therefore foreign and supranational securities are subject to
certain risks associated with foreign investing.
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OTHER INVESTMENT CONSIDERATIONS - NEW YORK TAX-FREE FUND
Municipal obligations which may be acquired by the New York Tax-Free Fund
include debt obligations issued by governmental entities to obtain funds for
various public purposes, including the construction of a wide range of public
facilities, the refunding of outstanding obligations, the payment of general
operating expenses and the extension of loans to public institutions and
facilities.
The two principal classifications of municipal obligations which may be held by
the New York Tax-Free Fund are general obligation securities and revenue
securities. The Fund may also acquire Moral Obligation securities.
Municipal obligations purchased by the New York Tax-Free Fund are debt
obligations issued by or on behalf of states, cities, municipalities and other
public authorities and include:
MUNICIPAL BONDS. Municipal bonds generally have a maturity at the time of
issuance of more than a year. Investments in municipal bonds are limited to
bonds with a remaining maturity of 397 days or less and which are rated at the
date of purchase "A" or better by S&P and "A" or better by Moody's or have
comparably high quality ratings by other NRSROs that have rated such bonds, or
which if not rated, are, in the opinion of the Adviser, of comparable investment
quality. See Appendix A for a description of the Rating system.
MUNICIPAL NOTES. Municipal notes generally have maturities at the time of
issuance of thirteen months or less. Investments in municipal notes are limited
to notes which are rated at the date of purchase "MIG 1" or "VMIG.1" or "MIG2"
or "VMIG2" by Moody's and/or (if only rated by one agency) "SP-1" or "SP-2" by
S&P or "FIN-1" or "FIN-2" by Fitch or of comparable high quality as determined
by ICBA or Duff & Phelps Credit Rating Co., or, if not rated, are, in the
opinion of the Adviser, of comparable investment quality.
MUNICIPAL COMMERCIAL PAPER. Municipal commercial paper is a debt obligation with
a stated maturity of 397 days or less which is issued to finance seasonal
working capital needs or as a short-term financing in anticipation of
longer-term debt. Investments in municipal commercial paper are limited to
commercial paper which is at the time of purchase rated (or issued by an issuer
with a similar security rated) in the highest short-term rating category by two
or more NRSROs, or the only NRSRO rating the security, or if unrated, determined
to be of comparable credit quality by the Adviser.
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, if the security is
downgraded to a level below that permitted for money market funds under Rule
2a-7 of the 1940 Act, the Fund's Adviser must report such event to the Board of
Trustees as soon as possible to permit the board to reassess the security
promptly to determine whether it may be retained as an eligible investment for
the Fund. To
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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 this Prospectus and in the SAI.
FLOATING RATE INSTRUMENTS. Certain of the municipal obligations which the New
York Tax-Free Fund may purchase have a floating or variable rate of interest.
Such obligations bear interest at rates which are not fixed, but which vary with
changes in specified market rates or indices, such as a Federal Reserve
composite index. Certain of such obligations may carry a demand or "put" feature
which would permit the holder to tender them back to the issuer (or to a third
party) at par value prior to maturity. The New York Tax-Free Fund may invest in
floating and variable rate Municipal Obligations even if they carry stated
maturities in excess of thirteen months, upon certain conditions contained in
Rule 2a-7 of the 1940 Act. It is the present position of the SEC that the
maturity of a short term (the principal amount must unconditionally be paid in
397 days or less) floating rate security is [one day] and the maturity of a long
term (the principal amount is scheduled to be paid in more than 397 days)
floating rate security that is subject to a demand feature shall be deemed to
have a maturity equal to the period remaining until the principal amount can be
recovered through demand. The New York Tax-Free Fund will limit its purchases of
floating and variable rate Municipal Obligations to those meeting the quality
standards set forth above. The adviser will monitor on an ongoing basis the
earning power, cash flow and other liquidity ratios of the issuers of such
obligations, and will similarly monitor the ability of an issuer of a demand
instrument to pay principal and interest on demand. The New York Tax-Free Fund's
right to obtain payment at par on a demand instrument could be affected by
events occurring between the date of the Fund elects to demand payment and the
date payment is due, which may affect the ability of the issuer of the
instrument to make payment when due.
TAXABLE SECURITIES. The New York Tax-Free Fund may invest up to 20% of the
current value of its total assets in securities subject to the Federal
alternative minimum tax. In addition, the New York Tax-Free Fund may invest up
to 100% of its total assets in these and other taxable securities to maintain a
temporary "defensive" posture when, in the opinion of the Adviser, it is prudent
to do so. The conditions for which such a posture would be undertaken include
adverse market conditions or the unavailability of suitable tax-exempt
securities. During these times when the New York Tax-Free Fund is maintaining a
temporary "defensive" posture, it may be unable to fully achieve its investment
objective.
The types of taxable securities (in addition to "alternative minimum tax"
securities) in which the New York Tax-Free Fund may invest are limited to the
following money market instruments which have remaining maturities not exceeding
397 days: (i) obligations of the United States Government, its agencies or
instrumentalities; (ii) negotiable certificates of deposit, bankers'
acceptances, time deposits and other obligations issued or supported by United
States banks which have more than $1 billion in total assets at the time of
investment and are members of the Federal Reserve System or are examined by the
Comptroller of the Currency or whose deposits
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are insured by the Federal Deposit Insurance Corporation; (iii) domestic and
foreign commercial paper rated in accordance with the standards set forth above
under "Cash Management Fund-Commercial Paper" and (iv) repurchase agreements.
The New York Tax-Free Fund also has the right to hold cash reserves of up to
100% of their total assets when the Adviser deems it necessary for temporary
defensive purposes.
SECURITIES WITH PUT RIGHTS. The New York Tax-Free Fund may, subject to Rule 2a-7
of the 1940 Act, enter into put transactions, sometimes referred to as stand-by
commitments, with respect to municipal obligations held in their portfolios. The
amount payable to the Fund by the seller upon its exercise of a put will
normally be (i) the Fund's acquisition cost of the securities (excluding any
accrued interest which the Fund paid on their acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date during the period the securities
were owned by the Fund. Absent unusual circumstances, the Fund values the
underlying securities at their amortized cost. Accordingly, the amount payable
by a broker-dealer or bank during the time a put is exercisable will be
substantially the same as the value of the underlying securities.
If necessary and advisable, the New York Tax-Free Fund may pay for certain puts
either separately in cash or by paying a higher price for portfolio securities
which are acquired subject to such a put (thus reducing the yield to maturity
otherwise available for the same securities).
The Fund's ability to exercise a put will depend on the ability of the
broker-dealer or bank to pay for the underlying securities at the time the put
is exercised. In the event that a broker-dealer or bank should default on its
obligation to repurchase an underlying security, the Fund might be unable to
recover all or a portion of any loss sustained from having to sell the security
elsewhere.
There are, of course, variations in the quality of Municipal Obligations both
within a particular classification and between classifications, and the yields
on Municipal Obligations depend upon a variety of factors, including general
money market conditions, the financial condition of the issuer, general
conditions of the municipal bond market, the size of a particular offering, the
maturity of the obligation and the rating of the issue. The ratings of NRSROs
represent their opinions as to the quality of Municipal Obligations. It should
be emphasized, however, that ratings are general and are not absolute standards
of quality, and Municipal Obligations with the same maturity, interest rate and
rating may have different yields while Municipal Obligations of the same
maturity and interest rate with different ratings may have the same yield.
The payment of principal and interest on most securities purchased by the New
York Tax-Free Fund will depend upon the ability of the issuers to meet their
obligations. An issuer's obligations under its Municipal Obligations are subject
to the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the Federal Bankruptcy Code, and laws, if
any, which may be enacted by federal or state legislatures
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extending the time for payment of principal or interest, or both, or imposing
other constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on, and principal of, its Municipal
Obligations may be materially adversely affected by litigation or other
conditions.
Certain of the Municipal Obligations held by the New York Tax-Free Fund may be
insured at the time of issuance as to the timely payment of principal and
interest. The insurance policies will usually be obtained by the issuer of the
Municipal Obligation at the time of its original issuance. In the event that the
issuer defaults on interest or principal payment, the insurer will be notified
and will be required to make payment to the bondholders. There is, however, no
guarantee that the insurer will meet its obligations. In addition, such
insurance will not protect against market fluctuations caused by changes in
interest rates and other factors. The New York Tax-Free Fund may, from time to
time, invest more than 25% of its assets in Municipal Obligations covered by
insurance policies.
Municipal Obligations acquired by the New York Tax-Free Fund may include
short-term General Obligation Notes, Tax Anticipation Notes, Bond Anticipation
Notes, Revenue Anticipation Notes, Tax-Exempt Commercial Paper, Construction
Loan Notes and other forms of short-term tax-exempt loans. Such instruments are
issued with a short-term maturity in anticipation of the receipt of tax funds,
the proceeds of bond placements or other revenues. In addition, the Fund may
invest in bonds and other types of tax-exempt instruments provided they have
remaining maturities of thirteen months or less at the time of purchase.
Certain types of Municipal Obligations (private activity bonds) have been or are
issued to obtain funds to provide privately operated housing facilities,
pollution control facilities, convention or trade show facilities, mass transit,
airport, port or parking facilities and certain local facilities for water
supply, gas, electricity or sewage or solid waste disposal. Private activity
bonds are also issued on behalf of privately held or publicly owned corporations
in the financing of commercial or industrial facilities. State and local
governments are authorized in most states to issue private activity bonds for
such purposes in order to encourage corporations to locate within their
communities. The principal and interest on these obligations may be payable from
the general revenues of the users of such facilities.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Obligations. For example, under the Tax Reform Act of
1986, interest on certain private activity bonds must be included in an
investor's alternative minimum taxable income, and corporate investors must
include all tax-exempt interest in their federal alternative minimum taxable
income. The Trust cannot predict what legislation, if any, may be proposed in
the future as regards the income tax status of interest on Municipal
Obligations, or which proposals, if any, might be enacted. Such proposals, while
pending or if enacted, might materially and adversely affect the availability of
Municipal Obligations for investment by the New York Tax-Free Fund and the
liquidity and
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value of the Fund's portfolio. In such an event, the Trust would reevaluate the
Fund's investment objective and policies and consider possible changes in its
structure or possible dissolution.
STAND-BY COMMITMENTS. The New York Tax-Free Fund may acquire "stand-by
commitments" with respect to Municipal Obligations held in its portfolio. Under
a stand-by commitment, a dealer or bank agrees to purchase at the Fund's option
specified Municipal Obligations at a specified price. Stand-by commitments may
be exercisable by the Fund at any time before the maturity of the underlying
Municipal Obligations and may be sold, transferred or assigned only with the
instruments involved.
The amount payable to the Fund upon its exercise of a stand-by commitment is
normally (i) the Fund's acquisition cost of the Municipal Obligations (excluding
any accrued interest which the Fund paid on their acquisition), less any
amortized market premium or plus any amortized market or original issue discount
during the period the Fund owned the securities, plus (ii) all interest accrued
on the securities since the last interest payment date during that period. A
"stand-by commitment" may be sold, transferred or assigned by the Fund only with
the instrument involved.
The Fund expects that stand-by commitments will generally be available without
the payment of any direct or indirect consideration. However, if necessary or
advisable, the Fund may pay for a stand-by commitment either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the commitment (thus reducing the yield to maturity otherwise available for
the same securities). Where the Fund has paid any consideration directly or
indirectly for a stand-by commitment, its cost would be reflected as unrealized
loss for the period during which the commitment was held by the Fund and will be
reflected in realized gain or loss when the commitment is exercised or expires.
The total amount paid in either manner for outstanding stand-by commitments held
by the Fund will not exceed 1/2 of 1% of the value of its total assets
calculated immediately after each stand-by commitment is acquired.
The Fund intends to enter into stand-by commitments only with dealers, banks and
broker-dealers which, in the Adviser's opinion, present minimal credit risks.
The Fund's reliance upon the credit of those dealers, banks and broker/dealers
is secured by the value of the underlying Municipal Obligations that are subject
to a commitment.
The Fund would acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes. The acquisition of a stand-by commitment will not affect the valuation
or assumed maturity of the underlying Municipal Obligations which will continue
to be valued in accordance with the ordinary method of valuation employed by the
Fund. Stand-by commitments acquired by the Fund would be valued at zero in
determining net asset value where the Fund paid any consideration directly or
indirectly for a stand-by commitment; its cost would be reflected as unrealized
depreciation for the period in which the commitment was held by the Fund.
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ADDITIONAL INVESTMENT LIMITATIONS
The following fundamental policies and investment restrictions have been adopted
by the Fund and except as noted, such policies and restrictions cannot be
changed without approval by the vote of a majority of the outstanding voting
shares of the Fund which, as defined by the Investment Company Act of 1940, as
amended (the "1940 Act"), means the affirmative vote of the lesser of (a) 67% or
more of the shares of the Fund present at a meeting at which the holders of more
than 50% of the outstanding shares of the Fund are represented in person or by
proxy, or (b) more than 50% of the outstanding shares of the Fund.
Each Fund may not:
1. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments but this shall not prevent a Fund
from (i) purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities or (ii)
engaging in forward purchases of sales of foreign currencies or securities.
2. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent a Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business). Investments by a Fund in
securities backed by mortgages on real estate or in marketable securities of
companies engaged in such activities are not hereby precluded.
3. Issue any senior security (as defined in the 1940 Act as amended), except
that (a) a Fund may engage in transactions that may result in the issuance of
senior securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) a Fund may acquire
other securities, the acquisition of which may result in the issuance of a
senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; (c) subject to the restrictions set forth
below, the Fund may borrow money as authorized by the 1940 Act. For purposes of
this restriction, collateral arrangements with respect to a Fund's permissible
options and futures transactions, including deposits of initial and variation
margin, are not considered to be the issuance of a senior security.
4. Borrow money, except that a Fund may borrow money for temporary or emergency
purposes or by engaging in reverse repurchase agreements in an amount not
exceeding 10% of the value of its total assets at the time when the loan is made
and may pledge mortgage, or hypothecate no more than 10% of its assets to secure
such borrowings. Any borrowing representing more than 5% of a Fund's total
assets must be repaid before a Fund may make additional investments.
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5. Make loans, except that each Fund may: (i) purchase and hold debt instruments
(including without limitation, bonds, notes, debentures or other obligations and
certificates of deposit, bankers' acceptances and fixed time deposits) in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements with respect to portfolio securities; and (iii) lend
portfolio securities with a value not in excess of one-third of the value of its
total assets.
6. Underwrite securities issued by others, except to the extent that a Fund may
be considered an underwriter within the meaning of the Securities Act of 1933,
as amended (the "1933 Act") in the disposition of portfolio securities.
7. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities,
or repurchase agreements secured thereby) if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of companies whose
principal business activities are in the same industry. Notwithstanding the
foregoing, (i) with respect to a Fund's permissible futures and options
transactions in U.S. Government securities, positions in options and futures
shall not be subject to this restriction; (ii) the Funds may invest more than
25% of their total assets in obligations issued by banks, including U.S. banks;
and (iii) the New York Tax-Free Fund may invest more than 25% of its assets in
municipal obligations secured by bank letters of credit or guarantees, including
participation certificates.
For purposes of investment restriction (2) above, real estate includes
Real Estate Limited Partnerships. For purposes of investment restriction (7)
above, industrial development bonds, where the payment of principal and interest
is the ultimate responsibility of companies within the same industry, are
grouped together as an "industry." Investment restriction (7) above, however, is
not applicable to investments by a fund in municipal obligations where the
issuer is regarded as a state, city, municipality or other public authority
since such entities are not members of any "industry." Supranational
organizations are collectively considered to be members of a single "industry"
for purposes of restriction (7) above.
The following restrictions are non-fundamental and may be changed by the Fund's
Board of Trustees. Pursuant to such restrictions, each Fund will not:
1. Make short sales of securities, other than short sales "against the box," or
purchase securities on margin except for short-term credits necessary for
clearance of portfolio transactions, provided that this restriction will not be
applied to limit the use of options, futures contracts and related options, in
the manner otherwise permitted by the investment restrictions, policies and
investment program of the Fund;
2. Purchase the securities of any other investment company, if the Fund,
immediately after such purchase or acquisition, owns in the aggregate, (i) more
than 3% of the total outstanding voting stock of such investment company, (ii)
securities issued by such investment company
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having an aggregate value in excess of 5% of the value of the total assets of
the Fund, or (iii) securities issued by such investment company and all other
investment companies having an aggregate value in excess of 10% of the value of
the total assets of the Fund;
3. Invest more than 10% of its net assets in illiquid securities. Illiquid
securities are securities that are not readily marketable or cannot be disposed
of promptly within seven days and in the usual course of business without taking
a materially reduced price. Such securities include, but are not limited to,
time deposits and repurchase agreements with maturities longer than seven days.
Securities that may be resold under Rule 144A or securities offered pursuant to
Section 4(2) of the Securities Act of 1933, as amended, shall not be deemed
illiquid solely by reason of being unregistered. The Investment Adviser shall
determine whether a particular security is deemed to be liquid based on the
trading markets for the specific security and other factors.
4. The Cash Management Fund may not, with respect to 75% of its assets, hold
more than 10% of the outstanding voting securities of any issuer or invest more
than 5% of its assets in the securities of any one issuer (other than
obligations of the U.S. Government, its agencies and instrumentalities); the New
York Tax-Free Fund may not, with respect to 50% of its assets, hold more than
10% of the outstanding voting securities of any issuer.
5. Each Fund may not purchase or sell interest in oil, gas or mineral leases.
6. Each Fund may not write, purchase or sell any put or call option or any
combination thereof, provided that this shall not prevent (i) the writing,
purchasing or selling of puts, calls or combinations thereof with respect to
portfolio securities or (ii) with respect to a Fund's permissible futures and
options transactions, the writing, purchasing, ownership, holding or selling of
futures and options positions or of puts, call or combinations thereof with
expect to futures.
It is the Trust's position that proprietary strips, such as CATS and TIGRS, are
United States Government securities. However, the Trust has been advised that
the staff of the Securities and Exchange Commission's Division of Investment
Management does not consider these to be United States Government securities, as
defined under the 1940 Act.
For purposes of the Funds' investment restrictions, the issuer of a tax-exempt
security is deemed to be the entity (public or private) ultimately responsible
for the payment of the principal of and interest on the security.
GENERAL. The policies and limitations listed above supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the Fund's assets that may be invested
in any security or other asset, or sets forth a policy regarding quality
standards, such standard or percentage limitation will be determined immediately
after and as a result of the Fund's acquisition of such security or other asset
except
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in the case of borrowing (or other activities that may be deemed to result in
the issuance of a "senior security" under the 1940 Act). Accordingly, any
subsequent change in values, net assets, or other circumstances will not be
considered when determining whether the investment complies with the Fund's
investment policies and limitations. If the value of the Fund's holdings of
illiquid securities at any time exceeds the percentage limitation applicable at
the time of acquisition due to subsequent fluctuations in value or other
reasons, the Trustees will consider what actions, if any, are appropriate to
maintain adequate liquidity.
Each Fund is subject to the investment limitations enumerated in this subsection
which may be changed with respect to a particular Fund only by a vote of the
holders of a majority of such Fund's outstanding shares (as defined under
"Miscellaneous" below).
Although the foregoing investment limitations would permit the Funds to invest
in options, futures contracts and options on future contracts, the Funds, during
the current fiscal year, do not intend to trade in such instruments. Prior to
making any such investments, the Funds would notify their shareholders and add
appropriate descriptions concerning the instruments to the Prospectus and this
SAI.
NET ASSET VALUE
The net asset value per share of each Fund described in this SAI is calculated
separately by adding the amortized cost of all portfolio securities and other
assets belonging to the particular Fund, subtracting the liabilities charged to
the Fund, and dividing the result by the number of outstanding shares of that
Fund. Assets belonging to a Fund consist of the consideration received upon the
issuance of shares of the particular Fund together with all net investment
income, realized gains/losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds, and a portion of any general
assets of the Trust not belonging to a particular investment portfolio. Assets
belonging to a particular Fund are charged with the direct liabilities of that
Fund and with a share of the general liabilities of the Trust which are normally
allocated in proportion to the relative net asset values of all of the Trust's
investment portfolios at the time of allocation. Subject to the provisions of
the Trust Instrument, determinations by the Board of Trustees as to the direct
and allocable liabilities, and the allocable portion of any general assets, with
respect to a particular Fund are conclusive.
The Trust uses the amortized cost method of valuation to value each Fund's
portfolio securities, pursuant to which an instrument is valued at its cost
initially and thereafter a constant amortization to maturity of any discount or
premium is assumed, regardless of the impact of fluctuating interest rates on
the market value of the instrument. This method may result in periods during
which value, as determined by amortized cost, is higher or lower than the price
a Fund would receive if it sold the instrument. The market value of portfolio
securities held by a Fund can be expected to vary inversely with changes in
prevailing interest rates.
- 19 -
<PAGE>
Each Fund attempts to maintain a dollar-weighted average portfolio maturity
appropriate to its objective of maintaining a stable net asset value per share.
In this regard, except for securities subject to repurchase agreements, each
Fund will neither purchase a security deemed to have a remaining maturity of
more than thirteen months within the meaning of the 1940 Act nor maintain a
dollar-weighted average maturity which exceeds 90 days. The Board of Trustees
has also established procedures that are intended to stabilize the net asset
value per share of each Fund for purposes of sales and redemptions at $1.00.
These procedures include the weekly determination of the extent, if any, to
which the net asset value per share of each Fund calculated by using available
market quotations deviates from $1.00 per share. In the event such deviation
exceeds one-half of one percent, the Board will promptly consider what action,
if any, should be initiated. If the Board believes that the extent of any
deviation from a $1.00 amortized cost price per share may result in material
dilution or other unfair results to new or existing investors, it has agreed to
take such steps as it considers appropriate to eliminate or reduce to the extent
reasonably practicable any such dilution or unfair results. These steps may
include selling portfolio instruments prior to maturity; shortening the average
portfolio maturity; withholding or reducing dividends; redeeming shares in kind;
reducing the number of outstanding shares without monetary consideration; or
utilizing a net asset value per share determined by using available market
quotations.
SPECIAL PROCEDURES FOR IN-KIND PAYMENTS
Payment for shares of a Fund may, in the discretion of the Fund, be made in the
form of securities that are permissible investments for the Fund as described in
the Prospectus. For further information about this form of payment, contact the
Funds' transfer agent at 1-887-RAM- 6868. In connection with an in-kind
securities payment, a Fund will require, among other things, that the securities
be valued on the day of purchase in accordance with the pricing methods used by
the Fund; that the Fund receive satisfactory assurances that it will have good
and marketable title to the securities received by it; that the securities be in
proper form for transfer to the Fund; that adequate information be provided to
the Fund concerning the basis and other tax matters relating to the securities;
and that the amount of the purchase be at least $1,000,000.
- 20 -
<PAGE>
DESCRIPTION OF SHARES
The Trust's Instrument authorizes the Board of Trustees an unlimited amount of
full and fractional series of shares $0.001 value per share that may be divided
into classes (each a designated "Class" or "Fund").
In the event of a liquidation or dissolution of the Trust or an individual Fund,
shareholders of a particular Fund would be entitled to receive the assets
available for distribution belonging to such Fund, and a proportionate
distribution, based upon the relative assets of the Trust's respective
investment portfolios, of any general assets not belonging to any particular
portfolio which are available for distribution. Subject to the allocation of
certain costs, expenses, charges and reserves attributable to the operation of a
particular series, shareholders of a Fund are entitled to participate equally in
the net distributable assets of the particular Fund involved on liquidation,
based on the number of shares of the Fund that are held by each shareholder.
Shareholders of the Funds, as well as those of any other investment portfolio
offered by the Trust, will vote together in the aggregate and not separately on
a fund-by-fund basis, except as otherwise required by law or when the Board of
Trustees determines that the matter to be voted upon affects only the interests
of the shareholders of a particular series. Rule 18f-2 under the 1940 Act
provides that any matter required to be submitted to the holders of the
outstanding voting securities of an investment company such as the Trust shall
not be deemed to have been effectively acted upon unless approved by the holders
of a majority of the outstanding shares of each fund affected by the matter. A
fund is affected by a matter unless it is clear that the interests of each fund
in the matter are substantially identical or that the matter does not affect any
interest of the fund. Under the Rule, the approval of an investment advisory
agreement or any change in a fundamental investment policy would be effectively
acted upon with respect to a fund only if approved by a majority of the
outstanding shares of such fund. However, the Rule also provides that the
ratification of the appointment of independent accountants, the approval of
principal underwriting contracts and the election of Trustees may be effectively
acted upon by shareholders of the Trust voting together in the aggregate without
regard to particular fund.
When issued for payment as described in the Funds' Prospectus and this SAI,
shares of the Funds will be fully paid and non-assessable by the Trust.
The Trust Instrument authorize the Board of Trustees, without shareholder
approval (unless otherwise required by applicable law), to: (a) sell and convey
the assets belonging to a series of shares to another management investment
company for consideration which may include securities issued by the purchaser
and, in connection therewith, to cause all outstanding shares of such series to
be redeemed at a price which is equal to their net asset value and which may be
paid in cash or by distribution of the securities or other consideration
received from the sale and conveyance; (b) sell and convert the assets belonging
to a series of shares into money and,
- 21 -
<PAGE>
in connection therewith, to cause all outstanding shares of such series to be
redeemed at their net asset value; or (c) combine the assets belonging to a
series of shares with the assets belonging to one or more other series of shares
if the Board of Trustees reasonably determines that such combination will not
have a material adverse effect on the shareholders of any series participating
in such combination and, in connection therewith, to cause all outstanding
shares of any such series to be redeemed or converted into shares of another
series of shares at their net asset value.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional federal income tax
considerations generally affecting the Funds and their shareholders that are not
described in their Prospectuses. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussions here and in the Prospectuses are not intended as substitutes for
careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund has elected to be taxed as a regulated investment company for federal
income tax purposes under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, a Fund is not subject
to federal income tax on the portion of its net investment income (i.e., taxable
interest, dividends and other taxable ordinary income, net of expenses) and
capital gain net income (i.e., the excess of capital gains over capital losses)
that it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) and, with
respect to the New York Tax-Free Fund, at least 90% of its tax-exempt income
(net of expenses allocable thereto) for the taxable year (the "Distribution
Requirement"), and satisfies certain other requirements of the Code that are
described below. Distributions by a Fund made during the taxable year or, under
specified circumstances, within twelve months after the close of the taxable
year, will be considered distributions of income and gains of the taxable year
and will therefore count toward satisfaction of the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated investment
company must derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies (to the extent such
currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement").
- 22 -
<PAGE>
In general, gain or loss recognized by a Fund on the disposition of an asset
will be a capital gain or loss. In addition, gain will be recognized as a result
of certain constructive sales, including short sales "against the box." However,
gain recognized on the disposition of a debt obligation (including municipal
obligations) purchased by a Fund at a market discount (generally, at a price
less than its principal amount) will be treated as ordinary income to the extent
of the portion of the market discount which accrued during the period of time
the Fund held the debt obligation.
Further, the Code also treats as ordinary income a portion of the capital gain
attributable to a transaction where substantially all of the return realized is
attributable to the time value of a Fund's net investment in the transaction
and: (1) the transaction consists of the acquisition of property by the Fund and
a contemporaneous contract to sell substantially identical property in the
future; (2) the transaction is a straddle within the meaning of section 1092 of
the Code; (3) the transaction is one that was marketed or sold to the Fund on
the basis that it would have the economic characteristics of a loan but the
interest-like return would be taxed as capital gain; or (4) the transaction is
described as a conversion transaction in the Treasury Regulations. The amount of
the gain recharacterized generally will not exceed the amount of the interest
that would have accrued on the net investment for the relevant period at a yield
equal to 120% of the federal long-term, mid-term, or short-term rate, depending
upon the type of instrument at issue, reduced by an amount equal to: (1) prior
inclusions of ordinary income items from the conversion transaction and (2) the
capital interest on acquisition indebtedness under Code section 263(g). Built-in
losses will be preserved where the Fund has a built-in loss with respect to
property that becomes a part of a conversion transaction. No authority exists
that indicates that the converted character of the income will not be passed
through to the Fund's shareholders.
In general, for purposes of determining whether capital gain or loss recognized
by a Fund on the disposition of an asset is long-term or short-term, the holding
period of the asset may be affected if (1) the asset is used to close a "short
sale" (which includes for certain purposes the acquisition of a put option) or
is substantially identical to another asset so used, (2) the asset is otherwise
held by the Fund as part of a "straddle" (which term generally excludes a
situation where the asset is stock and the Fund grants a qualified covered call
option (which, among other things, must not be deep-in-the-money) with respect
thereto) or (3) the asset is stock and the Fund grants an in-the-money qualified
covered call option with respect thereto. In addition, a Fund may be required to
defer the recognition of a loss on the disposition of an asset held as part of a
straddle to the extent of any unrecognized gain on the offsetting position.
Any gain recognized by a Fund on the lapse of, or any gain or loss recognized by
a Fund from a closing transaction with respect to, an option written by the Fund
will be treated as a short-term capital gain or loss.
Certain transactions that may be engaged in by a Fund (such as regulated futures
contracts and options on futures contracts) will be subject to special tax
treatment as "Section 1256 contracts." Section 1256 contracts are treated as if
they are sold for their fair market value on the last business day of the
taxable year, even though a taxpayer's obligations (or rights) under such
- 23 -
<PAGE>
contracts have not terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
taken into account for the taxable year together with any other gain or loss
that previously was recognized upon the termination of Section 1256 contracts
during that taxable year. Any capital gain or loss for the taxable year with
respect to Section 1256 contracts (including any capital gain or loss arising as
a consequence of the year-end deemed sale of such contracts) is generally
treated as 60% long-term capital gain or loss and 40% short-term capital gain or
loss. A Fund, however, may elect not to have this special tax treatment apply to
Section 1256 contracts that are part of a "mixed straddle" with other
investments of the Fund that are not Section 1256 contracts.
Treasury Regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) for any taxable year,
to elect (unless it made a taxable year election for excise tax purposes as
discussed below) to treat all or any part of any net capital loss, any net
long-term capital loss or any net foreign currency loss incurred after October
31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, each Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of each Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to each of which the
Fund has not invested more than 5% of the value of the Fund's total assets in
securities of such issuer and does not hold more than 10% of the outstanding
voting securities of such issuer), and no more than 25% of the value of its
total assets may be invested in the securities of any one issuer (other than
U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security, not the issuer of the option. For purposes of asset diversification
testing, obligations issued or guaranteed by agencies or instrumentalities of
the U.S. Government such as the Federal Agricultural Mortgage Corporation, the
Farm Credit System Financial Assistance Corporation, a Federal Home Loan Bank,
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Government National Mortgage Corporation, and the Student Loan
Marketing Association are treated as U.S.
Government securities.
If for any taxable year a Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
- 24 -
<PAGE>
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to distribute in each calendar year an amount equal to 98% of ordinary
taxable income for the calendar year and 98% of capital gain net income for the
one-year period ended on October 31 of such calendar year (or, at the election
of a regulated investment company having a taxable year ending November 30 or
December 31, for its taxable year (a "taxable year election")). (Tax-exempt
interest on municipal obligations is not subject to the excise tax.) The balance
of such income must be distributed during the next calendar year. For the
foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall: (1) reduce
its capital gain net income (but not below its net capital gain) by the amount
of any net ordinary loss for the calendar year; and (2) exclude foreign currency
gains and losses incurred after October 31 of any year (or after the end of its
taxable year if it has made a taxable year election) in determining the amount
of ordinary taxable income for the current calendar year (and, instead, include
such gains and losses in determining ordinary taxable income for the succeeding
calendar year).
Each Fund intends to make sufficient distributions or deemed distributions of
its ordinary taxable income and capital gain net income prior to the end of each
calendar year to avoid liability for the excise tax. However, investors should
note that a Fund may in certain circumstances be required to liquidate portfolio
investments to make sufficient distributions to avoid excise tax liability.
FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its investment company
taxable income for each taxable year. Such distributions will be taxable to
shareholders as ordinary income and treated as dividends for federal income tax
purposes, but they will not qualify for the 70% dividends-received deduction for
corporate shareholders.
Each Fund may either retain or distribute to shareholders its net capital gain
for each taxable year. Each Fund currently intends to distribute any such
amounts. Net capital gain that is distributed and designated as a capital gain
dividend will be taxable to shareholders as long-term capital gain, regardless
of the length of time the shareholder has held his shares or whether such gain
was recognized by the Fund prior to the date on which the shareholder acquired
his shares.
Conversely, if a Fund elects to retain its net capital gain, the Fund will be
taxed thereon (except to the extent of any available capital loss carryovers) at
the 35% corporate tax rate. If a Fund elects to retain its net capital gain, it
is expected that the Fund also will elect to have shareholders of record on the
last day of its taxable year treated as if each received a distribution
- 25 -
<PAGE>
of his pro rata share of such gain, with the result that each shareholder will
be required to report his pro rata share of such gain on his tax return as
long-term capital gain, will receive a refundable tax credit for his pro rata
share of tax paid by the Fund on the gain, and will increase the tax basis for
his shares by an amount equal to the deemed distribution less the tax credit.
The New York Tax-Free Fund intends to qualify to pay exempt-interest dividends
by satisfying the requirement that at the close of each quarter of its taxable
year at least 50% of such Fund's total assets consists of tax-exempt municipal
obligations. Distributions from the New York Tax-Free Fund will constitute
exempt-interest dividends to the extent of such Fund's tax-exempt interest
income (net of expenses and amortized bond premium). Exempt-interest dividends
distributed to shareholders of the New York Tax-Free Fund are excluded from
gross income for federal income tax purposes. However, shareholders required to
file a federal income tax return will be required to report the receipt of
exempt-interest dividends on their returns. Moreover, while exempt-interest
dividends are excluded from gross income for federal income tax purposes, they
may be subject to alternative minimum tax ("AMT") in certain circumstances and
may have other collateral tax consequences as discussed below. Distributions by
a Fund of any investment company taxable income or of any net capital gain will
be taxable to shareholders as discussed above.
Alternative Minimum Tax ("AMT") is imposed in addition to, but only to the
extent it exceeds, the regular tax and is computed at a maximum marginal rate of
28% for non-corporate taxpayers and 20% for corporate taxpayers on the excess of
the taxpayer's alternative minimum taxable income ("AMTI") over an exemption
amount. Exempt-interest dividends derived from certain "private activity"
municipal obligations issued after August 7, 1986 will generally constitute an
item of tax preference includable in AMTI for both corporate and non-corporate
taxpayers. In addition, exempt-interest dividends derived from all municipal
obligations, regardless of the date of issue, must be included in adjusted
current earnings, which are used in computing an additional corporate preference
item (i.e., 75% of the excess of a corporate taxpayer's adjusted current
earnings over its AMTI (determined without regard to this item and the AMT net
operating loss deduction)) includable in AMTI.
Exempt-interest dividends must be taken into account in computing the portion,
if any, of social security or railroad retirement benefits that must be included
in an individual shareholder's gross income and subject to federal income tax.
Further, a shareholder of the New York Tax-Free Fund is denied a deduction for
interest on indebtedness incurred or continued to purchase or carry shares of
the Fund. Moreover, a shareholder who is (or is related to) a "substantial user"
of a facility financed by industrial development bonds held by the New York
Tax-Free Fund will likely be subject to tax on dividends paid by the Fund which
are derived from interest on such bonds. Receipt of exempt-interest dividends
may result in other collateral federal income tax consequences to certain
taxpayers, including financial institutions, property and casualty insurance
companies, and foreign corporations engaged in a trade or business in the United
States. Prospective investors should consult their own advisers as to such
consequences.
- 26 -
<PAGE>
Distributions by a Fund that do not constitute ordinary income dividends,
exempt-interest dividends, or capital gain dividends will be treated as a return
of capital to the extent of (and in reduction of) the shareholder's tax basis in
his shares; any excess will be treated as gain realized from a sale of the
shares, as discussed below.
Distributions by a Fund will be treated in the manner described above regardless
of whether such distributions are paid in cash or reinvested in additional
shares of the Fund (or of another fund). Shareholders receiving a distribution
in the form of additional shares will be treated as receiving a distribution in
an amount equal to the fair market value of the shares received, determined as
of the reinvestment date. In addition, if the net asset value at the time a
shareholder purchases shares of a Fund reflects realized but undistributed
income or gain, or unrealized appreciation in the value of the assets held by
the Fund, distributions of such amounts will be taxable to the shareholder in
the manner described above, although such distributions economically constitute
a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by a Fund into
account in the year in which they are made. However, dividends declared in
October, November or December of any year and payable to shareholders of record
on a specified date in such a month will be deemed to have been received by the
shareholders (and made by the U.S. Government Series) on December 31 of such
calendar year provided such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) to them during
the year.
Each Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemption of shares, paid to any shareholder (1) who has failed to
provide a correct taxpayer identification number, (2) who is subject to backup
withholding for failure properly to report the receipt of interest or dividend
income, or (3) who has failed to certify to the Fund that it is not subject to
backup withholding or that it is an "exempt recipient" (such as a corporation).
SALE OR REDEMPTION OF SHARES
Each Fund seeks to maintain a stable net asset value of $1.00 per share;
however, there can be no assurance that the Funds will do this. If the net asset
value deviates from $1.00 per share, a shareholder will recognize gain or loss
on the sale or redemption of shares of a Fund in an amount equal to the
difference between the proceeds of the sale or redemption and the shareholder's
adjusted tax basis in the shares. All or a portion of any loss so recognized may
be disallowed if the shareholder purchases other shares of a Fund within 30 days
before or after the sale or redemption. In general, any gain or loss arising
from (or treated as arising from) the sale or redemption of shares of a Fund
will be considered capital gain or loss and will be long-term capital gain or
loss if the shares were held for longer than one year. However, any capital loss
arising from the sale or redemption of shares held for six months or less will
be disallowed to the extent of the amount of exempt-interest dividends received
with respect to such
- 27 -
<PAGE>
shares and (to the extent not disallowed) will be treated as a long-term capital
loss to the extent of the amount of capital gain dividends received on such
shares. For this purpose, the special holding period rules of Code section
246(c)(3) and (4) generally will apply in determining the holding period of
shares. Capital losses in any year are deductible only to the extent of capital
gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder"), depends on whether the income from a Fund is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from a Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income dividends paid to
the shareholder will be subject to U.S. withholding tax at the rate of 30% (or
lower applicable treaty rate) on the gross amount of the dividend. Such a
foreign shareholder would generally be exempt from U.S. federal income tax on
gains realized on the sale or redemption of shares of a Fund, capital gain
dividends, exempt-interest dividends, and amounts retained by a Fund that are
designated as undistributed capital gains.
If the income from a Fund is effectively connected with a U.S. trade or business
carried on by a foreign shareholder, then ordinary income and capital gain
dividends received in respect of, and any gains realized upon the sale of,
shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. taxpayers.
In the case of a noncorporate foreign shareholder, a Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding (or subject to withholding at a reduced treaty
rate), unless the shareholder furnishes the Fund with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in a Fund, including the
applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and Treasury Regulations issued thereunder as in effect on the
date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect.
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<PAGE>
Rules of state and local taxation of ordinary income dividends, exempt-interest
dividends and capital gain dividends from regulated investment companies may
differ from the rules for U.S. federal income taxation described above.
Shareholders are urged to consult their tax advisers as to the consequences of
these and other state and local tax rules affecting investment in a Fund.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust, their addresses, principal occupations
during the past five years and other affiliations are as follows:
- 29 -
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS & AGE POSITION PRINCIPAL OCCUPATION DURING
PAST 5 YEARS AND OTHER
AFFILIATIONS
<S> <C> <C>
* Samuel A. Ramirez President and Chairman Chairman, Ramirez Asset
Management, Inc.; (1998 -
present); Chairman,
Ramirez & Co., Inc. (1972
- present)
*Alexander Vermitsky, Jr. Vice-President & Secretary Vice President, Ramirez
Asset Management, Inc.
(1998 - present); Vice
President - Compliance,
Ramirez & Co., Inc. (1973-
present)
*John Kick Vice-President & Treasurer Chief Financial Officer,
Ramirez Asset Management,
Inc. (1998-present); Chief
Financial Officer, Ramirez
& Co., Inc. (1995 -1998
present); formerly, Chief
Financial Officer, Barr
Brothers (1993-1995)
Alfonse Santagata Trustee Real Estate Consultant
(19__-present).
*Alan J. Dlugash Trustee Certified Public Accountant;
Dlugash & Kevelson (1990-
present).
Charles H. Falk Trustee Past Presdent, Louis
Dreyfus Corporation (1996-
Present); formerly,
President Louis Dreyfus
Corporation (1984-1996).
Paul Voigt Trustee Retired; formerly Vice
President, Ramirez & Co.,
(1984-1994).
</TABLE>
* Interested Person of the Fund or the Adviser as defined in the 1940 Act.
- 30 -
<PAGE>
ESTIMATED TRUSTEE COMPENSATION
(FOR CALENDAR YEAR 1999)
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT COMPENSATION
AGGREGATE BENEFITS ACCRUED ESTIMATED FROM TRUST AND
NAME OF PERSON/ COMPENSATION AS PART OF FUND ANNUAL BENEFITS FUND COMPLEX*
POSITION FROM THE TRUST EXPENSES UPON RETIREMENT PAID TO TRUSTEES
<S> <C> <C> <C> <C>
Samuel Ramirez, $0 $0 $0 $0
Trustee
Alexander Vermitsky, $0 $0 $0 $0
Trustee
John Kick, $0 $0 $0 $0
Trustee
Alfonse Sagata, $2000 $0 $0 $2000
Trustee
Alan J. Dlugash $2000 $0 $0 $2000
Trustee
Charles H. Falk $2000 $0 $0 $2000
Trustee
Paul Voigt, $2000 $0 $0 $2000
Trustee
===========================================================================================================================
</TABLE>
*The "Fund Complex" includes only the Trust.
Each Trustee receives $500 per meeting attendance fee and reimbursement of
expenses incurred as a Trustee. As of the date of this SAI, the Trustees and
Officers of the Trust, as a group, owned less than 1% of the outstanding shares
of each Fund.
ADVISORY SERVICES
Ramirez Asset Management, Inc. is the Investment adviser to the Funds pursuant
to an Investment Advisory Agreement dated September 15, 1998. The Adviser is the
investment affiliate of Ramirez & Co., Inc. Ramirez & Co., Inc. has guaranteed
all obligations incurred by Ramirez Asset Management, Inc. in connection with
its Investment Advisory Agreement with the Funds. In its Investment Advisory
Agreement, the Adviser has agreed to pay all expenses incurred by it in
connection with its advisory activities, other than the cost of securities and
- 31 -
<PAGE>
other investments, including brokerage commissions and other transaction
charges, if any, purchased or sold for the Funds.
Under its Investment Advisory Agreement, the Adviser is not liable for any error
of judgment or mistake of law or for any loss suffered by the Trust in
connection with the performance of such Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
its reckless disregard of its duties and obligations under the Agreement.
Unless sooner terminated, the Investment Advisory Agreement provides that it
will continue in effect until September 14, 2000 and for consecutive one year
terms thereafter, provided such continuance is approved at least annually by the
Trust's Board of Trustees or by a vote of a majority of the outstanding shares
of the Fund (as defined in the 1940 Act), and, in either case, by a majority of
the Trustees who are not parties to the contract or "interested persons" (as
defined in the 1940 Act) of any party by votes cast in person at a meeting
called for such purpose. The Advisory Agreement may be terminated by the Trust
or the Adviser on 60 days' written notice, and will terminate immediately in the
event of its assignment.
Ramirez & Co., Inc., an affiliate of the Adviser, serves as distributor for
shares of the Funds under a Distribution Agreement with the Trust which is
subject to annual approval by a majority of the Fund's Board of Trustees,
including a majority of directors who are not "interested persons."
ADMINISTRATION, CUSTODY AND TRANSFER AGENT SERVICES
Firstar Trust Company is the Trust's Administrator. Under the Administration
Agreement, the Administrator has agreed to provide the following administrative
services: (1) assist in maintaining office facilities for the Funds, furnish
clerical and certain other services required by the Funds; (2) compile data for
and prepare notices to the SEC; (3) prepare annual and semiannual reports to the
SEC and current shareholders and filings with state securities commissions; (4)
coordinate federal and state tax returns; (5) monitor the arrangements
pertaining to the Funds' agreements with shareholder organizations; (6) monitor
the Funds' expense accruals; (7) monitor compliance with the Funds' investment
policies and limitations; and (8) generally assist the Funds' operations.
Trust's arrangements with respect to services provided by Shareholder
Organizations; and generally assist in the Funds' operations.
The Administration Agreement continues in effect until September 15, 1999 and
from year to year thereafter if such continuance is approved at least annually
by the Trust's Board of Trustees and by a majority of the Trustees who are not
parties to such Agreement or "interested persons" (as defined in the 1940 Act).
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<PAGE>
Firstar Trust Company serves as the Trust's Transfer Agent and Dividend
Disbursing Agent pursuant to a transfer agency agreement (the "Transfer Agency
Agreement") with the Trust. Under the Transfer Agency Agreement, Firstar has
agreed, among other things, to: (i) issue and redeem shares of the Funds; (ii)
transmit all communications by a Fund to its shareholders of record, including
reports to shareholders, dividend and distribution notices and proxy materials
for meetings of shareholders; (iii) respond to correspondence by shareholders
and others relating to its duties; (iv) maintain shareholder accounts; and (v)
make periodic reports to the Board of Trustees concerning each Fund's
operations. The Fund pays Firstar such compensation as may be agreed upon from
time to time. The Transfer Agency Agreement continues in effect until September
14, 2000 and from year to year thereafter if such continuance is approved at
least annually by the Trust's Board of Trustees and by a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party, and such Agreement may be terminated by either party on 60 days' written
notice.
Firstar Trust Company (the "Custodian") serves as the Trust's custodian pursuant
to a custodian agreement (the "Custodian Agreement") with the Trust. The
Custodian is located at 615 East Michigan Street, Milwaukee, Wisconsin 53202.
Under the Custodian Agreement, the Custodian has agreed to (i) maintain a
segregated account or accounts in the name of each Fund; (ii) hold and disburse
portfolio securities on account of each Fund; (iii) collect and receive all
income and other payments and distributions on account of each Fund's portfolio
securities; (iv) respond to correspondence relating to its duties; and (v) make
periodic reports to the Trust's Board of Trustees concerning each Fund's
operations. The Custodian is authorized under the Custodian Agreement to select
one or more banks or trust companies to serve as sub-custodian on behalf of a
Fund, provided that the Custodian remains responsible for the performance of all
of its duties under the Custodian Agreement. The Custodian is entitled to
receive such compensation from the Fund as may be agreed upon from time to time.
Firstar and Starbank contemplate that a merger between the two institutions will
be consummated on or about November 1, 1998. All Firstar contracts were approved
in the current form and the Board of Trustees also approved the entry of the
Fund into similar agreements with the resultant entity post-merger in the event
of any potential assignment of the contracts.
Other Information Concerning Fees and Expenses. All or part of the fees payable
by any or all of the Funds to the organizations retained to provide services for
the Funds may be waived from time to time in order to increase such Funds' net
investment income available for distribution to shareholders.
Except as otherwise noted, the Adviser and the Administrator pay all expenses in
connection with the performance of their advisory and administrative services
respectively. The Trust bears the expenses incurred in its operations,
including: taxes; interest; fees (including fees paid to its Trustees who are
not affiliated with the Trust); fees payable to the SEC; costs of preparing
prospectuses for regulatory purposes and for distribution; advisory and
administration fees; charges of its custodian and transfer agent; certain
insurance costs; auditing and legal expenses;
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<PAGE>
fees of independent pricing services; costs of shareholders' reports and
shareholder meetings, including proxy statements and related materials; and any
extraordinary expenses. Each Fund also pays for brokerage fees and commissions,
if any, in connection with the purchase of portfolio securities.
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 policy established
by the Trust's Board of Trustees, the Adviser is primarily responsible for the
Trust's portfolio decisions and the placing of the Trust's portfolio
transactions. It is the Fund's policy to seek execution of its purchases and
sales at the most favorable prices through responsible broker-dealers and in
agency transactions, at competitive commission rates. When considering
broker-dealers, the Fund will take into account such factors as the price of the
security, the size and difficulty of the order, the rate of commission, if any,
the reliability, financial condition, integrity and general execution and
operational capabilities of competing broker-dealers, and the brokerage and
research services which they provide to the Fund's management.
Portfolio securities normally will be purchased or sold from or to dealers
serving as market makers for the securities at a net price, which may include
dealer spreads and underwriting commissions. Purchases and sales of securities
on a stock exchange are effected through brokers who charge a commission. In the
over-the-counter market securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer.
Newly issued securities are usually purchased from the issuer or an underwriter,
at prices including underwriting fees; other purchases and sales are usually
placed with those dealers from whom it appears that the best price or execution
will be obtained.
The Funds may sell portfolio securities prior to their maturity if market
conditions and other considerations indicate, in the opinion of the Adviser,
that such sale would be advisable. In addition, the Adviser may engage in
short-term trading when it believes it is consistent with the Fund's investment
objective. Also, a security may be sold and another of comparable quality may be
simultaneously purchased to take advantage of what the Adviser believes to be a
temporary disparity in the normal yield relationships of two securities. The
frequency of portfolio transactions -- the Fund's turnover rates -- will vary
from year to year depending upon market conditions. Because a high turnover rate
increases transaction costs and the possibility of taxable short-term gains (see
"Dividends and Tax Status" in the Fund's Prospectus), the Adviser weighs the
added costs of short-term investment against anticipated gains. The Adviser is
generally responsible for the implementation, or supervision of the
implementation, of investment decisions, including the allocation of principal
business and portfolio brokerage, and the negotiation of commissions.
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<PAGE>
Under the 1940 Act, persons affiliated with the Trust are prohibited from
dealing with the Trust as a principal in the purchase and sale of securities
unless the transaction is conducted in accordance with procedures established by
the Trust's Board of Trustees and complies in all other respects with certain
criteria or an exemptive order allowing such transactions is obtained from the
SEC. Affiliated persons of the Trust, or affiliated persons of such persons, may
from time to time be selected to execute portfolio transactions for the Trust as
agent. Subject to the considerations discussed above and in accordance with
procedures expected to be adopted by the Board of Trustees, in order for such an
affiliated person to be permitted to effect any portfolio transactions for the
Trust, the commissions, fees or other remuneration received by such affiliated
person must be reasonable and fair compared to the commissions, fees and other
remuneration received by other brokers in connection with comparable
transactions. This standard would allow such an affiliated person to receive no
more than the remuneration which would be expected to be received by an
unaffiliated broker in a commensurate arm's-length agency transaction.
Investment decisions for the Trust are made independently from those for other
funds and accounts advised or managed by the Adviser. Such other funds and
accounts may also invest in the same securities as the Trust. If those funds or
accounts are prepared to invest in, or desire to dispose of, the same security
at the same time as the Trust, however, transactions in such securities will be
made, insofar as feasible, for the respective funds and accounts in a manner
deemed equitable to all. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Trust or the price paid
or received by the Trust. In addition, because of different investment
objectives, a particular security may be purchased for one or more funds or
accounts when one or more funds or accounts are selling the same security. To
the extent permitted by law, the Adviser may aggregate the securities to be sold
or purchased for the Trust with those to be sold or purchased for other funds or
accounts in order to obtain best execution.
The Trust reserves the right, in its sole discretion, to (i) suspend the
offering of shares of its Funds, and (ii) reject purchase orders when, in the
judgment of management, such suspension or rejection is in the best interest of
the Trust.
Furthermore, if the Board of Trustees determines that it is in the best
interests of the remaining shareholders of the Fund, such Fund may pay the
redemption price, in whole or in part, by a distribution in kind.
DISTRIBUTION PLANS
The Funds' distributor is Ramirez & Co., Inc. Each Fund has adopted a Rule 12b-1
distribution plan which provides that such Fund will pay distribution fees at
annual rates of up to 0.25% of the average daily net assets attributable to its
shares. Payments under the distribution plan shall be used to compensate or
reimburse the Funds' distributor and broker-dealer for services provided and
expenses incurred in connection with the sale of shares, and are not tied to the
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<PAGE>
amount of actual expenses that are incurred. Some activities intended to promote
the sale of shares will be conducted generally by Ramirez Family of Funds, and
activities intended to promote Funds shares may also benefit the Funds' other
shares and other Ramirez Funds.
Ramirez & Co., Inc. may provide promotional incentives to broker-dealers that
meet specified sales targets for one or more Ramirez funds. These incentives may
include gifts of up to $100 per person annually; an occasional meal, ticket to a
sporting event or theater for entertainment for broker-dealers and their guests;
and payment for reimbursements for travel expenses, including lodging and meals
in connection with attendance at training and educational meetings within and
outside of the U.S.
SHAREHOLDER ORGANIZATIONS
As stated in the Funds' Prospectus, the Funds intend to enter into agreements
from time to time with Shareholder Organizations providing for support and/or
distribution services to customers of the Shareholder Organizations who are the
beneficial owners of Fund shares. Under the agreements, the Funds may pay
Shareholder Organizations up to 0.15% (on an annualized basis) of the average
daily net asset value of the shares beneficially owned by their customers.
Support services provided by Shareholder Organizations under their Service
Agreements or Distribution and Service Agreements may include: (i) processing
dividend and distribution payments from a Fund; (ii) providing information
periodically to customers showing their share positions; (iii) arranging for
bank wires; (iv) responding to customer inquiries; (v) providing sub-accounting
with respect to shares beneficially owned by customers or the information
necessary for sub-accounting; (vi) forwarding shareholder communications; (vii)
assisting in processing share purchase, exchange and redemption requests from
customers; (viii) assisting customers in changing dividend options, account
designations and addresses; and (ix) other similar services requested by the
Funds. In addition, under the Distribution and Service Plan, Shareholder
Organizations may provide assistance (such as the forwarding of sales literature
and advertising to their customers) in connection with the distribution of Fund
shares.
The Funds' arrangements with Shareholder Organizations under the agreements are
governed by two Plans (a Service Plan and a Distribution and Service Plan),
which have been adopted by the Board of Trustees. Because the Distribution and
Service Plan contemplates the provision of services related to the distribution
of Fund shares (in addition to support services), that Plan has been adopted in
accordance with Rule 12b-1 under the 1940 Act. In accordance with the Plans, the
Board of Trustees reviews, at least quarterly, a written report of the amounts
expended in connection with the Funds' arrangements with Shareholder
Organizations and the purposes for which the expenditures were made. In
addition, the Funds' arrangements with Shareholder Organizations must be
approved annually by a majority of the Trustees, including a majority of the
Trustees who are not "interested persons" of the Funds as defined in the 1940
Act and have no direct or indirect financial interest in such arrangements (the
"Disinterested Trustees").
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<PAGE>
The Funds believe that there is a reasonable likelihood that their arrangements
with Shareholder Organizations have benefited each Fund and its shareholders as
a way of allowing Shareholder Organizations to participate with the Funds in the
provision of support and distribution services to customers of the Shareholder
Organizations who own Fund shares. Any material amendment to the arrangements
with Shareholder Organizations under the agreements must be approved by a
majority of the Board of Trustees (including a majority of the Disinterested
Trustees), and any amendment to increase materially the costs under the
Distribution and Service Plan with respect to a Fund must be approved by the
holders of a majority of the outstanding shares of the Fund involved. So long as
the Distribution and Service Plan is in effect, the selection and nomination of
the members of the Board of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Funds will be committed to the discretion of
such Disinterested Trustees.
SERVICING AGREEMENTS. The Funds may enter into agreements (the "Servicing
Agreement") with certain financial institutions, banks and corporations (the
"Participating Organizations") so that each Participating Organization handles
record keeping and provides certain administrative services for its customers
who invest in the Funds through accounts maintained at that Participating
Organization. In such cases, the Participating Organization or one of its
nominees will be the shareholder of record as nominee for its customers and will
maintain subaccounts for its customers. In addition, the Participating
Organization will credit cash distributions to each customer account, process
purchase and redemption requests, mail statements of all transactions with
respect to each customer and if required by law, distribute the Trust's
shareholder reports and proxy statements. However, any customer of a
Participating Organization may become the shareholder of record upon written
request to its Participating Organization or transfer agent. Each Participating
Organization will receive monthly payments which in some cases may be based upon
expenses that the Participating Organization has incurred in the performance of
its services under the Servicing Agreement. The payments will not exceed, on an
annualized basis, an amount equal to 0.35% of the average daily net asset value
during the month of Fund shares in the subaccount of which the Participating
Organization is record owner as nominee for its customers. Such payments will be
separately negotiated with each Participating Organization and will vary
depending upon such factors as the services provided and the costs incurred by
each Participating Organization. The payments may be more or less than the fees
payable to Firstar Trust Company for the services it provides pursuant to the
Transfer Agency Agreement for similar services.
The payments will be made by the Fund to the Participating Organizations
pursuant to the Servicing Agreements. Firstar Trust Company will not receive any
compensation as transfer or dividend disbursing agent with respect to the
subaccounts maintained by Participating Organizations. The Board of Trustees
will review, at least quarterly, the amounts paid and the purposes for which
such expenditures were made pursuant to the Servicing Agreements.
Under separate agreements, the Adviser (not the Funds) may make supplementary
payments from its own revenues to a Participating Organization that agrees to
perform services such as advising customers about the status of their
subaccounts, the current yield and dividends declared
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<PAGE>
to date and providing related services a shareholder may request. Such payments
will vary depending upon such factors as the services provided and the costs
incurred by each Participating Organization.
Investors who purchase and redeem shares of the Funds through a customer account
maintained at a Participating Organization may be charged one or more of the
following types of fees, as agreed upon by the Participating Organization and
the investor, with respect to the customer services provided by the
Participating 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 dividend paid on
those assets).
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers provides the Funds with audit services, tax review
preparation and assistance and consultation with respect to the preparation of
filings with the Securities and Exchange Commission.
COUNSEL
Kramer Levin Naftalis & Frankel LLP 919 Third Avenue, New York, New York 10022,
serves as counsel to the Trust and will pass upon the legality of the shares
offered by the Funds' Prospectus.
YIELD AND OTHER PERFORMANCE INFORMATION
From time to time each Fund may quote its "yield" and "effective yield," and the
New York Tax-Free Fund may also quote its "tax-equivalent yield," in
advertisements or in communications to shareholders. Each yield figure is based
on historical earnings and is not intended to indicate future performance. The
"yield" of a Fund refers to the income generated by an investment in the Fund
over a seven-day period identified in the advertisement. This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment. The
"yield" and "effective yield" of each Fund are calculated according to formulas
prescribed by the SEC. The standardized seven-day yield for each Fund is
computed separately by determining the net change, exclusive of capital changes
and income other than investment income, in the value of a hypothetical
pre-existing account in the particular Fund involved
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<PAGE>
having a balance of one share at the beginning of the period, dividing the net
change in account value by the value of the account at the beginning of the base
period to obtain the base period return, and multiplying the base period return
by (365/7). The net change in the value of an account in a Fund includes the
value of additional shares purchased with dividends from the original share, and
dividends declared on both the original share and any such additional shares and
all fees, other than nonrecurring account sales charges, that are charged to all
shareholder accounts in proportion to the length of the base period and the
Fund's average account size. The capital changes to be excluded from the
calculation of the net change in account value are realized gains and losses
from the sale of securities and unrealized appreciation and depreciation. The
effective annualized yield for each Fund is computed by compounding a particular
Fund's unannualized base period return (calculated as above) by adding 1 to the
base period return, raising the sum to a power equal to 365 divided by 7, and
subtracting one from the result. The fees which may be imposed by financial
intermediaries directly on their customers for cash management services are not
reflected in the Trust's calculations of yields for the Funds.
The "tax-equivalent yield" of the New York Tax-Free Fund shows the level of
taxable yield needed to produce an after-tax equivalent to the Fund's tax-free
yield. This is done by increasing the Fund's yield (calculated as above) by the
amount necessary to reflect the payment of federal income tax at a stated tax
rate. The Fund's standardized "tax-equivalent yield" is computed by: (a)
dividing the portion of the Fund's yield (as calculated above) that is exempt
from federal income tax by one minus a stated federal income tax rate; and (b)
adding the figure resulting from (a) above to that portion, if any, of the
Fund's yield that is not exempt from federal income tax. The "tax-equivalent
yield" will always be higher than the "yield" of the New York Tax-Free Fund.
Each Fund may compute "average annual total return." Average annual total return
reflects the average annual percentage change in value of an investment in
shares of a series over the measuring period. Each Fund may compute aggregate
total return, which reflects the total percentage change in value over the
measuring period.
Additionally, the total return and yields of the Funds may be compared in such
advertisements or reports to shareholders to those of other mutual funds with
similar investment objectives and to other relevant indices or to rankings
prepared by independent services or other financial or industry publications
that monitor the performance of mutual funds. For example, the yields of the
Money Market Fund and the Institutional Money Market Fund may be compared to the
Donoghue's Money Fund Average, the yields of the U.S. Treasury Money Market Fund
and the U.S. Government Money Market Fund may be compared to the Donoghue's
Government Money Fund Average, and the yields of the New York Tax-Free Fund may
be compared to the Donoghue's Tax-Free Money Fund Average, which are averages
compiled by IBC/Donoghue's Money Fund Report, a widely recognized independent
publication that monitors the performance of money market funds. In addition,
the yields of the Money Market, Institutional Money Market, U.S. Treasury Money
Market and the U.S. Government Money Market Funds may be compared to the average
yields reported by the Bank Rate Monitor for money market deposit
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<PAGE>
accounts offered by the 50 leading banks and thrift institutions in the top five
standard metropolitan statistical areas.
Yield data and total return as reported in national financial publications
including Forbes, Barron's, Morningstar Mutual Funds, The Wall Street Journal
and The New York Times, or in publications of a local or regional nature, may
also be used in comparing the yields of the Funds.
Since performance fluctuates, performance data cannot necessarily be used to
compare an investment in a Fund's shares with bank deposits, savings accounts
and similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Investors should remember that
performance and yield are generally functions of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any fees charged by Shareholder Organizations directly to
their customer accounts in connection with investments in shares of the Funds
will not be included in the Funds' calculations of yield and total return.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information do not contain all
the information included in the Registration Statement filed with the SEC under
the Securities Act of 1933 with respect to the securities offered by the
Prospectus. Certain portions of the Registration Statement have been omitted
from the Prospectus and this Statement of Additional Information pursuant to the
rules and regulations of the SEC. The Registration Statement including the
exhibits filed therewith may be examined at the office of the SEC in Washington,
D.C.
Statements contained in the Prospectus or in this Statement of Additional
Information as to the contents of any contract or other document referred to are
not necessarily complete, and, in each instance, reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.
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<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market. The following summarizes the rating categories used by Standard and
Poor's for commercial paper.
"A-1" - Issue's degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics are denoted
"A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory. However, the
relative degree of safety is not as high as for issues designated "A-1."
"A-3" - Issue has an adequate capacity for timely payment. It is, however,
somewhat more vulnerable to the adverse effects of changes and circumstances
than an obligation carrying a higher designation.
"B"- Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of 9
months. The following summarizes the rating categories used by Moody's for
commercial paper:
"Prime-1" - Issuer or related supporting institutions are considered to have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earning coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuer or related supporting institutions are considered to have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still
Appendix A-1
<PAGE>
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an acceptable
capacity for repayment of short-term promissory obligations. The effects of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime rating categories.
The three rating categories of Duff & Phelps for investment grade commercial
paper and short-term debt are "D- 1," "D- 2" and "D- 3." Duff & Phelps employs
three designations, "D- 1+," " D- 1" and "D- 1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors. Risk factors
are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors are
very small.
"D-2" - Debt possesses good certainty for timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
"D-3" - Debt possesses satisfactory liquidity, and other protection factors
qualify issue as investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service. Operating factors and
market access may be subject to a high degree of variation.
"D-5" - Issuer failed to meet scheduled principal and/or interest payments.
Fitch IBCA short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years. The following
summarizes the rating categories used by Fitch IBCA for short-term obligations:
Appendix A-2
<PAGE>
"F-1+" - Securities possess exceptionally strong credit quality. Issues assigned
this rating are regarded as having the strongest degree of assurance for timely
payment.
"F-1" - Securities possess highest credit quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in degree than issues
rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned this rating have
a satisfactory degree of assurance for timely payment, but the margin of safety
is not as great as the "F-1+" and "F-1" categories.
"F-3" - Securities possess fair credit quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely payment is
adequate; however, near-term adverse changes could cause these securities to be
rated below investment grade.
"B" - Securities are speculative. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for timely payment and
are vulnerable to near-term adverse changes in financial and economic
conditions.
"C" - Default is a real possibility for these securities. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
"D" - Securities are in actual or imminent payment default.
Fitch IBCA may also use the symbol "LOC" with its short-term ratings to indicate
that the rating is based upon a letter of credit issued by a commercial bank.
Thomson BankWatch short-term ratings assess the likelihood of an untimely
payment of principal or interest of unsubordinated instruments having a maturity
of one year or less which is issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the ratings used by Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's highest rating
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment grade category and
indicates that while the debt is more susceptible to adverse developments (both
internal and external) than obligations with higher ratings, the capacity to
service principal and interest in a timely fashion is considered adequate.
Appendix A-3
<PAGE>
"TBW-4" - This designation indicates that the debt is regarded as non-investment
grade and therefore speculative. Corporate and Municipal Long-Term Debt Ratings
The following summarizes the ratings used by Standard & Poor's for corporate and
municipal debt:
"AAA" - This designation represents the highest rating assigned by Standard &
Poor's to a debt obligation and indicates an extremely strong capacity to pay
interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay interest and
repay principal and differs from AAA issues only in small degree.
"A" - Debt is considered to have a strong capacity to pay interest and repay
principal although such issues are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay interest and
repay principal. Whereas such issues normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC," and "C" - Debt is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. "BB" indicates the lowest degree of
speculation and "C" the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
"CI" - This rating is reserved for income bonds on which no interest is being
paid.
"D" - Debt is in payment default. This rating is used when interest payments or
principal payments are not made on the date due, even if the applicable grace
period has not expired, unless S&P believes such payments will be made during
such grace period. Rating is also used upon the filing of a bankruptcy petition
if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
"r" - This rating is attached to highlight derivative, hybrid, and certain other
obligations that S & P believes may experience high volatility or high
variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities.
Appendix A-4
<PAGE>
The following summarizes the ratings used by Moody's for corporate and municipal
long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edged.'
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards. Together with
the "Aaa" group they comprise what are generally known as high-grade bonds. They
are rated lower than the best bonds because margins of protection may not be as
large as in "Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.
"A" - Bonds possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates some
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" represents a poor standing; "Ca" represents
obligations which are speculative in a high degree; and "C" represents the
lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default.
Con. ( ) - Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These are bonds
secured by (a) earnings of projects under construction, (b) earnings of projects
unseasoned in operation experience, (c) rentals which begin when facilities are
completed, or (d) payments to which some other limiting condition attaches.
Parenthetical rating denotes the probable credit stature upon completion of
construction or elimination of basis of condition.
(P) - When applied to forward delivery bonds, indicates that the rating is
provisional pending delivery of the bonds. The ratings may be revised prior to
delivery if changes occur in the legal documents or the underlying credit
quality of the bonds.
Appendix A-5
<PAGE>
Moody's applies numerical modifiers 1, 2 and 3 in each generic classification
from "Aa" to "B" in its bond rating system. The modifier 1 indicates that the
issuer ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issuer
ranks at the lower end of its generic rating category.
The following summarizes the long-term debt ratings used by Duff & Phelps for
corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The risk factors
are negligible, being only slightly more than for risk-free U.S. Treasury debt.
"AA" - Debt is considered of high quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.
"A" - Debt possesses protection factors which are average but adequate. However,
risk factors are more variable and greater in periods of economic stress.
"BBB" - Debt possesses below average protection factors but such protection
factors are still considered sufficient for prudent investment. Considerable
variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these ratings is
considered to be below investment grade. Although below investment grade, debt
rated "BB" is deemed likely to meet obligations when due. Debt rated "B"
possesses the risk that obligations will not be met when due. Debt rated "CCC"
is well below investment grade and has considerable uncertainty as to timely
payment of principal, interest or preferred dividends. Debt rated "DD" is a
defaulted debt obligation, and the rating "DP" represents preferred stock with
dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A," "BBB,"
"BB" and "B" ratings may be modified by the addition of a plus (+) or minus (-)
sign to show relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch IBCA for
corporate and municipal bonds:
"AAA" - bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
"AA" - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA." Because bonds rated in the
"AAA" and "AA" categories are not significantly
Appendix A-6
<PAGE>
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated "F-1+."
"A" - Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit quality. The
obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have an adverse impact on these bonds, and, therefore, impair
timely payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the Fitch IBCA ratings
from and including "AA" to "BBB" may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within these major rating
categories.
Thomson BankWatch assesses the likelihood of an untimely repayment of principal
or interest over the term to maturity of long-term debt and preferred stock
which are issued by United States commercial banks, thrifts and non-bank banks;
non-United States banks; and broker-dealers. The following summarizes the rating
categories used by Thomson BankWatch for long-term debt ratings:
"AAA" - This designation represents the highest category assigned by Thomson
BankWatch to long-term debt and indicates that the ability to repay principal
and interest on a timely basis is very high.
"AA" - This designation indicates a very strong ability to repay principal and
interest on a timely basis with limited incremental risk versus issues rated in
the highest category.
"A" - This designation indicates that the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents Thomson BankWatch's lowest investment grade
category and indicates an acceptable capacity to repay principal and interest.
Issues rated "BBB" are, however, more vulnerable to adverse developments (both
internal and external) than obligations with higher ratings.
"BB," "B," "CCC," and "CC" - These designations are assigned by Thomson
BankWatch to non-investment grade long-term debt. Such issues are regarded as
having speculative characteristics regarding the likelihood of timely payment of
principal and interest. "BB" indicates the lowest degree of speculation and "CC"
the highest degree of speculation.
Appendix A-7
<PAGE>
"D" - this designation indicates that the long-term debt is in default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may include a plus
or minus sign designation which indicates where within the respective category
the issue is placed.
MUNICIPAL NOTE RATINGS
A Standard and Poor's rating reflects the liquidity concerns and market access
risks unique to notes due in three years or less. The following summarizes the
ratings used by Standard & Poor's Rating Group for municipal notes:
"SP-1" - The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.
Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade ("MIG") and variable rate demand obligations
are designated Variable Moody's Investment Grade ("VMIG"). Such ratings
recognize the differences between short-term credit risk and long-term risk. The
following summarizes the ratings by Moody's Investors Service, Inc. for
short-term notes:
"MIG-1" / "VMIG-1" - Loans bearing this designation are of the best quality,
enjoying strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
"MIG-2" / ""VMIG-2" - Loans bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
"MIG-3" / "VMIG-3" - Loans bearing this designation are of favorable quality,
with all security elements accounted for but lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
"MIG-4" / "VMIG-4" - Loans bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as required of an
investment security and not distinctly or predominantly speculative.
Appendix A-8
<PAGE>
"SG" - Loans bearing this designation are of speculative quality and lack
margins of protection.
Duff & Phelps and Fitch IBCA use the short-term ratings described under
commercial Paper Ratings for Municipal notes.
Appendix A-9
<PAGE>
APPENDIX B
RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The financial condition of New York State (the "State") and certain of its
public bodies (the "Agencies") and municipalities, particularly New York City
(the "City"), could affect the market values and marketability of New York
Municipal Obligations which may be held by the Fund. The following information
constitutes only a brief summary, does not purport to be a complete description,
and is based on information drawn from official statements relating to
securities offerings of the State, the City and the Municipal Assistance
Corporation for the City of New York ("MAC") available as of the date of this
Statement of Additional Information. While the Fund has not independently
verified such information, it has no reason to believe that such information is
not correct in all material respects.
The State's budget for the 1997-98 fiscal year was enacted by the Legislature on
August 4, 1997, more than four months after the start of the fiscal year on
April 1. Prior to adoption of the budget, the Legislature enacted appropriations
for disbursements considered to be necessary for State operations and other
purposes, including all necessary appropriations for debt service. The State
Financial Plan for the 1997-98 fiscal year was formulated on August 11, 1997 and
is based on the State's budget as enacted by the Legislature and signed into law
by the Governor, as well as actual results for the first quarter of the 1997-98
fiscal year.
After adjustments for comparability between fiscal years, the adopted 1997-98
budget projects an increase in General Fund disbursements of $1.7 billion or
5.2% over 1996-97 levels. The average annual growth rate over the last three
fiscal years has been 1.2%. Adjusted State Funds (excluding Federal grants)
disbursements are projected to increase by 5.4% from the 1996-97 fiscal year.
All Governmental Funds projected disbursements increase by 7.0% over the prior
fiscal year, after adjustments for comparability.
The 1997-98 State Financial Plan is projected to be balanced on a cash basis.
The Financial Plan projections include a reserve for future needs of $530
million. As compared to the Governor's Executive Budget as amended in February
1997, the State's adopted budget for 1997-98 increases General Fund spending by
$1.7 billion, primarily from increases for local assistance ($1.3 billion).
Resources used to fund these additional expenditures include increased revenues
projected for the 1997-98 fiscal year, increased resources produced in the
1996-97 fiscal year that will be utilized in 1997- 98, reestimates of social
service, fringe benefit and other spending, and certain non-recurring resources.
Total non-recurring resources included in the 1997-98 Financial Plan are
projected by State Division of the Budget
<PAGE>
("DOB") to be $270 million, or 0.7% of total General Fund receipts.
The 1997-98 adopted budget includes multi-year tax reductions, including a State
funded property and local income tax reduction program, estate tax relief,
utility gross receipts tax reductions, permanent reductions in the State sales
tax on clothing, and elimination of assessments on medical providers. These
reductions are intended to reduce the overall level of State and local taxes in
New York and to improve the State's competitive position vis-a-vis other states.
The various elements of the State and local tax and assessment reductions have
little or no impact on the 1997-98 Financial Plan, and do not begin to
materially affect the outyear projections until the State's 1999-2000 fiscal
year.
The 1997-98 Financial Plan also includes: a projected General Fund reserve of
$530 million; a projected balance of $332 million in the Tax Stabilization
Reserve Fund; and a projected $65 million balance in the Contingency Reserve
Fund.
The major factor affecting the General Fund GAAP-basis results for 1996- 97 and
the projections for 1997-98 is the 1996-97 cash-basis surplus, which helped
produce a GAAP-basis surplus in the 1996-97 fiscal year of $1.93 billion. The
use of this cash-basis surplus to fund liabilities in the 1997- 98 fiscal year,
offset by the $494 million change in the projected 1997-98 cash-basis fund
balance, is the primary reason for the projected 1997-98 GAAP-basis deficit of
$959 million. This represents an increase of $191 million from the prior
projection, issued in January 1997 as part of the 1997-98 Executive Budget. The
new projection reflects the impact of legislative changes to the Executive
Budget, and the increase in the 1996-97 cash-basis surplus since that time.
Across the two fiscal years, the General Fund accumulated deficit is projected
to be reduced by $974 million to $1.95 billion.
For 1997-98, total revenues in the General Fund are projected at $33.37 billion,
total expenditures are projected at $34.66 billion, and net operating sources
and uses are projected to contribute $331 million. For all governmental funds,
total revenues are projected at $67.48 billion, total expenditures are projected
at $68.24 billion, and financing uses are projected to exceed financing sources
by $220 million. The all governmental funds GAAP-basis Financial Plan
projections show a deficiency of revenues and other financing sources over
expenditures and other financing uses of $979 million, after a reported 1996-97
all funds surplus of $2.1 billion
The State Financial Plan was based upon forecasts of national and State economic
activity. Economic forecasts have frequently failed to predict accurately the
timing and magnitude of changes in the national and the State economies. Many
uncertainties exist in forecasts of both the national and
<PAGE>
State economies, including consumer attitudes toward spending, Federal financial
and monetary policies, the availability of credit and the condition of the world
economy, which could have an adverse effect on the State. There can be no
assurance that the State economy will not experience worse-than-predicted
results, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.
There can be no assurance that the State will not face substantial potential
budget gaps in future years resulting from a significant disparity between tax
revenues projected from a lower recurring receipts base and the spending
required to maintain State programs at current levels. To address any potential
budgetary imbalance, the State may need to take significant actions to align
recurring receipts and disbursements in future fiscal years.
On June 6, 1990, Moody's changed its ratings on all the State's outstanding
general obligation bonds from A1 to A. On March 26, 1990 and January 13, 1992,
S&P changed its ratings on all of the State's outstanding general obligation
bonds from AA- to A and from A to A-, respectively. In February 1991, Moody's
lowered its rating on the City's general obligation bonds from A to Baa1 and in
July 1995, S&P lowered its rating on such bonds from A- to BBB+. Ratings reflect
only the respective views of such organizations, and their concerns about the
financial condition of New York State and City, the debt load of the State and
City and any economic uncertainties about the region. There is no assurance that
a particular rating will continue for any given period of time or that any such
rating will not be revised downward or withdrawn entirely if, in the judgment of
the agency originally establishing the rating, circumstances so warrant.
(1) The State, Agencies and Other Municipalities. During the mid- 1970s,
some of the Agencies and municipalities (in particular, the City) faced
extraordinary financial difficulties, which affected the State's own financial
condition. These events, including a default on short-term notes issued by the
New York State Urban Development Corporation ("UDC") in February 1975, which
default was cured shortly thereafter, and a continuation of the financial
difficulties of the City, created substantial investor resistance to securities
issued by the State and by some of its municipalities and Agencies. For a time,
in late 1975 and early 1976, these difficulties resulted in a virtual closing of
public credit markets for State and many State related securities.
In response to the financial problems confronting it, the State developed
and implemented programs for its 1977 fiscal year that included the adoption of
a balanced budget on a cash basis (a deficit of $92 million that actually
resulted was financed by issuing notes that were paid during
<PAGE>
the first quarter of the State's 1978 fiscal year). In addition, legislation was
enacted limiting the occurrence of additional so-called "moral obligation" and
certain other Agency debt, which legislation does not, however, apply to MAC
debt.
GAAP-Basis Results--1996-97 Fiscal Year. The State completed its 196-97 fiscal
year with a combined Governmental Funds operating surplus of $2.1 billion, which
included an operating surplus in the General Fund of $1.9 billion, in Capital
Projects Funds of $98 million and in the Special Revenue Funds of $65 million,
offset in part by an operating deficit of $37 million in the Debt Service Funds.
GAAP-Basis Results--1995-96 Fiscal Year. The State completed its 1995-96 fiscal
year with a combined Governmental Funds operating surplus of $432 million, which
included an operating surplus in the General Fund of $380 million, in the
Capital Projects Funds of $276 million and in the Debt Service Funds of $185
million. There was an operating deficit of $409 million in the Special Revenue
Funds. The State's Combined Balance Sheet as of March 31, 1996 showed an
accumulated deficit in its combined Governmental Funds of $1.23 billion,
reflecting liabilities of $14.59 billion and assets of $13.35 billion. This
accumulated Governmental Funds deficit includes a $2.93 billion accumulated
deficit in the General Fund and an accumulated deficit of $712 million in the
Capital Projects Fund type as partially offset by accumulated surpluses of $468
million and $1.94 billion in the Special Revenue and Debt Service Fund types,
respectively.
GAAP-Basis Results--1994-95 Fiscal Year. The State's Combined Balance Sheet as
of March 31, 1995 showed an accumulated deficit in its combined Governmental
Funds of $1.666 billion reflecting liabilities of $14.778 billion and assets of
$13.112 billion. This accumulated Governmental Funds deficit includes a $3.308
billion accumulated deficit in the General Fund, as well as accumulated
surpluses in the Special Revenue and Debt Service Fund types of $877 million and
$1.753 billion, respectively, and a $988 million accumulated deficit in the
Capital Projects Fund type.
The State completed its 1994-95 fiscal year with a combined Governmental Funds
operating deficit of $1.791 billion, which included operating deficits in the
General Fund of $1.426 billion, in the Capital Projects Funds of $366 million,
and in the Debt Service Funds of $38 million. There was an operating surplus in
the Special Revenue Funds of $39 million.
State Financial Plan--Cash-Basis Results--General Fund. The General
Fund is the principal operating fund of the State and is used to account for
all financial transactions, except those required to be accounted for in
another fund. It is the State's largest fund and receives almost all State
<PAGE>
taxes and other resources not dedicated to particular purposes. General Fund
moneys are also transferred to other funds, primarily to support certain capital
projects and debt service payments in other fund types.
In the State's 1997-98 fiscal year, the General Fund is expected to account for
approximately 48% of total Governmental Funds disbursements and 71% of total
State Funds disbursements. The General Fund is projected to be balanced on a
cash basis for the 1997-98 fiscal year. Total receipts and transfers from other
funds are projected to be $35.09 billion, an increase of $2.05 billion from the
prior fiscal year. Total General Fund disbursements and transfers to other funds
are projected to be $34.60 billion, an increase of $1.70 billion from the total
in the prior fiscal year.
New York State's financial operations have improved during recent fiscal years.
During the period 1989-90 through 1991-92, the State incurred General Fund
operating deficits that were closed with receipts from the issuance of tax and
revenue anticipation notes ("TRANs"). First, the national recession, and then
the lingering economic slowdown in the New York and regional economy, resulted
in repeated shortfalls in receipts and three budget deficits. During its last
five fiscal years, however, the State recorded balanced budgets on a cash basis,
with positive fund balances as described below.
The State ended its 1996-97 fiscal year on March 31, 1997 in balance on a cash
basis, with a General Fund cash surplus as reported by DOB of approximately $1.4
billion. The cash surplus was derived primarily from higher-than-expected
revenues and lower-than-expected spending for social services programs. The
Governor in his Executive Budget applied $1.05 billion of the cash surplus
amount to finance the 1997-98 Financial Plan, and the additional $373 million is
available for use in financing the 1997- 98 Financial Plan when enacted by the
State Legislature.
The General Fund closing fund balance was $433 million. Of that amount, $317
million was in the Tax Stabilization Reserve Fund ("TSRF"), after a required
deposit of $15 million and an additional deposit of $65 million in 1996-97. The
TSRF can be used in the event of any future General Fund deficit, as provided
under the State Constitution and State Finance Law. In addition, $41 million
remains on deposit in the Contingency Reserve Fund ("CRF"). This fund assists
the State in financing any extraordinary litigation costs during the fiscal
year. The remaining $75 million reflects amounts on deposit in the Community
Projects Fund. This fund was created to fund certain legislative initiatives.
The General Fund closing fund balance does not include $1.86 billion in the tax
refund reserve account, of which $521 million was made available as a result of
the Local Government Assistance Corporation ("LGAC") financing program as was
required to be on
<PAGE>
deposit as of March 31, 1997.
General Fund receipts and transfers from other funds for the 1996-97 fiscal year
totaled $33.04 billion, and increase of 0.7% from the previous fiscal year
(excluding deposits into the tax refund reserve account). General Fund
disbursements and transfers to other funds totaled $32.90 billion for the
1996-97 fiscal year, an increase of 0.7% from the 1995-96 fiscal year.
The State ended its 1995-96 fiscal year on March 31, 1996 with a General Fund
cash surplus, as reported by DOB, of $445 million. Of that amount, $65 million
was deposited into the TSRF, and $380 million was used to reduce 1996-97
Financial Plan liabilities by accelerating 1996-97 payments, deferring 1995-96
revenues, and making a deposit to the tax refund reserve account.
The General Fund closing fund balance was $287 million, an increase of $129
million from 1994-95 levels. The $129 million change in fund balance is
attributable to the $65 million voluntary deposit to the TSRF, a $15 million
required deposit to the TSRF, a $40 million deposit to the CRF, and a $9 million
deposit to the Revenue Accumulation Fund. The closing fund balance includes $237
million on deposit in the TSRF, to be used in the event of any future General
Fund deficit as provided under the State Constitution and State Finance Law. In
addition, $41 million is on deposit in the CRF. The CRF was established in State
fiscal year 1993-94 to assist the State in financing the costs of extraordinary
litigation. The remaining $9 million reflects amounts on deposit in the Revenue
Accumulation Fund. This fund was created to hold certain tax receipts
temporarily before their deposit to other accounts. In addition, $678 million
was on deposit in the tax refund reserve account, of which $521 million was
necessary to complete the restructuring of the State's cash flow under the LGAC
program.
General Fund receipts totaled $32.81 billion, a decrease of 1.1% from 1994-95
levels. This decrease reflects the impact of tax reductions enacted and
effective in both 1994 and 1995. General Fund disbursements totaled $32.68
billion for the 1995-96 fiscal year, a decrease of 2.2% from 1994-95 levels.
The State ended its 1994-95 fiscal year with the General Fund in balance. The
$241 million decline in the fund balance reflects the planned use of $264
million from the CRF, partially offset by the required deposit of $23 million to
the TSRF. In addition, $278 million was on deposit in the tax refund reserve
account, $250 million of which was deposited to continue the process of
restructuring the State's cash flow as part of the LGAC program. The closing
fund balance of $158 million reflects $157 million in the TSRF and $1 million in
the CRF.
<PAGE>
General Fund receipts totaled $33.16 billion, an increase of 2.9% from 1993-94
levels. General Fund disbursements totaled $33.40 billion for the 1994-95 fiscal
year, an increase of 4.7% from the previous fiscal year.
Cash-Basis Results--Other Governmental Funds. Activity in the three other
governmental funds has remained relatively stable over the last three fiscal
years ended March 31, 1997, with Federally-funded programs comprising
approximately two-thirds of these funds. The most significant change in the
structure of these funds has been the redirection of a portion of
transportation-related revenues from the General Fund to two new dedicated funds
in the Special Revenue and Capital Projects Fund types. These revenues are used
to support the capital programs of the Department of Transportation and the
Metropolitan Transportation Authority ("MTA").
The Special Revenue Funds account for State receipts from specific sources that
are legally restricted in use to specified purposes and include all moneys
received from the Federal government. Disbursements from Special Revenue Funds
increased from $24.38 billion to $26.02 billion over the last three years,
primarily as a result of increased costs for the federal share of Medicaid.
Other activity reflected dedication of taxes to a new fund for mass
transportation, new lottery games, and new fees for criminal justice programs.
Although activity in this fund type is expected to comprise approximately 42% of
total governmental funds receipts in the 1997-98 fiscal year, three-quarters of
that activity relates to federally-funded programs. Projected receipts in this
fund type for the 1997-98 fiscal year total $28.22 billion, an increase of $2.51
billion (9.7%) over the prior year. Projected disbursements in this fund type
total $28.45 billion, an increase of $2.43 billion (9.3%) over 1996-97 levels.
Disbursements from federal funds, primarily the federal share of Medicaid and
other social services programs, are projected to total $21.19 billion in the
1997-98 fiscal year. Remaining projected spending of $7.26 billion primarily
reflects aid to SUNY supported by tuition and dormitory fees, education aid
funded from lottery receipts, operating aid payments to the MTA funded from the
proceeds of dedicated transportation taxes, and costs of a variety of
self-supporting programs which deliver services financed by user fees.
The Capital Projects Funds are used to finance the acquisition, construction or
rehabilitation of major state capital facilities and to aid local government
units and Agencies in financing capital construction. Disbursements in the
Capital Projects Funds declined from $3.62 billion to $3.54 billion over the
last three years, as spending for miscellaneous capital programs decreased,
partially offset by increases for mental hygiene, health and environmental
programs. The composition of this fund type's receipts also changed as the
dedicated transportation taxes began to be deposited, general obligation bond
proceeds declined substantially, federal grants remained stable, and
reimbursements from public authority
<PAGE>
bonds (primarily transportation related) increased. The increase in the negative
fund balance in 1994-95 resulted from delays in reimbursements caused by delays
in the timing of public authority bond sales.
In the 1997-98 fiscal year, activity in these funds is expected to comprise 5%
of total governmental receipts.
Total receipts in this fund type for the 1997-98 fiscal year are projected at
$3.30 billion. Bond and note proceeds are expected to provide $605 million in
other financing sources. Disbursements from this fund type are projected to be
$3.70 billion, an increase of $154 million (4.3%) over prior-year levels. The
Dedicated Highway and Bridge Trust Fund is the single largest dedicated fund,
comprising an estimated $982 million (27%) of the activity in this fund type.
Total spending for capital projects will be financed through a combination of
sources: federal grants (29%), public authority bond proceeds (31%), general
obligation bond proceeds (15%), and pay-as-you-go revenues (25%).
The Debt Service Funds serve to fulfill State debt service on long-term general
obligation State debt and other State lease/purchase and contractual obligation
financing commitments.
Activity in the Debt Service Funds reflected increased use of bonds during the
three-year period for improvements to the State's capital facilities and the
continued implementation of the LGAC fiscal reform program. The increases were
moderated by the refunding savings achieved by the State over the last several
years using strict present value savings criteria. The growth in LGAC debt
service was offset by reduced short-term borrowing costs reflected in the
General Fund. This fund type is expected to comprise 4% of total governmental
fund receipts and 4.7% of total government disbursements in the 1997-98 fiscal
year. Receipts in these funds in excess of debt service requirements may be
transferred to the General Fund and Special Revenue Funds, pursuant to law.
The Debt Service fund type consists of the General Debt Service Fund, which is
supported primarily by tax receipts transferred from the General Fund, and other
funds established to accumulate moneys for the payment of debt service. In the
1997-998 fiscal year, total disbursements in this fund type are projected at
$3.17 billion, an increase of $641 million or 25.3%, most of which is explained
by increases in the General Fund transfer as discussed earlier. The projected
transfer from the General Fund of $2.07 billion is expected to finance 65% of
these payments.
The remaining payments are expected to be financed by pledged revenues,
including $2.03 billion in taxes and $601 million in dedicated fees and other
miscellaneous receipts. After required impoundment for debt service,
<PAGE>
$3.77 billion is expected to be transferred to the General Fund and other funds
in support of State operations. The largest transfer-$1.86 billion-is made to
the Special Revenue fund type in support of operations of the mental hygiene
agencies. Another $1.47 billion in excess sales taxes is expected to be
transferred to the General Fund, following payments of projected debt service on
LGAC bonds.
State Borrowing Plan. The State anticipates that its capital programs will be
financed, in part, through borrowings by the State and public authorities in the
1997-98 fiscal year. The State expects to issue $605 million in general
obligation bonds (including $140 million for purposes of redeeming outstanding
BANs) and $140 million in general obligation commercial paper. The Legislature
has also authorized the issuance of $311 million in COPs during the State's
1997-98 fiscal year for equipment purchases. The projection of the State
regarding its borrowings for the 1997-98 fiscal year may change if circumstances
require.
State Agencies. The fiscal stability of the State is related, at least in part,
to the fiscal stability of its localities and various of its Agencies. Various
Agencies have issued bonds secured, in part, by non-binding statutory provisions
for State appropriations to maintain various debt service reserve funds
established for such bonds (commonly referred to as "moral obligation"
provisions).
At September 30, 1996, there were 17 Agencies that had outstanding debt of $100
million or more. The aggregate outstanding debt, including refunding bonds, of
these 17 Agencies was $75.4 billion as of September 30, 1996. As of March 31,
1997, aggregate Agency debt outstanding as State- supported debt was $32.8
billion and as State-related was $37.1 billion. Debt service on the outstanding
Agency obligations normally is paid out of revenues generated by the Agencies'
projects or programs, but in recent years the State has provided special
financial assistance, in some cases on a recurring basis, to certain Agencies
for operating and other expenses and for debt service pursuant to moral
obligation indebtedness provisions or otherwise. Additional assistance is
expected to continue to be required in future years.
Several Agencies have experienced financial difficulties in the past. Certain
Agencies continue to experience financial difficulties requiring financial
assistance from the State. Failure of the State to appropriate necessary amounts
or to take other action to permit certain Agencies to meet their obligations
could result in a default by one or more of such Agencies. If a default were to
occur, it would likely have a significant effect on the marketability of
obligations of the State and the Agencies. These Agencies are discussed below.
<PAGE>
The New York State Housing Finance Agency ("HFA") provides financing for
multifamily housing, State University construction, hospital and nursing home
development, and other programs. In general, HFA depends upon mortgagors in the
housing programs it finances to generate sufficient funds from rental income,
subsidies and other payments to meet their respective mortgage repayment
obligations to HFA, which provide the principal source of funds for the payment
of debt service on HFA bonds, as well as to meet operating and maintenance costs
of the projects financed. From January 1, 1976 through March 31, 1987, the State
was called upon to appropriate a total of $162.8 million to make up deficiencies
in the debt service reserve funds of HFA pursuant to moral obligation
provisions. The State has not been called upon to make such payments since the
1986-87 fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975, because
a substantial number of these housing program mortgagors are unable to make full
payments on their mortgage loans. Through a subsidiary, UDC is currently
attempting to increase its rate of collection by accelerating its program of
foreclosures and by entering into settlement agreements. UDC has been, and will
remain, dependent upon the State for appropriations to meet its operating
expenses. The State also has appropriated money to assist in the curing of a
default by UDC on notes which did not contain the State's moral obligation
provision.
The MTA oversees New York City's subway and bus lines by its affiliates, the New
York City Transit Authority and the Manhattan and Bronx Surface Transit
Operating Authority (collectively, the "TA"). Through MTA's subsidiaries, the
Long Island Rail Road Company, the Metro-North Commuter Railroad Company and the
Metropolitan Suburban Bus Authority, the MTA operates certain commuter rail and
bus lines in the New York metropolitan area. In addition, the Staten Island
Rapid Transit Authority, an MTA subsidiary, operates a rapid transit line on
Staten Island. Through its affiliated agency, the Triborough Bridge and Tunnel
Authority (the "TBTA"), the MTA operates certain toll bridges and tunnels.
Because fare revenues are not sufficient to finance the mass transit portion of
these operations, the MTA has depended and will continue to depend for operating
support upon a system of State, local government and TBTA support and, to the
extent available, Federal operating assistance, including loans, grants and
subsidies. If current revenue projections are not realized and/or operating
expenses exceed current projections, the TA or commuter railroads may be
required to seek additional State assistance, raise fares or take other actions.
Since 1980, the State has enacted several taxes--including a surcharge on the
profits of banks, insurance corporations and general business corporations doing
business in the 12-county region (the "Metropolitan
<PAGE>
Transportation Region") served by the MTA and a special .25% regional sales and
use tax--that provide additional revenues for mass transit purposes, including
assistance to the MTA. In addition, since 1987, State law has required that the
proceeds of .25% mortgage recording tax paid on certain mortgages in the
Metropolitan Transportation Region be deposited in a special MTA fund for
operating or capital expenses. Further, in 1993, the State dedicated a portion
of certain additional State petroleum business tax receipts to fund operating or
capital assistance to the MTA. For the 1997- 98 State fiscal year, total State
assistance to the MTA is estimated at approximately $1.2 billion, an increase of
$76 million over the 1996-97 fiscal year.
In 1981, the State Legislature authorized procedures for the adoption, approval
and amendment of a five-year plan for the capital program designed to upgrade
the performance of the MTA's transportation systems and to supplement, replace
and rehabilitate facilities and equipment, and also granted certain additional
bonding authorization therefor.
State legislation accompanying the 1996-97 adopted State budget authorized the
MTA, TBTA and TA to issue an aggregate of $6.5 billion in bonds to finance a
portion of a new $11.98 billion MTA capital plan for the 1995 through 1999
calendar years (the "1995-99 Capital Program"), and authorized the MTA to submit
the 1995-99 Capital Program to the Capital Program Review Board for approval.
This plan supersedes the overlapping portion of the MTA's 1992-96 Capital
Program. This is the fourth capital plan since the Legislature authorized
procedures for the adoption, approval and amendment of MTA capital programs and
is designed to upgrade the performance of the MTA's transportation systems by
investing in new rolling stock, maintaining replacement schedules for existing
assets and bringing the MTA system into a state of good repair. The 1995-99
Capital Program assumes the issuance of an estimated $5.1 billion in bonds under
this $6.5 billion aggregate bonding authority. The remainder of the plan is
projected to be financed through assistance from the State, the Federal
government, and the City of New York, and from various other revenues generated
from actions taken by the MTA.
There can be no assurance that such governmental actions will be taken, that
sources currently identified will not be decreased or eliminated, or that the
1995-1999 Capital Program will not be delayed or reduced. If the MTA capital
program is delayed or reduced because of funding shortfalls or other factors,
ridership and fare revenues may decline, which could, among other things, impair
the MTA's ability to meet its operating expenses without additional State
assistance.
The cities, towns, villages and school districts of the State are political
subdivisions of the State with the powers granted by the State
<PAGE>
Constitution and statutes. As the sovereign, the State retains broad powers and
responsibilities with respect to the government, finances and welfare of these
political subdivisions, especially in education and social services. In recent
years the State has been called upon to provide added financial assistance to
certain localities.
Other Localities. Certain localities in addition to the City could have
financial problems leading to requests for additional State assistance during
the last several State fiscal years. The potential impact on the State of such
actions by localities is not included in the projections of the State receipts
and disbursements in the State's 1997-98 fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in the
re-establishment of the Financial Control Board for the City of Yonkers by the
State in 1984. That Board is charged with oversight of the fiscal affairs of
Yonkers. Future actions taken by the State to assist Yonkers could result in
increased State expenditures for extraordinary local assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary deficits
that resulted in the establishment of a Supervisory Board for the City of Troy
in 1994. The Supervisory Board's powers were increased in 1995, when Troy MAC
was created to help Troy avoid default on certain obligations. The legislation
creating Troy MAC prohibits the City of Troy from seeking federal bankruptcy
protection while Troy MAC bonds are outstanding.
Eighteen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities, and that was largely continued in 1997.
Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1995, the total indebtedness of all localities in the
State, other than the City, was approximately $19 billion. A small portion
(approximately $102.3 million) of this indebtedness represented borrowing to
finance budgetary deficits and was issued pursuant to enabling State
legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than the City authorized by State law to issue debt to finance deficits during
the period that such deficit financing is outstanding. Eighteen localities had
outstanding indebtedness for deficit financing at the close of their fiscal year
ending in 1995.
From time to time, Federal expenditure reductions could reduce, or in some cases
eliminate, Federal funding of some local programs and accordingly might impose
substantial increased expenditure requirements on affected
<PAGE>
localities to increase local revenues to sustain those expenditures. If the
State, the City or any of the Agencies were to suffer serious financial
difficulties jeopardizing their respective access to the public credit markets,
the marketability of notes and bonds issued by localities within the State could
be adversely affected. Localities also face anticipated and potential problems
resulting from certain pending litigation, judicial decisions and long-range
economic trends. Long-range, potential problems of declining urban population,
increasing expenditures and other economic trends could adversely affect
localities and require increasing State assistance in the future.
Certain litigation pending against the State or its officers or employees could
have a substantial or long-term adverse effect on State finances. Among the more
significant of these litigations are those that involve: (i) the validity and
fairness of agreements and treaties by which various Indian tribes transferred
title to the State of approximately six million acres of land in central New
York; (ii) certain aspects of the State's Medicaid rates and regulations,
including reimbursements to providers of mandatory and optional Medicaid
services; (iii) contamination in the Love Canal area of Niagara Falls; (iv) a
challenge to the State's practice of reimbursing certain Office of Mental Health
patient-care expenses with clients' Social Security benefits; (v) a challenge to
the methods by which the State reimburses localities for the administrative
costs of food stamp programs; (vi) a challenge to the State's possession of
certain funds taken pursuant to the State's Abandoned Property law; (vii)
alleged responsibility of State officials to assist in remedying racial
segregation in the City of Yonkers; (viii) an action, in which the State is a
third party defendant, for injunctive or other appropriate relief, concerning
liability for the maintenance of stone groins constructed along certain areas of
Long Island's shoreline; (ix) actions challenging the constitutionality of
legislation enacted during the 1990 legislative session which changed the
actuarial funding methods for determining contributions to State employee
retirement systems; (x) an action against State and City officials alleging that
the present level of shelter allowance for public assistance recipients is
inadequate under statutory standards to maintain proper housing; (xi) an action
challenging legislation enacted in 1990 which had the effect of deferring
certain employer contributions to the State Teachers' Retirement System and
reducing State aid to school districts by a like amount; (xii) a challenge to
the constitutionality of financing programs of the Thruway Authority authorized
by Chapters 166 and 410 of the Laws of 1991 (described below in this Part);
(xiii) a challenge to the constitutionality of financing programs of the
Metropolitan Transportation Authority and the Thruway Authority authorized by
Chapter 56 of the Laws of 1993 (described below in this Part); (xiv) challenges
to the delay by the State Department of Social Services in making two one-week
Medicaid payments to the service providers; (xv) challenges by commercial
insurers, employee
<PAGE>
welfare benefit plans, and health maintenance organizations to provisions of
Section 2807-c of the Public Health Law which impose 13%, 11% and 9% surcharges
on inpatient hospital bills and a bad debt and charity care allowance on all
hospital bills paid by such entities; (xvi) challenges to the promulgation of
the State's proposed procedure to determine the eligibility for and nature of
home care services for Medicaid recipients; (xvii) a challenge to State
implementation of a program which reduces Medicaid benefits to certain
home-relief recipients; and (xviii) challenges to the rationality and
retroactive application of State regulations recelebrating nursing home Medicaid
rates.
(2) New York City. In the mid-1970s, the City had large accumulated past
deficits and until recently was not able to generate sufficient tax and other
ongoing revenues to cover expenses in each fiscal year. However, the City has
achieved balanced operating results for each of its fiscal years since 1981 as
reported in accordance with the then-applicable GAAP standards. The City's
ability to maintain balanced operating results in future years is subject to
numerous contingencies and future developments.
In 1975, the City became unable to market its securities and entered a period of
extraordinary financial difficulties. In response to this crisis, the State
created MAC to provide financing assistance to the City and also enacted the New
York State Financial Emergency Act for the City of New York (the "Emergency
Act") which, among other things, created the Financial Control Board (the
"Control Board") to oversee the City's financial affairs and facilitate its
return to the public credit markets. The State also established the Office of
the State Deputy Comptroller ("OSDC") to assist the Control Board in exercising
its powers and responsibilities. On June 30, 1986, the Control Board's powers of
approval over the City Financial Plan were suspended pursuant to the Emergency
Act. However, the Control Board, MAC and OSDC continue to exercise various
monitoring functions relating to the City's financial condition. The City
prepares and operates under a four-year financial plan which is submitted
annually to the Control Board for review and which the City periodically
updates.
The City's independently audited operating results for each of its fiscal years
from 1981 through 1995 show a General Fund surplus reported in accordance with
GAAP. The City has eliminated the cumulative deficit in its net General Fund
position.
During the 1990 and 1991 fiscal years, as a result of a slowing economy, the
City has experienced significant shortfalls in almost all of its major tax
sources and increases in social services costs, and was required to take actions
to close substantial budget gaps in order to maintain balanced budgets in
accordance with the Financial Plan.
<PAGE>
According to a recent OSDC economic report, the City's economy was slow to
recover from the recession and was expected to have experienced a weak
employment situation, and moderate wage and income growth, during the 1995- 96
period. Also, Financial Plan reports of OSDC, the Control Board, and the City
Comptroller have variously indicated that many of the City's balanced budgets
have been accomplished, in part, through the use of non-recurring resource, tax
and fee increases, personnel reductions and additional State assistance; that
the City has not yet brought its long-term expenditures in line with recurring
revenues; that the City's proposed gap-closing programs, if implemented, would
narrow future budget gaps; that these programs tend to rely heavily on actions
outside the direct control of the City; and that the City is therefore likely to
continue to face futures projected budget gaps requiring the City to reduce
expenditures and/or increase revenues. According to the most recent staff
reports of OSDC, the Control Board and the City Comptroller during the four-year
period covered by the current Financial Plan, the City is relying on obtaining
substantial resources from initiatives needing approval and cooperation of its
municipal labor unions, Covered Organizations, and City Council, as well as the
State and Federal governments, among others, and there can be no assurance that
such approval can be obtained.
The City requires certain amounts of financing for seasonal and capital spending
purposes. The City issued $1.75 billion of notes for seasonal financing purposes
during the 1994 fiscal year. The City's capital financing program projects
long-term financing requirements of approximately $17 billion for the City's
fiscal years 1995 through 1998 for the construction and rehabilitation of the
City's infrastructure and other fixed assets. The major capital requirement
include expenditures for the City's water supply system, and waste disposal
systems, roads, bridges, mass transit, schools and housing. In addition, the
City and the Municipal Water Finance Authority issued about $1.8 billion in
refunding bonds in the 1994 fiscal year.
State Economic and Demographic Trends. The State historically has been one of
the wealthiest states in the nation. For decades, however, the State has grown
more slowly than the nation as a whole, gradually eroding its relative economic
position. Statewide, urban centers have experienced significant changes
involving migration of the more affluent to the suburbs and an influx of
generally less affluent residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and the West have had in
attracting people and business. The City has also had to face greater
competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City.
<PAGE>
During the 1982-83 recession, overall economic activity in the State declined
less than that of the nation as a whole. However, in the calendar years 1984
through 1991, the State's rate of economic expansion was somewhat slower than
that of the nation. In the 1990-91 recession, the economy of the State, and that
of the rest of the Northeast, was more heavily damaged than that of the nation
as a whole and has been slower to recover. The total employment growth rate in
the State has been below the national average since 1984. The unemployment rate
in the State dipped below the national rate in the second half of 1981 and
remained lower until 1991; since then, it has been higher. According to data
published by the U.S. Bureau of Economic Analysis, during the past ten years,
total personal income in the State rose slightly faster than the national
average only from 1986 through 1988.
The forecast of the State's economy shows moderate expansion during the first
half of calendar 1997 with the trend continuing through the year. Although
industries that export goods and services are expected to continue to do well,
growth is expected to be moderated by tight fiscal constraints on the health
care and social services industries. On an average annual basis, employment
growth in the State is expected to be up substantially from the 1996 rate.
Personal income is expected to record moderate gains in 1997. Bonus payments in
the securities industry are expected to increase further from last year's record
level.
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Amended Certificate of Trust.
(a)(2) Amended Trust Instrument.
(b) By-laws.
(c) None.
(d) Investment Advisory Agreement between Registrant and The
Ramirez Trust is filed herewith.
(e) Distribution Agreement by and between the Registrant and
Ramirez & Company is filed herewith.
(f) None.
(g) Custodian Agreement between the Registrant and Firstar Trust
Company is filed herewith.
(h)(1) Transfer Agency Agreement by and between the Registrant and
Firstar Trust Company is filed herewith.
(h)(2) Fund Administration Servicing Agreement by and between the
Registrant and Firstar Trust Company is filed herewith.
(h)(3) Shareholder Services Plan and Agreement by and between the
Registrant and Firstar Trust Company is filed herewith.
(h)(4) Fund Accounting Servicing Agreement by and between the
Registrant and Firstar Trust Company is filed herewith.
(h)(5) Fulfillment Servicing Agreement by and between the Registrant
and Firstar Trust Company is filed herewith.
(i)(1) Opinion of Kramer Levin Naftalis & Frankel LLP as to legality
of securities being registered is field herewith.
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<PAGE>
(i)(2) Opinion of Morris, Nichols, Arsht & Tunnell is filed
herewith
(j)(1) Consent of Kramer Levin Naftalis & Frankel LLP Counsel for the
Registrant, is filed herewith.
(j)(2) Consent of PricewaterhouseCoopers Independent Auditors for the
Registrant, is filed herewith.
(k) None
(l) Agreement between the Registrant and The Ramirez Trust in
consideration for providing the initial capital is to be filed
by amendment
(m) The Ramirez Trust Service and Distribution Plan adopted under
Rule 12b-1 is filed herewith.
(n) None
(o) None
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
After commencement of the public offering of the Registrant's shares,
the Registrant expects that no person will be directly or indirectly
controlled by or under common control with the Registrant.
C-2
<PAGE>
ITEM 25. INDEMNIFICATION
(a) "Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office or (B)
not to have acted in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection (a) of this Section 10.02 may be paid by the Trust or Series from
time to time prior to final disposition thereof upon receipt of an undertaking
by or on behalf of such Covered Person that such amount will be paid over by him
to the Trust or Series if it is ultimately
C-3
<PAGE>
determined that he is not entitled to indemnification under this Section 10.02;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to believe that
such Covered Person will be found entitled to indemnification under this Section
10.02."
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to trustees, officers, and controlling persons or
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Investment Company
Act of 1940, as amended, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of 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, 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 of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Ramirez Asset Management, Inc. provides management services
to the Registrant. To the best of the Registrant's knowledge, the directors and
officers have not held at any time during the past two fiscal years or been
engaged for his own account or in the capacity of director, officer, employee,
partner or trustee in any other business, profession, vocation or employment of
a substantial nature.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Ramirez & Co., Inc. is the Registrant's principal
underwriter.
(b) The following information is furnished with respect to
the officers and directors of Ramirez & Co., Inc., Registrant's principal
underwriter:
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<PAGE>
Name and Principal Position and Offices with Position and Offices
Business Address Principal Underwriter with Registrant
- ---------------- --------------------- ---------------
Samuel A. Ramirez President Chairman/President
61 Broadway
New York, NY 10066
Alexander Vermitsky, Jr. Vice President/Secretary Vice
61 Broadway President/Secretary
New York, NY 10066
John Kick Chief Financial Officer Treasurer
61 Broadway
New York, NY 10066
(c) not applicable
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules promulgated thereunder
are maintained by Ramirez Asset Management, 61 Broadway, New York, NY 10066.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
(1) Registrant undertakes to furnish each person to whom a
prospectus is delivered, a copy of the Fund's latest annual report to
shareholders which will include the information required by Item 5A, upon
request and without charge.
(2) Registrant undertakes to call a meeting of shareholders
for the purpose of voting upon the question of removal of a trustee or trustees
if requested to do so by the holders of at least 10% of the Registrant's
outstanding voting securities, and to assist in communications with other
shareholders as required by Section 16(c) of the 1940 Act.
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<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Pre-Effective Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York and State of New York, on the 29th day
of October, 1998.
The Ramirez Trust
By:/s/ Samuel A. Ramirez
------------------------
Samuel A. Ramirez
President
As required by the Securities Act of 1933, this Pre-Effective Amendment to the
its Registration Statement has been signed by the following persons in the
capacities on the 29th day of October, 1998.
Name Title Date
- ---- ----- ----
/s/ Samuel A. Ramirez President and Chairman October 29, 1998
- ---------------------
Samuel A. Ramirez
/s/ John Kick Treasurer and Chief
- ------------- Financial Officer October 29, 1998
John Kick
* Trustee October 29, 1998
- -------------------
Alexander Vermitsky
* Trustee October 29, 1998
- -------------------
Alfonse Santagata
* Trustee October 29, 1998
- -------------------
Charles H. Falk
* Trustee October 29, 1998
- -------------------
Paul Voigt
* Trustee October 29, 1998
- -------------------
Alan Dlugash
*By:/s/ Peter O'Rourke
------------------
Peter O'Rourke
Power of Attorney
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<PAGE>
EXHIBIT INDEX
EX-99.B1(a) Amended Certificate of Trust
EX-99.B1 Amended Trust Instrument
EX-99.B2 By laws
EX-99.B5 Investment Advisory Agreement
EX-99.B6 Distribution Agreement
EX-99.B8 Form of Custodian Agreement
EX-99.B9(a) Shareholder Services Plan & Agreement
EX-99.B9(b) Fund Administration Servicing Agreement
EX-99.B9(c) Form of Transfer Agency Agreement
EX-99.B9(d) Form of Fund Accounting Servicing Agreement
EX-99.B9(e) Form of Fulfillment Servicing Agreement
EX-99.B10(a) Opinion of Morris, Nichols, Arsht & Tunnell
EX-99.B10(b) Opinion of Kramer Levin Naftalis & Frankel LLP
EX-99.B11(a) Consent of Kramer Levin Naftalis & Frankel LLP Counsel for
the Registrant
EX-99.B11(b) Consent of PricewaterhouseCoopers, Independent Auditors for
the Registrant
EX-99.B15 The Ramirez Trust Service and Distribution Plan
EX-99.B19 Power of Attorney
AMENDED CERTIFICATE OF TRUST
OF
THE RAMIREZ TRUST
This Certificate of Trust is being executed as of September 15, 1998
for the purpose of organizing a business trust pursuant to the Delaware Business
Trust Act, 12 Del. C. ss.ss. 3801 et seq.
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is The Ramirez Trust ("Trust").
2. Registered Investment Company. The Trust is or will become a
registered investment company under the Investment Company Act of 1940, as
amended.
3. Registered Office and Registered Agent. The registered office of the
Trust in the State of Delaware is located at 1013 Centre Road, Wilmington,
Delaware 19805-1297. The name of the registered agent of the Trust for service
of process at such location is Corporation Service Company.
4. Notice of Limitation of Liabilities of Series. Notice is hereby
given that the Trust is or may hereafter be constituted a series trust. The
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to any particular series shall be enforceable
against the assets of such series only, and not against the assets of the Trust
generally.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year first
above written.
Trustees
Peter J. O'Rourke
Debra Jacob Nachlis
- 2 -
THE RAMIREZ TRUST
AMENDED TRUST INSTRUMENT
DATED SEPTEMBER 15, 1998
<PAGE>
THE RAMIREZ TRUST
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I - NAME AND DEFINITION........................................................................ 1
Section 1.01 Name............................................................................ 1
Section 1.02 Definitions..................................................................... 1
ARTICLE II - BENEFICIAL INTEREST....................................................................... 2
Section 2.01 Shares of Beneficial Interest................................................... 2
Section 2.02 Issuance of Shares.............................................................. 2
Section 2.03 Register of Shares and Share Certificates....................................... 3
Section 2.04 Transfer of Shares.............................................................. 3
Section 2.05 Treasury Shares................................................................. 3
Section 2.06 Establishment of Series......................................................... 3
Section 2.07 Investment in the Trust......................................................... 4
Section 2.08 Assets and Liabilities of Series................................................ 4
Section 2.09 No Preemptive Rights............................................................ 5
Section 2.10 No Personal Liability of Shareholder............................................ 5
Section 2.11 Assent to Trust Instrument...................................................... 5
ARTICLE III - THE TRUSTEES............................................................................. 6
Section 3.01 Management of the Trust......................................................... 6
Section 3.02 Initial Trustees................................................................ 6
Section 3.03 Term of Office.................................................................. 6
Section 3.04 Vacancies and Appointments...................................................... 7
Section 3.05 Temporary Absence............................................................... 7
Section 3.06 Number of Trustees.............................................................. 7
Section 3.07 Effect of Ending of a Trustee's Service......................................... 7
Section 3.08 Ownership of Assets of the Trust................................................ 7
ARTICLE IV - POWERS OF THE TRUSTEES.................................................................... 8
Section 4.01 Powers.......................................................................... 8
Section 4.02 Issuance and Repurchase of Shares............................................... 11
Section 4.03 Trustees and Officers as Shareholders........................................... 11
Section 4.04 Action by the Trustees.......................................................... 11
Section 4.05 Chairman of the Trustees........................................................ 11
Section 4.06 Principal Transactions.......................................................... 11
ARTICLE V - EXPENSES OF THE TRUST...................................................................... 12
ARTICLE VI - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT.............................................................. 12
Section 6.01 Investment Adviser.............................................................. 12
Section 6.02 Principal Underwriter........................................................... 13
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Section 6.03 Administration.................................................................. 13
Section 6.04 Transfer Agent.................................................................. 13
Section 6.05 Parties to Contract............................................................. 13
Section 6.06 Provisions and Amendments....................................................... 14
ARTICLE VII - SHAREHOLDERS' VOTING POWERS AND MEETINGS................................................. 14
Section 7.01 Voting Powers................................................................... 14
Section 7.02 Meetings........................................................................ 15
Section 7.03 Quorum and Required Vote........................................................ 15
ARTICLE VIII - CUSTODIAN............................................................................... 16
Section 8.01 Appointment and Duties.......................................................... 16
Section 8.02 Central Certificate System...................................................... 16
ARTICLE IX - DISTRIBUTIONS AND REDEMPTIONS............................................................. 17
Section 9.01 Distributions................................................................... 17
Section 9.02 Redemptions..................................................................... 17
Section 9.03 Determination of Net Asset Value and Valuation of Portfolio
Assets........................................................................ 17
Section 9.04 Suspension of the Right of Redemption........................................... 18
Section 9.05 Redemption of Shares in Order to Qualify as Regulated
Investment Company............................................................................ 18
Section 9.06 Redemption of Small Accounts.................................................... 19
ARTICLE X - LIMITATION OF LIABILITY AND INDEMNIFICATION................................................ 19
Section 10.01 Limitation of Liability........................................................ 19
Section 10.02 Indemnification................................................................ 19
Section 10.03 Shareholders................................................................... 20
ARTICLE XI - MISCELLANEOUS............................................................................. 21
Section 11.01 Trust Not A Partnership........................................................ 21
Section 11.02 Trustee's Good Faith Action, Expert Advice,
No Bond or Surety................................................................... 21
Section 11.03 Establishment of Record Dates.................................................. 21
Section 11.04 Termination of Trust........................................................... 22
Section 11.05 Reorganization................................................................. 23
Section 11.06 Filing of Copies, References, Headings......................................... 23
Section 11.07 Applicable Law................................................................. 24
Section 11.08 Amendments..................................................................... 24
Section 11.09 Fiscal Year.................................................................... 24
Section 11.10 Name Reservation............................................................... 24
Section 11.11 Provisions in Conflict With Law................................................ 25
ii
</TABLE>
<PAGE>
THE RAMIREZ TRUST
SEPTEMBER 15, 1998
TRUST INSTRUMENT, made by Peter J. O'Rourke and Debra Jacob Nachlis
(the "Trustees").
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITION
Section 1.01 Name. The name of the trust created hereby is "The Ramirez
Trust."
Section 1.02 Definitions. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time. Whenever reference is made hereunder to the 1940 Act, such
references shall be interpreted as including any applicable order or orders of
the Commission or any rules or regulations adopted by the Commission thereunder
or interpretive releases of the Commission staff;
(b) "Bylaws" means the Bylaws of the Trust as adopted by the Trustee,
as amended from time to time;
(c) "Commission" has the meaning given it in the 1940 Act. In addition,
"Affiliated Person," "Interested Person" and "Principal Underwriter" shall have
the respective meanings given them in the 1940 Act;
(d) "Delaware Act" means the Delaware Business Trust Act, to Chapter 38
of Title 12 of the Delaware Code, as amended from time to time;
(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
(f) "Outstanding Shares" means those Shares shown from time to time in
the books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;
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(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof;
(h) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(j) The "Trust" means The Ramirez Trust, a Delaware business trust, and
reference to the Trust when applicable to one or more Series of the Trust, shall
refer to any such Series;
(k) The "Trustees" means the person or persons who has or have signed
this Trust Instrument so long as he or they shall continue in office in
accordance with the terms hereof and all other persons who may from time to time
be duly qualified and serving as Trustees in accordance with the provisions of
Article III hereof, and reference herein to a Trustee or to the Trustees shall
refer to the individual Trustees in their respective capacity as Trustees
hereunder;
(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
ARTICLE II
BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest. The beneficial interest in
the Trust shall be divided into such Shares of one or more separate and distinct
Series or classes of a Series as set forth in Section 2.06 or as the Trustees
shall otherwise from time to time create and establish as provided in Section
2.06. The number of Shares of each Series and class thereof authorized hereunder
is unlimited. Except as otherwise determined by the Trustees, each Share shall
have a par value of $.001. All Shares issued hereunder, including without
limitation Shares issued in connection with a dividend paid in Shares or a split
or reverse split of Shares, shall be fully paid and nonassessable.
Section 2.02 Issuance of Shares. The Trustees in their discretion may,
from time to time, without a vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1000th of a Share or
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integral multiples thereof. The Trustees or any person the Trustees may
authorize for the purpose may, in their discretion, reject any application for
the issuance of shares.
Section 2.03 Register of Shares and Share Certificates. A register
shall be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. No
share certificates shall be issued by the Trust except as the Trustees may
otherwise authorize, and the persons indicated as shareholders in such register
shall be entitled to receive dividends or other distributions or otherwise to
exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled
to receive payment of any dividend or other distribution, nor to have notice
given to him as herein or in the Bylaws provided, until he has given his address
to the transfer agent or such officer or other agent of the Trustees as shall
keep the said register for entry thereon.
Section 2.04 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.
Section 2.05 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 2.06 Establishment of Series and Classes. The Trust created
hereby shall consist initially of three Series which is specified by name on
Schedule A attached hereto, and such Series shall initially consist of such
classes of Shares as are designated on Schedule A. Such initial Series (or class
thereof, as applicable) shall have the investment objectives, purposes and
policies, and such relative rights, powers, duties and other attributes, as are
specified in the Registration Statement and related prospectus and statement of
additional information approved by the Trustees in connection with the
registration and offer of Shares of such Series (or class thereof). Distinct
records shall be maintained by the Trust for each Series and the assets and
liabilities associated with the Series shall be held and accounted for
separately from the assets and liabilities of the Trust or any other Series. The
Trustees shall have full power and authority, in their sole discretion and
without obtaining any prior authorization or vote of the Shareholders of any
Series, to establish and designate and to change in any manner any Series or any
classes of initial or additional Series and to fix such preferences, voting
powers, rights and privileges of such Series or classes thereof as the Trustees
may from time to time determine, to divide or combine the Shares or any Series
or classes thereof into a greater or lesser number, to classify or reclassify
any issued Shares or any Series or classes thereof into one or more Series or
classes of Shares, and to take such other action with respect to the Shares as
the Trustees may deem
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desirable. The establishment and designation of any Series (other than those
established pursuant to the first sentence of this Section 2.06) shall be
effective upon the adoption of a resolution by a majority of the Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series. A Series may issue any number of
Shares, but need not issue Shares. At any time that there are no Shares
outstanding of any particular Series previously established and designated, the
Trustees may by a majority vote abolish that Series and the establishment and
designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his proportionate share of all distributions made
with respect to such Series, based upon the number of full and fractional Shares
of the Series held. Upon redemption of his Shares, such Shareholder shall be
paid solely out of the funds and property of such Series of the Trust.
Section 2.07 Investment in the Trust. The Trustees shall accept
investments in any Series from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which the
affected Series is authorized to invest, valued as provided in Article IX
Section 9.03 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full and fractional Shares at the net asset
value per Share next determined after the investment is received or accepted as
may be determined by the Trustees; provided, however, that the Trustees may, in
their sole discretion, (a) fix minimum amounts for initial and subsequent
investments or (b) impose a sales charge upon investments in such manner and at
such time determined by the Trustees.
Section 2.08 Assets and Liabilities of Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held and accounted for separately from the other assets of
the Trust and of every other Series and may be referred to herein as "assets
belonging to" that Series. The assets belonging to a particular Series shall
belong to that Series for all purposes, and to no other Series, and shall be
subject only to the rights of creditors of that Series. In addition, any assets,
income, earnings, profits or funds, or payments and proceeds with respect
thereto, which are not readily identifiable as belonging to any particular
Series shall be allocated by the Trustees between and among one or more of the
Series in such manner as the Trustees, in their sole discretion, deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, income, earnings,
profits or funds, or payments and proceeds with respect thereto shall be assets
belonging to that Series. The assets belonging to a particular Series shall be
so recorded upon the books of the Trust, and
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shall be held by the Trustees in trust for the benefit of the holders of Shares
of that Series. The assets belonging to each particular Series shall be charged
with the liabilities of that Series and all expenses, costs, charges and
reserves attributable to that Series. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as belonging
to any particular Series shall be allocated and charged by the Trustees between
or among any one or more of the Series in such manner as the Trustees in their
sole discretion deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all purposes.
Without limitation of the foregoing provisions of this Section 2.08, but subject
to the right of the Trustees in their discretion to allocate general
liabilities, expenses, costs, changes or reserves as herein provided, the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular Series shall be enforceable against the
assets of such Series only, and not against the assets of the Trust generally.
Notice of this contractual limitation on inter-Series liabilities may, in the
Trustee's sole discretion, be set forth in the certificate of trust of the Trust
(whether originally or by amendment) as filed or to be filed in the Office of
the Secretary of State of the State of Delaware pursuant to the Delaware Act,
and upon the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the Delaware Act relating to limitations on
inter-Series liabilities (and the statutory effect under Section 3804 of setting
forth such notice in the certificate of trust) shall become applicable to the
Trust and each Series. Any person extending credit to, contracting with or
having any claim against any Series may look only to the assets of that Series
to satisfy or enforce any debt, with respect to that Series. No Shareholder or
former Shareholder of any Series shall have a claim on or any right to any
assets allocated or belonging to any other Series.
Section 2.09 No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees, whether of the same or other
Series.
Section 2.10 No Personal Liability of Shareholder. No Shareholder shall
be personally liable for the debts, liabilities, obligation and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
by or on behalf of any Series. The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other understanding issued by or on
behalf of the Trust or the Trustees relating to the Trust or to a Series shall
include a recitation limiting the obligation represented thereby to the Trust or
to one or more Series and its or their assets (but the omission of such a
recitation shall not operate to bind any Shareholder or Trustee of the Trust).
Section 2.11 Assent to Trust Instrument. Every Shareholder, by virtue
of having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.
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ARTICLE III
THE TRUSTEES
Section 3.01 Management of the Trust. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III and except as otherwise provided in
Section 3.02 of this Article III, the Trustees shall be elected by the
Shareholders owning of record a plurality of the Shares voting at a meeting of
Shareholders. Any Shareholder meeting held for such purpose shall be held on a
date fixed by the Trustees. In the event that less than a majority of the
Trustees holding office have been elected by Shareholders, the Trustees then in
office will call a Shareholders' meeting for the election of Trustees in
accordance with the provisions of the 1940 Act.
Section 3.02 Initial Trustees. The initial Trustees shall be the person
named herein. The initial Trustees shall appoint additional or substitute
Trustees at an organizational meeting of Trustees. Thereafter, Trustees shall be
appointed or elected as provided in Sections 3.01 and 3.04 of this Article III.
Section 3.03 Term of Office. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by reason
of illness or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of
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the Trust by a vote of Shareholders owning at least two-thirds of the
Outstanding Shares of the Trust.
Section 3.04 Vacancies and Appointments. In case of a Trustee's
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of illness, disease or otherwise, or if a Trustee is
otherwise unable to serve, or if there is an increase in the number of Trustees,
a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy shall be
conclusive. In the case of a vacancy, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their discretion see fit, to
the extent consistent with the limitations provided under the 1940 Act. Such
appointment shall be evidenced by a written instrument signed by a majority of
the Trustees in office or by resolution of the Trustees, duly adopted, which
shall be recorded in the minutes of a meeting of the Trustees, whereupon the
appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any person
appointed as a Trustee pursuant to this Section 3.04 shall have accepted this
Trust, the trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and such person
shall be deemed a Trustee.
Section 3.05 Temporary Absence. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall fewer than two
Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.06 Number of Trustees. From and after the date of appointment
of Trustees by the initial Trustees named herein, the number of Trustees shall
be at least three (3), and thereafter shall be such number as shall be fixed
from time to time by a majority of the Trustees, provided, however, that the
number of Trustees shall in no event be more than twelve (12).
Section 3.07 Effect of Ending of a Trustee's Service. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability of
the Trustees, or any one of them, shall not operate to terminate the Trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
Section 3.08 Ownership of Assets of the Trust. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and the
right to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of, the Trust or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof but each Shareholder
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shall have, except as otherwise provided for herein, a proportionate undivided
beneficial interest in the Trust or Series based upon the number of Shares
owned. The Shares shall be personal property giving only the rights specifically
set forth in this Trust Instrument.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.01 Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority and power
to make any and all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust Instrument
or the Bylaws of the Trust, the Trustees shall have the power and authority:
(a) To invest and reinvest cash and other property (including
investment, notwithstanding any other provision hereof, of all of the assets of
any Series in a single open-end investment company, including investment by
means of transfer of such assets in exchange for an interest or interests in
such investment company), and to hold cash or other property of the Trust
uninvested, without in any event being bound or limited by any present or future
law or custom in regard to investments by trustees, and to sell, exchange, lend,
pledge, mortgage, hypothecate, write options on and lease any or all of the
assets of the Trust:
(b) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation or engagement of any other Person and
to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders; such
Bylaws shall be deemed formed and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
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(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable (with power
of subdelegation) to any officers or employees of the Trust and to any
investment adviser, manager, custodian, underwriter or other agent or
independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property, and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form; or
either in the name of the Trust or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
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(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner provided herein;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers
of the Trustees to said committees and to adopt a committee charter providing
for such responsibilities, membership (including Trustees, officers or other
agents of the Trust therein) and any other characteristics of said committees as
the Trustees may deem proper. Notwithstanding the provisions of this Article IV,
and in addition to such provisions or any other provision of this Trust
Instrument or of the Bylaws, the Trustees may by resolution appoint a committee
consisting of less than the whole number of Trustees then in office, which
committee may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any action, suit or proceeding which shall be pending or
threatened to be brought before any court, administrative agency or other
adjudicatory body;
(v) To interpret the investment policies, practices or limitations of
any Series;
(w) To establish a registered office and have a registered agent in the
state of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see the application
of any payments made or property transferred to the Trustees or upon their
order.
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Section 4.02 Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
Section 4.03 Trustees and Officers as Shareholders. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if he were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any such person or any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and purchase of
such Shares; and all subject to any restrictions which may be contained in the
Bylaws.
Section 4.04 Action by the Trustees. In any action taken by the
Trustees hereunder, unless otherwise specified, the Trustees shall act by
majority vote at a meeting duly called or by unanimous written consent without a
meeting or by telephone meeting provided a quorum of Trustees participate in any
such telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the person calling the
meeting to each Trustee by telephone, facsimile or other electronic mechanism
sent to his home or business address at least twenty-four hours in advance of
the meeting or by written notice mailed to his home or business address at least
seventy-two hours in advance of the meeting. Notice need not be given to any
Trustee who attends the meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Any meeting
conducted by telephone shall be deemed to take place at the principal office of
the Trust, as determined by the Bylaws or by the Trustees. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to any
one or more of their number their authority to approve particular matters or
take particular actions on behalf of the Trust. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Execution of a written
consent or waiver and delivery thereof to the Trust may be accomplished by
facsimile or other similar electronic mechanism.
Section 4.05 Chairman of the Trustees. The Trustees shall appoint one
of their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.
Section 4.06 Principal Transactions. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of
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such person; and the Trust may employ any such person, or firm or company in
which such person is an Interested Person, as broker, legal counsel, registrar,
investment adviser, administrator, distributor, transfer agent, dividend
disbursing agent, custodian or in any other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Subject to the provisions of Article II, Section 2.08 hereof, the
Trustees are authorized to pay or cause to be paid from the Trust estate or the
assets belonging to the appropriate Series, expenses and disbursements,
including, without limitation, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodian, transfer agent and fund accountant; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
maintaining its existence; costs of preparing and printing the Trust's
prospectuses, statements of additional information and shareholder reports and
delivering them to existing Shareholders; expenses of meetings of Shareholders
and proxy solicitations therefor; costs of maintaining books and accounts; costs
of reproduction, stationery and supplies; fees and expenses of the Trust's
trustees; compensation of the Trust's officers and employees and costs of other
personnel performing services for the Trust; costs of Trustee meetings;
Commission registration fees and related expenses; state or foreign securities
laws registration fees and related expenses and for such non-recurring items as
may arise, including litigation to which the Trust (or a Trustee acting as such)
is a party, and for all losses and liabilities by them incurred in administering
the Trust, and for the payment of such expenses, disbursements, losses and
liabilities the Trustees shall have a lien on the assets belonging to the
appropriate Series, or in the case of an expense allocable to more than one
Series, on the assets of each such Series, prior to any rights or interests of
the Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser. (a) The Trustees may in their
discretion, from time to time, enter into an investment advisory contract or
contracts with respect to the Trust or any Series whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trustees
with such investment advisory, statistical and research facilities and services
and such other facilities and services, if any, all upon such terms and
conditions (including any Shareholder vote) that may be required under the 1940
Act, as may be prescribed in the Bylaws, or as the Trustees may in their
discretion determine (such terms and conditions not to be inconsistent with the
provisions of this Trust Instrument or of the Bylaws). Notwithstanding any other
provision
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of this Trust Instrument, the Trustees may authorize any investment adviser
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales or exchanges of portfolio securities,
other investment instruments of the Trust, or other Trust Property on behalf of
the Trustees, or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the investment
adviser (and all without further action by the Trustees). Any such purchases,
sales and exchanges shall be deemed to have been authorized by all of the
Trustees.
(b) The Trustees may authorize the investment adviser to employ, from
time to time, one or more sub-advisers to perform such of the acts and services
of the investment adviser, and upon such terms and conditions, as may be agreed
upon between the investment adviser and sub-adviser (such terms and conditions
not to be inconsistent with the provisions of this Trust Instrument or of the
Bylaws). Any reference in this Trust Instrument to the investment adviser shall
be deemed to include such sub-advisers, unless the context otherwise requires;
provided that no Shareholder approval shall be required with respect to any
sub-adviser unless required under the 1940 Act or other law, contract or order
applicable to the Trust.
Section 6.02 Principal Underwriter. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of Shares, whereby the
Trust may either agree to sell Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws); and such contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust.
Section 6.03 Administration. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Section 6.04 Transfer Agent. The Trustees may in their discretion from
time to time enter into one or more transfer agency and shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).
Section 6.05 Parties to Contract. Any contract of the character
described in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any
contract of the character described in Article VIII hereof may be entered into
with any corporation, firm, partnership, trust or association, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered void or voidable by reason of the
existence of any relationship, nor shall
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any person holding such relationship be disqualified from voting on or executing
the same in his capacity as Shareholder and/or Trustee, nor shall any person
holding such relationship be liable merely by reason of such relationship for
any loss or expense to the Trust under or by reason of said contract or
accountable for any profit realized directly or indirectly therefrom, provided
that the contract when entered into was not inconsistent with the provisions of
this Article VI or Article VIII hereof or of the Bylaws. The same person
(including a corporation, firm, partnership, trust, or association) may be the
other party to contracts entered into pursuant to Sections 6.01, 6.02, 6.03 and
6.04 of this Article VI or pursuant to Article VIII hereof and any individual
may be financially interested or otherwise affiliated with persons who are
parties to any or all of the contracts mentioned in this Section 6.05.
Section 6.06 Provisions and Amendments. Any contract entered into
pursuant to Section 6.01 or 6.02 of this Article VI shall be consistent with and
subject to the requirements of Section 15 of the 1940 Act, if applicable, or
other applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 6.01 of this Article VI shall be effective
unless assented to in a manner consistent with the requirements of said Section
15, as modified by any applicable rule, regulation or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers. (a) The Shareholders shall have power to
vote only (a) for the election of Trustees to the extent provided in Article
III, Section 3.01 hereof, (b) for the removal of Trustees to the extent provided
in Article III, Section 3.03(d) hereof, (c) with respect to any investment
advisory contract to the extent provided in Article VI, Section 6.01 hereof, (d)
with respect to an amendment of this Trust Instrument, to the extent provided in
Article XI, Section 11.08, and (e) with respect to such additional matters
relating to the Trust as may be required by law, by this Trust Instrument, or
any registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.
(b) Notwithstanding paragraph (a) of this Section 7.01 or any other
provision of this Trust Instrument (including the Bylaws) which would by its
terms provide for or require a vote of Shareholders, the Trustees may take
action without a Shareholder vote if (i) the Trustees shall have obtained an
opinion of counsel that a vote or approval of such action by Shareholders is not
required under (A) the 1940 Act or any other applicable laws, or (B) any
registrations, undertakings or agreements of the Trust known to such counsel,
and the Trustees determine in good faith that the taking of such action without
a Shareholder vote would be consistent with the best interests of the
Shareholders.
(c) On any matter submitted to a vote of the Shareholders, all Shares
shall be voted separately by individual Series, and whenever the Trustees
determine that the matter affects only certain Series, may be submitted for a
vote by only such Series, except (i) when required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual Series; and (ii) when the
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Trustees have determined that the matter affects the interests of more than one
Series and that voting by shareholders of all Series would be consistent with
the 1940 Act, then the Shareholders of all such Series shall be entitled to vote
thereon (either by individual Series or by Shares voted in the aggregate, as the
Trustees in their discretion may determine). The Trustees may also determine
that a matter affects only the interests of one or more classes of a Series, in
which case (or if required under the 1940 Act) such matter shall be voted on by
such class or classes. Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote. There shall be no cumulative voting
in the election of Trustees. Shares may be voted in person or by proxy or in any
manner provided for in the Bylaws. A proxy may be given in writing. The Bylaws
may provide that proxies may also, or may instead, be given by any electronic or
telecommunications device or in any other manner. Notwithstanding anything else
herein or in the Bylaws, in the event a proposal by anyone other than the
officers or Trustees of the Trust is submitted to a vote of the Shareholders, or
in the event of any proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees of the Trust, Shares may
be voted only in person or by written proxy. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required or permitted by law, this Trust Instrument or any of the Bylaws of the
Trust to be taken by Shareholders.
Section 7.02 Meetings. Meetings of Shareholders may be held within or
without the State of Delaware. Special meetings of the Shareholders of any
Series for the purpose of voting upon the removal of a Trustee or Trustees may
be called by the Trustees and shall be called by the Trustees upon the written
request of Shareholders owning at least one tenth of the Outstanding Shares of
the Trust entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the 1940 Act, as the same may be
amended from time to time, seek the opportunity of furnishing materials to the
other Shareholders with a view to obtaining signatures on such a request for a
meeting, the Trustees shall comply with the provisions of said Section 16(c)
with respect to providing such Shareholders access to the list of the
Shareholders of record of the Trust or the mailing of such materials to such
Shareholders of record, subject to any rights provided to the Trust or any
Trustees provided by said Section 16(c). Notice shall be sent, by First Class
Mail or such other means determined by the Trustees, at least 10 days prior to
any such meeting. Notwithstanding anything to the contrary in this Section 7.02,
the Trustees shall not be required to call a special meeting of the Shareholders
of any Series or to provide Shareholders seeking the opportunity of furnishing
the materials to other Shareholders with a view to obtaining signatures on a
request for a meeting except to the extent required under the 1940 Act.
Section 7.03 Quorum and Required Vote. One-third of Shares outstanding
and entitled to vote in person or by proxy as of the record date for a
Shareholders' meeting shall be a quorum for the transaction of business at such
Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any meeting of Shareholders may be adjourned from time
to time by a majority of the votes properly cast upon the question of adjourning
a meeting to another date and time, whether or not a quorum is present. Any
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adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
at a meeting at which a quorum is present shall decide any questions and a
plurality shall elect a Trustee, provided that where any provision of law or of
this Trust Instrument permits or requires that the holders of any Series shall
vote as a Series (or that the holders of any class shall vote as a class), then
a majority of the Shares voted in person or by proxy at a meeting of that Series
(or class), at which a quorum is present shall decide that matter insofar as
that Series (or class) is concerned. Shareholders may act by unanimous written
consent, to the extent not inconsistent with the 1940 Act, and any such actions
taken by a Series (or class) may be consented to unanimously in writing by
Shareholders of that Series (or class).
ARTICLE VIII
CUSTODIAN
Section 8.01 Appointment and Duties. The Trustees shall employ a bank,
a company that is a member of a national securities exchange, or a trust
company, that in each case shall have capital, surplus and undivided profits of
at least twenty million dollars ($20,000,000) and that is a member of the
Depository Trust Company (or such other person or entity as may be permitted to
act as custodian of the Trust's assets under the 1940 Act) as custodian with
authority as its agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Bylaws of the Trust: (a) to
hold the securities owned by the Trust and deliver the same upon written order
or oral order confirmed in writing; (b) to receive and receipt for any moneys
due to the Trust and deposit the same in its own banking department or elsewhere
as the Trustees may direct; and (c) to disburse such funds upon orders or
vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and that is a
member of the Depository Trust Company or such other person or entity as may be
permitted by the Commission or is otherwise able to act as custodian of the
Trust's assets in accordance with the 1940 Act.
Section 8.02 Central Certificate System. Subject to the 1940 Act and
such other rules, regulations and orders as the Commission may adopt, the
Trustees may direct the custodian to deposit all or any part of the securities
owned by the Trust in a system for the central handling of securities
established by a national securities exchange or a national securities
association registered with the Commission under the Securities Exchange Act of
1934, as amended, or such other person as may be permitted by the Commission, or
otherwise in accordance with the 1940 Act, pursuant to which system all
securities of any particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of such securities, provided that all such
deposits
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shall be subject to withdrawal only upon the order of the Trust or its
custodians, sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions.
(a) The Trustees may from time to time declare and pay dividends or
other distributions with respect to any Series and/or class of a Series. The
amount of such dividends or distributions and the payment of them and whether
they are in cash or any other Trust Property shall be wholly in the discretion
of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute a share dividend to the
Shareholders of a particular Series, or class thereof, as of the record date of
that Series fixed as provided in Subsection 9.01(b) hereof.
Section 9.02 Redemptions. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof he may
deposit at the office of the transfer agent or other authorized agent of that
Series a written request or such other form of request as the Trustees may from
time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and, subject to Section 9.04 hereof, the
Shareholder so requesting shall be entitled to require the Series to purchase,
and the Series or the principal underwriter of the Series shall purchase his
said Shares, but only at the Net Asset Value thereof (as described in Section
9.03 of this Article IX). The Series shall make payment for any such Shares to
be redeemed, as aforesaid, in cash or property from the assets of that Series
and, subject to Section 9.04 hereof, payment for such Shares shall be made by
the Series or the principal underwriter of the Series to the Shareholder of
record within seven (7) days after the date upon which the request is effective.
Upon redemption and unless otherwise determined by the Trustees shares shall
become Treasury shares and may be re-issued from time to time.
Section 9.03 Determination of Net Asset Value and Valuation of
Portfolio Assets. The term "Net Asset Value" of any Series shall mean that
amount by which the assets of that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. The Trustees may delegate
any of their powers and duties under this Section 9.03 with respect to valuation
of assets and liabilities. Such value shall be determined separately for each
Series and shall be determined on such days and at such times as the Trustees
may determine. Such determination
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shall be made with respect to securities for which market quotations are readily
available, at the market value of such securities; and with respect to other
securities and assets, at the fair value as determined in good faith by the
Trustees; provided, however, that the Trustees, without Shareholder approval,
may alter the method of valuing portfolio securities insofar as permitted under
the 1940 Act. The resulting amount, which shall represent the total Net Asset
Value of the particular Series, shall be divided by the total number of shares
of that Series outstanding at the time and the quotient so obtained shall be the
Net Asset Value per Share of that Series. At any time the Trustees may cause the
Net Asset Value per Share last determined to be determined again in similar
manner and may fix the time when such redetermined value shall become effective.
The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend a practice of seeking to maintain the Net Asset Value per
Share of the Series at a constant amount. If, for any reason, the net income of
any Series, determined at any time, is a negative amount, the Trustees shall
have the power with respect to that Series (a) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, (b) to reduce the number of Outstanding Shares of such Series by
reducing the number of Shares in the account of each Shareholder by a pro rata
portion of that number of full and fractional Shares which represents the amount
of such excess negative net income, (c) to cause to be recorded on the books of
such Series an asset account in the amount of such negative net income (provided
that the same shall thereupon become the property of such Series with respect to
such Series and shall not be paid to any Shareholder), which account may be
reduced by the amount of dividends declared thereafter upon the Outstanding
Shares of such Series on the day such negative net income is experienced, until
such asset account is reduced to zero; (d) to combine the methods described in
clauses (a) and (b) and (c) of this sentence; or (e) to take any other action
they deem appropriate, in order to cause (or in order to assist in causing) the
Net Asset Value per Share of such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration. The
Trustees shall also have the power not to declare a dividend out of net income
for the purpose of causing the Net Asset Value per Share to be increased.
In the event that any Series is divided into classes, the provisions of
this Section 9.03, to the extent applicable as determined in the discretion of
the Trustees and consistent with the 1940 Act and other applicable law, may be
equally applied to each such class.
Section 9.04 Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
if permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension.
Section 9.05 Redemption of Shares in Order to Qualify as Regulated
Investment Company. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of any Series has or may
become concentrated in any Person to an
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extent which would disqualify any Series as a regulated investment company under
the Internal Revenue Code, then the Trustees shall have the power (but not the
obligation) by lot or other means deemed equitable by them (a) to call for
redemption by any such person of a number, or principal amount, of Shares
sufficient to maintain or bring the direct or indirect ownership of Shares into
conformity with the requirements for such qualification and (b) to refuse to
transfer or issue Shares to any person whose acquisition of Shares in question
would result in such disqualification. The redemption shall be effected at the
redemption price and in the manner provided in this Article IX.
The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the requirements of any taxing
authority or this Section 9.05.
Section 9.06 Redemption of Small Accounts. Subject to the requirements
of the 1940 Act, the Trustees may cause the Trust to redeem, at the price and in
the manner provided in this Article IX, Shares of any Series or class of a
Series held by any Shareholder (i) if such Shareholder is no longer qualified to
hold such Shares in accordance with such qualifications as may be established by
the Trustees, (ii) if the net asset value of such Shares is below $500 or such
other amount as determined by the Trustees or (iii) if otherwise deemed by the
Trustees to be in the best interest of the Trust or that particular Series (or
class) as a whole.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability. Neither a Trustee nor an officer
of the Trust, when acting in such capacity, shall be personally liable to any
person other than the Trust or the Shareholders for any act, omission or
obligation of the Trust, any Trustee or any officer of the Trust. Neither a
Trustee nor an officer of the Trust shall be liable for any act or omission or
any conduct whatsoever in his capacity as Trustee or as an officer of the Trust,
provided that nothing contained herein or in the Delaware Act shall protect any
Trustee or any officer of the Trust against any liability to the Trust or to
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee or officer of the Trust
hereunder.
Section 10.02 Indemnification.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
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(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or
other body approving the settlement; (B) by at least a majority of
those Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written opinion
of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection (a) of this Section 10.02 may be paid by the Trust or Series from
time to time prior to final disposition thereof upon receipt of an undertaking
by or on behalf of such Covered Person that such amount will be paid over by him
to the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 10.02; provided, however, that either (i)
such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Section 10.02.
Section 10.03 Shareholders. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and
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not because of his acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his heirs, executors, administrators or other legal
representatives, or, in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Trust, on behalf of the affected
Series, shall, upon request by the Shareholder, assume the defense of any claim
made against the Shareholder for any act or obligation of the Series and satisfy
any judgment thereon from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Not A Partnership. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder shall
have any power to bind personally either the Trust officers or any Shareholder.
All persons extending credit to, contracting with or having any claim against
the Trust or the Trustees shall look only to the assets of the appropriate
Series or (if the Trustees shall have yet to have established Series) of the
Trust for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Trust Instrument
shall protect a Trustee against any liability to the Trust or a Shareholder to
which the Trustee would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee hereunder.
Section 11.02 Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees or the officers of the Trust of their
powers and discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article X hereof and to Section 11.01 of this Article XI,
the Trustees and the officers of the Trust shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees and the officers of the Trust
may take advice of counsel or other experts with respect to the meaning and
operation of this Trust Instrument, and subject to the provisions of Article X
hereof and Section 11.01 of this Article XI, shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustees and the officers of the Trust shall not be required to give
any bond as such, nor any surety if a bond is obtained.
Section 11.03 Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution,
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or to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend or other distribution, or to
receive such allotment or rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any Shares on the books of the Trust after
any such record date fixed as aforesaid.
Section 11.04 Termination of Trust.
(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).
(b) The Trustees may, subject to any necessary Shareholder, Trustee,
and regulatory approvals:
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another trust, partnership,
association or corporation, or to a separate series of shares thereof,
organized under the laws of any state which trust, partnership,
association or corporation is an open-end management investment
company as defined in the 1940 Act, or is a series thereof, for
adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust or any affected Series, and which may include
shares of beneficial interest, stock or other ownership interests of
such trust, partnership, association or corporation or of a series
thereof;
(ii) enter into a plan of liquidation in order to terminate and
liquidate any Series (or class) of the Trust, or the Trust; or
(iii) at any time sell and convert into money all of the assets
of the Trust or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for the
payment of all liabilities by assumption or otherwise, the Trustees shall
distribute the remaining proceeds or assets (as the case may be) of each Series
(or class) ratably among the holders of Shares of the affected Series, based
upon the ratio that each Shareholder's Shares bears to the number of Shares of
such Series (or class) then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in Subsection 11.04(b), the Trust or any
affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties with respect to the Trust or Series
shall be cancelled and discharged.
Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of trust to be filed in
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accordance with the Delaware Act, which certificate of cancellation may be
signed by any one Trustee.
Section 11.05 Reorganization.
(a) Notwithstanding anything else herein, the Trustees, in order to
change the form or jurisdiction of organization of the Trust, may (i) cause the
Trust to merge or consolidate with or into one or more trusts, partnerships
(general or limited), associations or corporations so long as the surviving or
resulting entity is an open-end management investment company under the 1940
Act, or is a series thereof, that will succeed to or assume the Trust's
registration under that Act and which is formed, organized or existing under the
laws of a state, commonwealth, possession or colony of the United States or (ii)
cause the Trust to incorporate under the laws of Delaware.
(b) The Trustees may, subject to a vote of a majority of the Trustees
and any shareholder vote required under the 1940 Act, if any, cause the Trust to
merge or consolidate with or into one or more Trusts, partnerships (general or
limited), associations, limited liability companies or corporations formed,
organized or existing under the laws of a state, commonwealth, possession or
colony of the United States.
(c) Any agreement of merger or consolidation or certificate of merger
or consolidation may be signed by a majority of Trustees and facsimile
signatures conveyed by electronic or telecommunication means shall be valid.
(d) Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything to the contrary
contained in this Trust Instrument, an agreement of merger or consolidation
approved by the Trustees in accordance with paragraph (a) or (b) this Section
11.05 may effect any amendment to the Trust Instrument or effect the adoption of
a new trust instrument of the Trust if it is the surviving or resulting trust in
the merger or consolidation.
Section 11.06 Filing of Copies, References, Headings. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions such
as "herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions such as "his," "he" and "him," shall be deemed to include the
feminine and neuter, as well as masculine, genders. Headings are placed herein
for convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
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Section 11.07 Applicable Law. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust," and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 11.08 Amendments. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment which would affect their rights to vote granted in Section
7.01 of Article VII hereof, (b) on any amendment to this Section 11.08, (c) on
any amendment as may be required by law or by the Trust's registration statement
filed with the Commission and (d) on any amendment submitted to them by the
Trustees. Any amendment required or permitted to be submitted to Shareholders
which, as the Trustees determine, shall affect the Shareholders of one or more
Series shall be authorized by vote of the Shareholders of each Series affected
and no vote of shareholders of a Series not affected shall be required.
Notwithstanding any other provision of this Trust Instrument, any amendment to
Article X hereof shall not limit the rights to indemnification or insurance
provided therein with respect to action or omission of Covered Persons prior to
such amendment.
Section 11.09 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may change the fiscal year of the Trust.
Section 11.10 Name Reservation. The Trustees on behalf of the Trust
acknowledge that Ramirez & Co., Inc. has licensed to the Trust the non-exclusive
right to use the word "Ramirez" as part of the name of the Trust, and has
reserved the right to grant the non-exclusive use of the
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word "Ramirez" or any derivative thereof to any other party. In addition,
Ramirez & Co., Inc. reserves the right to grant the non-exclusive use of the
word "Ramirez" to, and to withdraw such right from, any other business or other
enterprise. Ramirez & Co., Inc. reserves the right to withdraw from the Trust
the right to use said word "Ramirez" and will withdraw such right if the Trust
ceases to employ, for any reason, Ramirez & Co., Inc., an affiliate or any
successor as adviser of the Trust.
Section 11.11 Provisions in Conflict With Law. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provision in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees of the
Trust, have executed this instrument as of date first written above.
Peter J. O'Rourke, as Trustee
and not individually
Debra Jacob Nachlis, as Trustee
and not individually
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SCHEDULE A
Ramirez Cash Management Money Market Fund
Ramirez New York Tax-Free Money Market Fund
Ramirez U.S. Treasury Money Market Fund
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THE RAMIREZ TRUST
BYLAWS
June 30, 1998
<PAGE>
THE RAMIREZ TRUST
BYLAWS
These Bylaws of The Ramirez Trust (the "Trust"), a Delaware business
trust, are subject to the Trust Instrument of the Trust, dated June 30, 1998, as
from time to time amended, supplemented or restated (the "Trust Instrument").
Capitalized terms used herein which are defined in the Trust Instrument are used
as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in New York, New
York or such other location as the Trustees may, from time to time, determine.
The Trust may establish and maintain such other offices and places of business
as the Trustees may, from time to time, determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
SECTION 1.01 OFFICERS. The officers of the Trust shall be a President,
a Treasurer, a Secretary, and such other officers as the Trustees may from time
to time elect. The Trustees may delegate to any officer or committee the power
to appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or other officer to be a holder of Shares in the Trust.
SECTION 1.02 ELECTION OF OFFICERS. The Treasurer and Secretary shall be
chosen by the Trustees. The President shall be chosen by and from the Trustees.
Two or more offices may be held by a single person except the offices of
President and Secretary. Subject to the provisions of Section 3.13 hereof the
President, the Treasurer and the Secretary shall each hold office until their
successors are chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees.
SECTION 1.03 RESIGNATIONS. Any officer of the Trust may resign,
notwithstanding Section 2.02 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by, or under the direction of the Trustees, and they
shall have all
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powers necessary and desirable to carry out their responsibilities, so far as
such powers are not inconsistent with the laws of the State of Delaware, the
Trust Instrument or with these Bylaws.
SECTION 3.02 EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect
from their own number an executive committee, which shall have any or all of the
powers of the Board of Trustees while the Board of Trustees is not in session.
The Trustees may also elect from their own number other committees from time to
time. The number composing such committees and the powers conferred upon the
same are to be determined by vote of a majority of the Trustees. All members of
such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
SECTION 3.03 COMPENSATION. Each Trustee and each committee member may
receive such compensation for his services and reimbursement for his expenses as
may be fixed from time to time by resolution of the Trustees.
SECTION 3.04 CHAIRMAN OF THE TRUSTEES. The Trustees may appoint from
among their number a Chairman who shall serve as such at the pleasure of the
Trustees. When present, he shall preside at all meetings of the Shareholders and
the Trustees, and he may, subject to the approval of the Trustees, appoint a
Trustee to preside at such meetings in his absence. He shall perform such other
duties as the Trustees may from time to time designate.
SECTION 3.05 PRESIDENT. The President shall be the chief executive
officer of the Trust and, subject to the direction of the Trustees, shall have
general administration of the business and policies of the Trust. Except as the
Trustees may otherwise order, the President shall have the power to grant,
issue, execute or sign such powers of attorney, process, agreements or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust or any Series thereof. He shall also have the power to
employ attorneys, accountants and other advisors and agents and counsel for the
Trust. The President shall perform such duties additional to all of the
foregoing as the Trustees may from time to time designate.
SECTION 3.06 TREASURER. The Treasurer shall be the principal financial
and accounting officer of the Trust. He shall deliver all funds and securities
of the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer shall perform
such additional duties as the Trustees may from time to time designate.
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SECTION 3.07 SECRETARY. The Secretary shall record in books kept for
the purpose all votes and proceedings of the Trustees and the Shareholders at
their respective meetings. He shall have the custody of the seal of the Trust.
The Secretary shall perform such additional duties as the Trustees may from time
to time designate.
SECTION 3.08 VICE PRESIDENT. Any Vice President of the Trust shall
perform such duties as the Trustees or the President may from time to time
designate. At the request or in the absence or disability of the President, the
Vice President (or, if there are two or more Vice Presidents, then the senior of
the Vice Presidents) present and able to act may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
SECTION 3.09 ASSISTANT TREASURER. Any Assistant Treasurer of the Trust
shall perform such duties as the Trustees or the Treasurer may from time to time
designate, and, in the absence of the Treasurer, the senior Assistant Treasurer,
present and able to act, may perform all the duties of the Treasurer and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Treasurer.
SECTION 3.10 ASSISTANT SECRETARY. Any Assistant Secretary of the Trust
shall perform such duties as the Trustees or the Secretary may from time to time
designate, and, in the absence of the Secretary, the senior Assistant Secretary,
present and able to act, may perform all the duties of the Secretary and, when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Secretary.
SECTION 3.11 SUBORDINATE OFFICERS. The Trustees from time to time may
appoint such officers or agents as they may deem advisable, each of whom shall
have such title, hold office for such period, have such authority and perform
such duties as the Trustees may determine. The Trustees from time to time may
delegate to one or more officers or committees of Trustees the power to appoint
any such subordinate officers or agents and to prescribe their respective terms
of office, authorities and duties.
SECTION 3.12 SURETY BONDS. The Trustees may require any officer or
agent of the Trust to execute a bond (including without limitation, any bond
required by the 1940 Act and the rules and regulations of the Commission) to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his duties to the Trust
including responsibility for negligence and for the accounting of any of the
Trust's property, funds or securities that may come into his hands.
SECTION 3.13 REMOVAL. Any officer may be removed from office, with or
without cause, whenever in the judgment of the Trustees the best interest of the
Trust will be served thereby, by the vote of a majority of the Trustees given at
any regular meeting or any special meeting of the Trustees. In addition, any
officer or agent appointed in accordance with the provisions of Section 3.11
hereof may be removed, either with or without cause, by any officer upon whom
such power of removal shall have been conferred by the Trustees.
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SECTION 3.14 REMUNERATION. The salaries or other compensation, if any,
of the officers of the Trust shall be fixed from time to time by resolution of
the Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
SECTION 4.01 SPECIAL MEETINGS. A special meeting of the shareholders
shall be called by the Secretary whenever (a) ordered by the Trustees or (b)
requested in writing by the holder or holders of at least 10% of the Outstanding
Shares entitled to vote for the purpose of voting upon the question of removal
of Trustees. If the meeting is a meeting of the Shareholders of one or more
Series or classes of Shares, but not a meeting of all Shareholders of the Trust,
then only special meetings of the Shareholders of such one or more Series or
classes shall be called and only the shareholders of such one or more Series or
classes shall be entitled to notice of and to vote at such meeting.
SECTION 4.02 NOTICES. Except as provided in Section 4.01, notices of
any meeting of the Shareholders shall be given by the Secretary by delivering or
mailing, postage prepaid, to each Shareholder entitled to vote at said meeting,
written or printed notification of such meeting at least ten (10) days before
the meeting, to such address as may be registered with the Trust by the
Shareholder. Notice of any Shareholder meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the records of such meeting, or to any Shareholder who
shall attend such meeting in person or by proxy. Notice of adjournment of a
Shareholder's meeting to another time or place need not be given, if such time
and place are announced at the meeting or reasonable notice is given to persons
present at the meeting and the adjourned meeting is held within a reasonable
time after the date set for the original meeting.
SECTION 4.03 VOTING-PROXIES. Subject to the provisions of the Trust
Instrument, shareholders entitled to vote may vote either in person or by proxy,
provided that either (a) an instrument authorizing such proxy to act is executed
by the Shareholder in writing and dated not more than eleven (11) months before
the meeting, unless the instrument specifically provides for a longer period or
(b) the Trustees adopt by resolution an electronic, telephonic, computerized or
other alternative to execution of a written instrument authorizing the proxy to
act, which authorization is received not more than eleven (11) months before the
meeting. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the holder thereof to
vote at any adjournment of a meeting. A proxy purporting to be exercised by or
on behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest on the
challenger. At all meetings of the Shareholders, unless the voting is conducted
by inspectors, all questions relating to the qualifications of voters, the
validity of proxies, and the acceptance or rejection of votes shall be decided
by the Chairman of the meeting. Except as otherwise provided
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herein or in the Trust Instrument, as these Bylaws or such Trust Instrument may
be amended or supplemented from time to time, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and the
Shareholders were shareholders of a Delaware corporation.
SECTION 4.04 PLACE OF MEETING. All special meetings of the Shareholders
shall be held at the principal place of business of the Trust or at such other
place in the United States as the Trustees may designate.
SECTION 4.05 ACTION WITHOUT A MEETING. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting of the Shareholders
held at the principal place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
SECTION 5.01 SPECIAL MEETINGS. Special meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or any two
other Trustees.
SECTION 5.02 REGULAR MEETINGS. Regular meetings of the Trustees may be
held at such places and at such times as the Trustees may from time to time
determine; each Trustee present at such determination shall be deemed a party
calling the meeting and no call or notice will be required to such Trustee
provided that any Trustee who is absent when such determination is made shall be
given notice of the determination by the Chairman or any two other Trustees, as
provided for in Section 4.04 of the Trust Instrument.
SECTION 5.03 QUORUM. A majority of the Trustees shall constitute a
quorum for the transaction of business at any meeting and an action of a
majority of the Trustees in attendance constituting a quorum shall constitute
action of the Trustees.
SECTION 5.04 NOTICE. Except as otherwise provided, notice of any
special meeting of the Trustees shall be given by the party calling the meeting
to each of the Trustees, as provided for in Section 4.04 of the Trust
Instrument. A written notice may be mailed, postage prepaid, addressed to him at
his address as registered on the books of the Trust or, if not so registered, at
his last known address.
SECTION 5.05 PLACE OF MEETING. All special meetings of the Trustees
shall be held at the principal place of business of the Trust or such other
place as the Trustees may designate. Any meeting may adjourn to any place.
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SECTION 5.06 SPECIAL ACTION. When all the Trustees shall be present at
any meeting however called or wherever held, or shall assent to the holding of
the meeting without notice, or shall sign a written assent thereto filed with
the records of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.
SECTION 5.07 ACTION BY CONSENT. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the Trustees and
filed with the records of the Trustees' meeting. Such consent shall be treated,
for all purposes, as a vote at a meeting of the Trustees held at the principal
place of business of the Trustees.
SECTION 5.08 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Except
when presence in person is required at a meeting under the 1940 Act or other
applicable laws, Trustees may participate in a meeting of Trustees by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting. Any meeting conducted by
telephone shall be deemed to take place at and from the principal office of the
Trust.
ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT
SECTION 6.01 FISCAL YEAR. The fiscal year of the Trust and of each
Series of the Trust shall end on August 31 of each year; provided that the last
fiscal year of the Trust and each Series shall end on the date on which the
Trust or each such Series is terminated, as applicable; and further provided
that the Trustees by resolution and without a Shareholder vote may at any time
change the fiscal year of the Trust and of any or all Series (and the Trust and
each Series may have different fiscal years as determined by the Trustees).
SECTION 6.02 REGISTERED OFFICE AND REGISTERED AGENT. The initial
registered office of the Trust in the State of Delaware shall be located at 1201
North Market Street, P.O. Box 1347, Wilmington, Delaware 19899-1347. The
registered agent of the Trust at such location shall be Delaware Corporation
Organizers, Inc.; provided that the Trustees by resolution and without a
Shareholder vote may at any time change the Trust's registered office or its
registered agent, or both.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and regulations
the accounts and books of the Trust or any of them shall be open to the
inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees or by resolution of the Shareholders.
- 6 -
<PAGE>
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any Covered
Person (as defined in Section 10.02 of the Trust Instrument) or employee of the
Trust, including any Covered Person or employee of the Trust who is or was
serving at the request of the Trust as a Trustee, officer or employee of a
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and claimed by him in any such capacity or
arising out of his status as such, whether or not the Trustees would have the
power to indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance that
protects or purports to protect any Trustee or officer of the Trust against any
liability to the Trust or its Shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE IX
SEAL
The seal of the Trust shall be circular in form bearing the inscription:
"THE RAMIREZ TRUST, JUNE 30, 1998
THE STATE OF DELAWARE"
ARTICLE X
AMENDMENTS
These Bylaws may be amended from time to time by action of the
Trustees, without requirement for the vote or approval of shareholders.
- 7 -
<PAGE>
TABLE OF CONTENTS
ARTICLE I
PRINCIPAL OFFICE...............................................................1
ARTICLE II
OFFICERS AND THEIR ELECTION....................................................1
Section 2.01 Officers.................................................1
Section 2.02 Election of Officers.....................................1
Section 2.03 Resignations.............................................1
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES.....................................1
Section 3.01 Management of the Trust..................................1
Section 3.02 Executive And Other Committees...........................2
Section 3.03 Compensation.............................................2
Section 3.04 Chairman Of The Trustees.................................2
Section 3.05 President................................................2
Section 3.06 Treasurer................................................2
Section 3.07 Secretary................................................3
Section 3.08 Vice President...........................................3
Section 3.09 Assistant Treasurer......................................3
Section 3.10 Assistant Secretary......................................3
Section 3.11 Subordinate Officers.....................................3
Section 3.12 Surety Bonds.............................................3
Section 3.13 Removal..................................................3
Section 3.14 Remuneration.............................................4
ARTICLE IV
SHAREHOLDERS' MEETINGS.........................................................4
Section 4.01 Special Meetings.........................................4
Section 4.02 Notices..................................................4
Section 4.03 Voting-Proxies...........................................4
Section 4.04 Place of Meeting.........................................5
Section 4.05 Action Without a Meeting.................................5
ARTICLE V
TRUSTEES' MEETINGS.............................................................5
Section 5.01 Special Meetings.........................................5
Section 5.02 Regular Meetings.........................................5
Section 5.03 Quorum...................................................5
Section 5.04 Notice...................................................5
Section 5.05 Place of Meeting.........................................5
Section 5.06 Special Action...........................................6
Section 5.07 Action by Consent........................................6
Section 5.08 Participation in Meetings By Conference Telephone........6
- i -
<PAGE>
ARTICLE VI
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT............................6
Section 6.01 Fiscal Year..............................................6
Section 6.02 Registered Office and Registered Agent...................6
ARTICLE VII
INSPECTION OF BOOKS............................................................6
ARTICLE VIII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES.................................7
ARTICLE IX
SEAL...........................................................................7
ARTICLE X
AMENDMENTS.....................................................................7
- ii -
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this fifteenth day of September, 1998 by and
between THE RAMIREZ TRUST, a Delaware business trust (the "Trust"), on behalf of
its series of funds designated on Schedule A attached hereto (the "Fund") and
RAMIREZ ASSET MANAGEMENT, INC., a New York corporation (the "Investment
Adviser");
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder; and
WHEREAS, the Investment Adviser is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Investment
Advisers Act"), and engages in the business of acting as an investment adviser;
and
WHEREAS, the Trust and the Investment Adviser desire to enter
into an agreement to provide for the management of the assets of the Fund on the
terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Management. The Investment Adviser shall act as investment
adviser for the Trust and shall, in such capacity, supervise the investment and
reinvestment of the cash, securities or other properties comprising the Trust's
assets, subject at all times to the policies and control of the Trust's Board of
Trustees. The Investment Adviser shall give the Trust the benefit of its best
judgment, efforts and facilities in rendering its services as investment
adviser. The Investment Adviser shall, for all purposes herein, be deemed an
independent contractor and shall have, unless otherwise expressly provided or
authorized, no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
2. Duties of Investment Advisor. In carrying out its
obligation under paragraph 1 hereof, the Investment Adviser shall:
(a) supervise and manage all aspects of the Fund's
operations;
(b) provide the Fund or obtain for it, and thereafter
supervise, such executive, administrative, clerical and
shareholder servicing services as are deemed advisable
by the Trust's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material,
tax returns, reports to the Funds' shareholders and
reports to and filings with the Securities and Exchange
Commission, state Blue Sky authorities;
(d) provide the Funds with, or obtain for them, adequate
office space and all necessary office equipment and
services, including telephone service, heat, utilities,
stationery supplies and similar items for the Funds'
principal office;
-2-
<PAGE>
(e) provide the Board of Trustees of the Trust on a regular
basis with financial reports and analyses on the Fund's
operations and the operations of comparable investment
companies;
(f) obtain and evaluate pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Funds, and
whether concerning the individual issuers whose
securities are included in the Funds or the activities
in which they engage, or with respect to securities
which the Investment Adviser considers desirable for
inclusion in the Funds;
(g) determine what issuers and securities shall be
represented in the Funds' portfolio and regularly
report them to the Board of Trustees of the Trust;
(h) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers
and regularly report thereon to the Board of Trustees
of the Trust; and
(i) take, on behalf of the Funds, all actions which appear
to the Funds necessary to carry into effect such
purchase and sale programs and supervisory functions as
aforesaid, including the placing of orders for the
purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Adviser is
responsible for decisions to buy and sell securities for the Funds,
broker-dealer selection, and negotiation of brokerage commission rates. The
Investment Adviser may select Ramirez & Co., Inc. or any other affiliated person
of the Trust or the Investment Adviser to the extent permitted pursuant to the
Trust's procedures for securities transactions with affiliated brokers pursuant
to Section
-3-
<PAGE>
17(e)(2) and Rule 17e-1 under The Investment Company Act. The Investment
Adviser's primary consideration in effecting a security transaction will be
execution at a price that is reasonable and fair compared to the commission, fee
or other remuneration received or to be received by other brokers in connection
with comparable transactions, including similar securities being purchased or
sold on a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular
transaction, the Investment Adviser will take the following into consideration:
the best net price available; the reliability, integrity and financial condition
of the broker-dealer; the size of and difficulty in executing the order; and the
value of the expected contribution of the broker-dealer to the investment
performance of the Fund on a continuing basis. Accordingly, the price to the
Fund in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies and procedures as
the Board of Trustees may determine, the Investment Adviser shall not be deemed
to have acted unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Funds to pay a broker or
dealer that provides brokerage and research services to the Investment Adviser
for the Funds' use an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Investment Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular
-4-
<PAGE>
transaction or the Investment Adviser's overall responsibilities with respect to
the Funds. The Investment Adviser is further authorized to allocate the orders
placed by it on behalf of the Funds to such brokers and dealers who also provide
research or statistical material, or other services to the Funds or the
Investment Adviser for the Fund's use. Such allocation shall be in such amounts
and proportions as the Investment Adviser shall determine and the Investment
Adviser will report on said allocations regularly to the Board of Trustees of
the Trust indicating the brokers to whom such allocations have been made and the
basis therefor.
4. Control by Board of Trustees. Any investment program
undertaken by the Investment Adviser pursuant to this Agreement, as well as any
other activities undertaken by the Investment Adviser on behalf of the Funds
pursuant thereto, shall at all times be subject to any directives of the Board
of Trustees of the Trust.
5. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, the Investment Adviser shall at all times
conform to:
(a) all applicable provisions of the Investment Company
Act and the Investment Advisers Act and any rules and regulations adopted
thereunder as amended; and
(b) the provisions of the Registration Statements of the
Funds under the Securities Act of 1933, as amended, and the Investment Company
Act; and
(c) the provisions of the Trust Instrument of the Trust,
as amended; and
(d) the provisions of the By-laws of the Trust, as
amended; and
(e) any other applicable provisions of state and federal
law.
-5-
<PAGE>
6. Expenses. The expenses connected with the Fund shall be
allocable between the Funds and the Investment Adviser as follows:
(a) The Investment Adviser shall furnish, at its expense
and without cost to the Trust, the services of a President, Secretary and one or
more Vice Presidents of the Funds, to the extent that such additional officers
may be required by the Funds for the proper conduct of its affairs.
(b) The Investment Adviser shall further maintain, at its
expense and without cost to the Fund, a trading function in order to carry out
its obligations under subparagraph (i) of paragraph 2 hereof to place orders for
the purchase and sale of portfolio securities for the Funds.
(c) Nothing in subparagraph (a) hereof shall be construed
to require the Investment Adviser to bear:
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal
financial officer of the Funds whose normal duties consist of
maintaining the financial accounts and books and records of the
Funds; including the reviewing of calculations of net asset value
and preparing tax returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the personnel
operating under the direction of such principal financial
officer. Notwithstanding the obligation of
-6-
<PAGE>
the Funds to bear the expense of the functions referred to in
clauses (i) and (ii) of this subparagraph (c), the Investment
Adviser may pay the salaries, including any applicable employment
or payroll taxes and other salary costs, of the principal
financial officer and other personnel carrying out such functions
and the Fund shall reimburse the Investment Adviser therefor upon
proper accounting.
(d) All of the ordinary business expenses incurred in the
operations of the Funds and the offering of its shares shall be borne by the
Funds unless specifically provided otherwise in this paragraph 6. These expenses
include but are not limited to brokerage commissions, legal, auditing, taxes or
governmental fees, networking servicing costs, fund accounting servicing costs,
administrative servicing costs, fulfillment servicing costs, the cost of
preparing share certificates, custodian, depository, transfer and shareholder
service agent costs, expenses of issue, sale, redemption and repurchase of
shares, expenses of registering and qualifying shares for sale, insurance
premiums on property or personnel (including officers and trustees if available)
of the Funds which inure to its benefit, expenses relating to trustee and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
shareholders.
7. Delegation of Responsibilities. The Investment Adviser may
delegate the performance of certain investment advisory services to a
subadvisor.
-7-
<PAGE>
8. Compensation. The Funds shall pay the Investment Adviser in
full compensation for services rendered hereunder an annual investment advisory
fee, payable monthly, of the percentage of the Fund's average daily net assets
set forth on Schedule A attached hereto. The average daily net asset value of
the Funds shall be determined in the manner set forth in the Registration
Statement of the Funds.
The Investment Adviser may from time to time and for such
periods as it deems appropriate voluntarily reduce its compensation hereunder
(and/or voluntarily assume expenses) for the Funds. The Investment Adviser may,
at any later date, recoup such amounts after such time as the Investment Adviser
is no longer reducing its compensation and/or assuming expenses for the Funds
provided that the aggregate expenses in the year such amounts are recouped do
not exceed any limitation to which the Investment Adviser has agreed.
9. Non-Exclusivity. The services of the Investment Adviser to
the Funds are not to be deemed to be exclusive, and the Investment Adviser shall
be free to render investment advisory and corporate administrative or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers or Partners of the
Investment Adviser may serve as officers or trustees of the Trust, and that
officers or trustees of the Trust may serve as officers or partners of the
Investment Adviser to the extent permitted by law; and that the officers and
partners of the Investment Adviser are not prohibited from engaging in any other
business activity or from rendering
-8-
<PAGE>
services to any other person, or from serving as partners, officers or partners
of any other firm or corporation, including other investment companies.
10. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in force and effect
for two years and thereafter from year to year, provided that such continuance
is specifically approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the
vote of a majority of the Funds' outstanding voting securities (as defined in
Section 2(a)(42) of the Investment Company Act); and
(b) by the affirmative vote of a majority of the Trustees
who are not parties to this Agreement or interested persons of a party to this
Agreement (other than as Trust trustees), by votes cast in person at a meeting
specifically called for such purpose.
11. Termination. This Agreement may be terminated at any time
with respect to any or all Funds, without the payment of any penalty, by vote of
the Trust's Board of Trustees or by vote of a majority of the Funds' outstanding
voting securities, or by the Investment Adviser, on sixty (60) days' written
notice to the other party. The notice provided for herein may be waived by
either party. Termination of this Agreement with respect to one Fund shall not
affect the binding nature of the Agreement on the remaining Funds. This
Agreement shall automatically terminate in the event of its assignment, the term
"assignment" for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
12. Liability of Investment Adviser and Indemnification. In
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties
-9-
<PAGE>
hereunder on the part of the Investment Adviser or any of its officers, trustees
or employees, it shall not be subject to liability to the Trust or to any
shareholder of the Trust for any omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
13. Liability of Trustees and Shareholders. A copy of the
Certificate of Trust of the Trust is on file with the Secretary of State of
Delaware, and notice is hereby given that this instrument is executed on behalf
of the trustees of the Trust as trustees and not individually and that the
obligations of this instrument are not binding upon any of the trustees or
shareholders individually but are binding only upon the assets and property of
the Funds.
14. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of the
Trust and that of the Investment Adviser shall be 61 Broadway, New York, New
York 10006.
15. Questions of Interpretation. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the Investment Company Act
shall be resolved by reference to such term or
-10-
<PAGE>
provision of the Act and to interpretations thereof, if any, by the United
States Courts or in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of the
Investment Company Act reflected in any provision of this Agreement is released
by rules, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers on the day
and year first above written.
THE RAMIREZ TRUST,
Attest: By: /s/John Kick
------------
John Kick, Chief Financial Officer
Alexander Vermitsky, Jr., Secretary
RAMIREZ ASSET MANAGEMENT,
INC.
Attest:
By: /s/ Samuel A. Ramirez
---------------------
Samuel A. Ramirez, Chairman
Alexander Vermitsky, Jr.
-11-
<PAGE>
SCHEDULE A
The Ramirez Trust:
- ------------------
Advisory Fee
================================================================================
Ramirez Cash Management Money Market 0.35% Average Daily Net Assets
Fund
- --------------------------------------------------------------------------------
Ramirez New York Tax-Free Money 0.35% Average Daily Net Assets
Market Fund
- --------------------------------------------------------------------------------
Ramirez U.S. Treasury Money Market 0.35% Average Daily Net Assets
Fund
================================================================================
-12-
DISTRIBUTION AGREEMENT
BETWEEN
THE RAMIREZ TRUST
AND
RAMIREZ & CO., INC.
THIS AGREEMENT made this 15th day of September, 1998, by and
between THE RAMIREZ TRUST, a Delaware business trust (hereinafter referred to as
the "Trust"), on behalf of each of its series and classes listed on Schedule A,
and RAMIREZ & CO., INC. (hereinafter referred to as the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
FIRST: The Trust hereby appoints the Distributor as its
underwriter to promote the sale and to arrange for the sale of shares of
beneficial interest of the Trust to the public through its sales representatives
and to investment dealers. In addition, the Distributor may receive payment for
certain distribution expenses pursuant to any Rule 12b-1 distribution plan
adopted by the Trust.
<PAGE>
The Trust agrees to sell and deliver its shares, upon the
terms hereinafter set forth, as long as it has unissued and/or treasury shares
available for sale.
SECOND: The Trust hereby authorizes the Distributor, subject
to law and the organizational documentation of the Trust, to accept, for the
account of the Trust, orders for the purchase of its shares, satisfactory to the
Distributor, as of the time of receipt of such orders by the dealer or as
otherwise described in the then current Prospectus of the Trust.
THIRD: The Trust will determine the net asset value of its
shares of each series once daily as of the close of trading on The New York
Stock Exchange on each day that the Exchange is open for business. It is
expected that the Exchange will be closed on Saturdays and Sundays and on New
Year's Day, Reverend Martin Luther King Jr. Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value of a series is determined by dividing the market value of
such series as of the close of trading plus any cash or other assets (including
dividends receivable and accrued interest) less all liabilities (including
accrued expenses) by the number of shares of the series outstanding. Securities
will be valued according to the Securities Valuation Procedures of the Trust.
FOURTH: The Distributor agrees to devote reasonable time and
effort to enlist investment dealers and otherwise promote the sale and
distribution and act as Distributor for the sale and distribution of the shares
of the Trust as such arrangements may profitably be made; but so long as it does
so, nothing herein contained shall prevent the Distributor from
<PAGE>
entering into similar arrangements with other funds and to engage in other
activities. The Trust reserves the right to issue shares in connection with any
merger or consolidation of the Trust with any other investment company or any
personal holding company or in connection with offers of exchange exempted from
Section 22(a) of the Investment Company Act of 1940.
FIFTH: Upon receipt by the Trust at its principal place of
business of a written order from the Distributor, together with delivery
instructions, the Trust shall, as promptly as practicable, cause certificates
for the shares called for in such order to be delivered or credited in such
amounts and in such names as shall be specified by the Distributor, against
payment therefor in such manner as may be acceptable to the Trust.
SIXTH: All sales literature and advertisements used by the
Distributor in connection with sales of the shares of the Trust shall be subject
to the approval of the Trust. The Trust authorizes the Distributor in connection
with the sale or arranging for the sale of its shares to give only such
information and to make only such statement or representations as are contained
in the current Prospectus and Statement of Additional Information or in sales
literature or advertisements approved by the Trust or in such financial
statements and reports as are furnished to the Distributor pursuant to this
Agreement. The Trust shall not be responsible in any way for any information,
statements or representations given or made by the Distributor or its
representatives or agents other than such information, statements and
representations contained in the then current Prospectus and Statement of
Additional Information.
<PAGE>
SEVENTH: The Distributor as agent of the Trust is authorized,
subject to the direction of the Trust, to accept shares for redemption at their
net asset value, determined as prescribed in the then current prospectus of the
Trust.
EIGHTH: The Trust shall bear:
(A) the expenses related to the sale of the shares in
connection with such public offerings in such states as shall be selected by the
Distributor and of continuing the qualification therein until the Distributor
notifies the Trust that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
NINTH: The Distributor shall bear:
(A) the expenses of printing and distributing prospectuses and
statements of additional information (other than those prospectuses and
statements of additional information required by applicable laws and regulations
to be distributed to the shareholders by the Trust and pursuant to any Rule
12b-1 distribution plan), and any other promotional or sales literature which
are used by the Distributor or furnished by the Distributor to purchasers or
dealers in connection with the Distributor's activities pursuant to this
Agreement; and
(B) expenses of any advertising used by the Distributor in
connection with such public offering.
<PAGE>
TENTH: The Distributor will accept orders for shares of the
Trust only to the extent of purchase orders actually received and not in excess
of such orders, and it will not avail itself of any opportunity of making a
profit by expediting or withholding orders.
ELEVENTH: The Trust shall keep the Distributor fully informed
with regard to its affairs, shall furnish the Distributor with a certified copy
of all financial statements, and a signed copy of each report, prepared by
independent public accountants, and with such reasonable number of printed
copies of each quarterly, semi-annual and annual report of the Trust as the
Distributor may request, and shall cooperate fully in the efforts of the
Distributor to sell and arrange for the sale of its shares and in the
performance by the Distributor of all its duties under this Agreement.
TWELFTH: The Trust agrees to register, from time to time as
necessary, additional shares with the Securities and Exchange Commission, state
and other regulatory bodies and to pay the related filing fees therefor and to
file such amendments, reports and other documents as may be necessary in order
that there may be no untrue statement of a material fact in the Registration
Statement, Prospectus or necessary in order that there may be no omission to
state a material fact therein necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. As
used in this Agreement, the term "Registration Statement" shall mean from time
to time the Registration Statement most recently filed by the Trust with the
Securities and Exchange Commission and effective under the Securities Act of
1933, as amended, as such Registration Statement is amended at such time, and
the term "Prospectus" shall mean for the purposes of this Agreement from time to
time the form of prospectus and statement of additional information authorized
by the Trust for use by the Underwriter and by dealers.
<PAGE>
THIRTEENTH:
(A) The Trust and the Distributor shall each comply with all
applicable provisions of the Investment Company Act of 1940, the Securities Act
of 1933, and of all other Federal and state laws, rules and regulations
governing the issuance and sale of shares of the Trust.
(B) In absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Distributor, the Trust agrees to indemnify the Distributor against any
and all claims, demands, liabilities and expenses which the Distributor may
incur under the Securities Act of 1933, or common law or otherwise, arising out
of or based upon any alleged untrue statement of a material fact contained in
any registration statement, statement of additional information or prospectus of
the Trust, or any omission to state a material fact therein, the omission of
which makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with information furnished
to the Trust in connection therewith by or on behalf of the Distributor. The
Distributor agrees to indemnify the Trust against any and all claims, demands,
liabilities and expenses which the Trust may incur arising out of or based upon
any act or deed of sales representatives of the Distributor which is outside the
scope of their authority.
<PAGE>
(C) The Distributor agrees to indemnify the Trust against any
and all claims, demands, liabilities and expenses which the Trust may incur
under the Securities Act of 1933, or common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in any
registration statement, or Prospectus of the Trust, or any omission to state a
material fact therein if such statement or omission was made in reliance upon,
and in conformity with, information furnished to the Trust in connection
therewith by or on behalf of the Distributor.
FOURTEENTH: Nothing herein contained shall require the Trust
to take any action contrary to any provision of its trust agreement or to any
applicable statute or regulation.
FIFTEENTH: This Agreement has been approved by the Trustees of
the Trust and shall become effective at the close of business on the date
hereof, and shall remain in effect for two years from the date hereof and shall
continue in force and effect for successive annual periods thereafter, provided
that such continuance is specifically approved at least annually (a)(i) by the
Board of Trustees of the Trust, or (ii) by vote of a majority of the Trust's
outstanding voting securities (as defined in Section 2(a)(42) of the Investment
Company Act), and (b) by vote of a majority of the Trust's Trustees who are not
interested persons (as defined in Section 2(a)(19) of the Investment Company
Act) of the Distributor by votes cast in person at a meeting called for such
purpose.
<PAGE>
SIXTEENTH: A copy of the Certificate of Formation of the Trust
is on file with the Secretary of the State of Delaware, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Trust.
SEVENTEENTH:
(A) This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Trust, or by the
Distributor, on sixty (60) days written notice to the other party.
(B) This Agreement shall automatically terminate in the event
of its assignment, the term "assignment" for this purpose having the meaning
defined in Section 2(a)(4) of the Investment Company Act.
EIGHTEENTH: Any notice under this Agreement shall be in
writing, addressed and delivered, or mailed, postage paid, to the other party at
such address as such other party may designate for the receipt of such notices.
Until further notice to the other party, it is agreed that the address of the
Trust shall be 61 Broadway, New York, New York 10006 and the address of the
Distributor shall be 61 Broadway, New York, New York 10006.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed in duplicate on the day and year first above written.
ATTEST: THE RAMIREZ TRUST,
on behalf of each of its series listed on
Schedule A
/s/ John Kick By: /s/ Samuel A. Ramirez
- ---------------------------------- -------------------------------
John Kick, Chief Financial Officer Samuel A. Ramirez, Chairman
ATTEST: RAMIREZ ASSET MANAGEMENT, INC.
/s/ John Kick By: /s/ Alexander Vermitsky, Jr.
- ---------------------------------- ----------------------------
John Kick, Chief Financial Officer Alexander Vermitsky, Jr.,
Secretary
<PAGE>
SCHEDULE A
Ramirez Cash Management Money Market Fund
Ramirez New York Tax-Free Money Market Fund
Ramirez U.S. Treasury Money Market Fund
FORM OF CUSTODIAN AGREEMENT
THIS AGREEMENT made on this fifteenth day of September, 1998,
between The RAMIREZ TRUST, a Delaware business trust consisting of three funds:
The Ramirez Cash Management Money Market Fund, The Ramirez New York Tax-Free
Money Market Fund, The Ramirez U.S. Treasury Money Market Fund, (hereinafter
called the ("Funds"), and FIRSTAR TRUST COMPANY, a corporation organized under
the laws of the State of Wisconsin (hereinafter called "Custodian"),
WHEREAS, the Funds desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Funds and Custodian agree as follows:
1. DEFINITIONS
The word "securities" as used herein includes stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the Funds by any two
of the President, a Vice President, the Secretary and the Treasurer of the
Funds, or any other persons duly authorized to sign by the Board of Trustees.
The word "Board" shall mean Board of Trustees of The RAMIREZ
TRUST.
2. NAMES, TITLES, AND SIGNATURES OF THE FUNDS' OFFICERS
An officer of the Funds will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Trustees, together with any changes which may occur from time to time.
ADDITIONAL SERIES. THE RAMIREZ TRUST is authorized to issue
separate Series of shares of beneficial interest representing interests in
separate investment portfolios. The parties intend that each portfolio
established by the Trust, now or in the future, be covered by the terms and
conditions of this agreement.
<PAGE>
3. RECEIPT AND DISBURSEMENT OF MONEY
A. Custodian shall open and maintain a separate account or
accounts in the name of the Funds, subject only to draft or order by Custodian
acting pursuant to the terms of this Agreement. Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Funds. Custodian shall make payments of cash to,
or for the account of, the Funds from such cash only:
(a) for the purchase of securities for the portfolio of the
Funds upon the delivery of such securities to Custodian,
registered in the name of the Funds or of the nominee of
Custodian referred to in Section 7 or in proper form for
transfer;
(b) for the purchase or redemption of shares of beneficial
interest of the Funds upon delivery thereof to Custodian,
or upon proper instructions from The Ramirez Trust;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing
and custodian services and expenses for printing and
postage);
(d) for payments in connection with the conversion, exchange
or surrender of securities owned or subscribed to by the
Funds held by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by
resolution of the Board of Trustees of the Funds.
Before making any such payment, Custodian shall receive (and may
rely upon) an officers' certificate requesting such payment and stating that it
is for a purpose permitted under the terms of items (a), (b), (c), or (d) of
this Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom such payment
is to be made, provided, however, that an officers' certificate need not precede
the disbursement of cash for the purpose of purchasing a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Funds issues
appropriate oral or facsimile instructions to Custodian and an appropriate
officers' certificate is received by Custodian within two business days
thereafter.
B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by Custodian
for the account of the Funds.
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<PAGE>
C. Custodian shall, upon receipt of proper instructions, make
federal fund available to the Funds as of specified times agreed upon from time
to time by the Funds and the custodian in the amount of checks received in
payment for shares of the Funds which are deposited into the Funds' account.
4. SEGREGATED ACCOUNTS
Upon receipt of proper instructions, the Custodian shall
establish and maintain a segregated account(s) for and on behalf of the
portfolio, into which account(s) may be transferred cash and/or securities.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES
Custodian shall have sole power to release or deliver any
securities of the Funds held by it pursuant to this Agreement. Custodian agrees
to transfer, exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Funds
upon receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or
otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities
alone or other securities and cash whether pursuant to any
plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their terms
into other securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock
of the Funds upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
3
<PAGE>
As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f), and (g), securities or cash receivable in exchange therefore
shall be deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian
shall receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose permitted
under the terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this
Section 5 and also, in respect of item (i), upon receipt of an officers'
certificate specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made, provided, however, that an officers' certificate need
not precede any such transfer, exchange or delivery of a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Funds issues
appropriate oral or facsimile instructions to Custodian and an appropriate
officers' certificate is received by Custodian within two business days
thereafter.
6. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and other
income items held by it for the account of the Funds, which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Funds; (b) collect interest and cash dividends received, with
notice to the Funds, for the account of the Funds; (c) hold for the account of
the Funds hereunder all stock dividends, rights and similar securities issued
with respect to any securities held by it hereunder; and (d) execute, as agent
on behalf of the Funds, all necessary ownership certificates required by the
Internal Revenue Code or the Income Tax Regulations of the United States
Treasury Department or under the laws of any state now or hereafter in effect,
inserting the Funds' name on such certificates as the owner of the securities
covered thereby, to the extent it may lawfully do so.
7. REGISTRATION OF SECURITIES
Except as otherwise directed by an officers' certificate,
Custodian shall register all securities, except such as are in bearer form, in
the name of a registered nominee of Custodian as defined in the Internal Revenue
Code and any Regulations of the Treasury Department issued hereunder or in any
provision of any subsequent federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. Custodian shall use its best efforts
to the end that the specific securities held by it hereunder shall be at all
times identifiable in its records.
The Funds shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Funds and which may
4
<PAGE>
from time to time be registered in the name of the Funds.
8. VOTING AND OTHER ACTION
Neither Custodian nor any nominee of Custodian shall vote any of
the securities held hereunder by or for the account of the Funds, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Funds), but without
indicating the manner in which such proxies are to be voted.
9. TRANSFER TAX AND OTHER DISBURSEMENTS
The Funds shall pay or reimburse Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder, and for
all other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement as may
be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exemptable transfers and/or deliveries of
any such securities.
10. CONCERNING CUSTODIAN
Custodian shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in Exhibit A attached hereto. If the Fund elects to
terminate this Agreement prior to the anniversary of this Agrement, the Fund
agrees to reimburse Agent for the difference between the standard fee schedule
and the discounted fee schedule agreed to between the parties
Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution of the
Board, and may rely on the genuineness of any such document which it may in good
faith believe to have been validly executed.
The Funds agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act
5
<PAGE>
or willful misconduct. Custodian is authorized to charge any account of the
Funds for suchitems.
In the event of any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Funds, or in the event that
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Funds shall be security therefore.
Custodian agrees to indemnify and hold harmless the Funds from all
charges, expenses, assessments, and claims/liabilities (including counsel fees)
incurred or assessed against it in connection with the performance of this
agreement, except such as may arise from the Funds' own negligent action,
negligent failure to act, or willful misconduct.
11. SUBCUSTODIANS
Custodian is hereby authorized to engage another bank or trust
company as a Subcustodian for all or any part of the Funds' assets, so long as
any such bank or trust company is a bank or trust company organized under the
laws of any state of the United States, having an aggregate capital, surplus and
undivided profit, as shown by its last published report, of not less than Two
Million Dollars ($2,000,000) and provided further that, if the Custodian
utilizes the services of a Subcustodian, the Custodian shall remain fully liable
and responsible for any losses caused to the Funds by the Subcustodian as fully
as if the Custodian was directly responsible for any such losses under the terms
of the Custodian Agreement.
Notwithstanding anything contained herein, if the Funds require
the Custodian to engage specific Subcustodians for the safekeeping and/or
clearing of assets, the Funds agree to indemnify and hold harmless Custodian
from all claims, expenses and liabilities incurred or assessed against it in
connection with the use of such Subcustodian in regard to the Funds assets,
except as may arise from their own negligent action, negligent failure to act or
willful misconduct.
12. REPORTS BY CUSTODIAN
Custodian shall furnish the Funds periodically as agreed upon
with a statement summarizing all transactions and entries for the account of
Funds. Custodian shall furnish to the Funds, at the end of every month, a list
of the portfolio securities showing the aggregate cost of each issue. The books
and records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of auditors
employed by, the Funds.
6
<PAGE>
13. TERMINATION OR ASSIGNMENT
This Agreement may be terminated by the Funds, or by Custodian,
on ninety (90) days notice, given in writing and sent by registered mail to
Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Funds at The
RAMIREZ TRUST located at 61 Broadway, New York, N.Y. 10006 as the case may be.
Upon any termination of this Agreement, pending appointment of a successor to
Custodian or a vote of the shareholders of the Funds to dissolve or to function
without a custodian of its cash, securities and other property, Custodian shall
not deliver cash, securities or other property of the Funds to the Funds, but
may deliver them to a bank or trust company of its own selection, having an
aggregate capital, surplus and undivided profits, as shown by its last published
report of not less than Two Million Dollars ($2,000,000) as a Custodian for the
Funds to be held under terms similar to those of this Agreement, provided,
however, that Custodian shall not be required to make any such delivery or
payment until full payment shall have been made by the Funds of all liabilities
constituting a charge on or against the properties then held by Custodian or on
or against Custodian, and until full payment shall have been made to Custodian
of all its fees, compensation, costs and expenses, subject to the provisions of
Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the
consent of the Funds, authorized or approved by a resolution of its Board of
Trustees.
14. DEPOSITS OF SECURITIES IN SECURITIES DEPOSITORIES
No provision of this Agreement shall be deemed to prevent the use
by Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Trustees of the Funds approves by resolution the
use of such central securities clearing agency or securities depository.
15. RECORDS
To the extent that Custodian in any capacity prepares or
maintains any records required to be maintained and preserved by the Funds
pursuant to the provisions of the Investment Company Act of 1940, as amended, or
the rules and regulations promulgated thereunder, Custodian agrees to make any
such records available to the Funds upon request and to preserve such records
for the periods prescribed in Rule 31a-2 under the Investment Company Act of
1940, as amended.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and their respective corporate seals to be affixed hereto as of
the date first above-written by their respective officers thereunto duly
authorized.
Executed in several counterparts, each of which is an original.
THE RAMIREZ TRUST FIRSTAR TRUST COMPANY
By________________________________ By ________________________________
Print: ______________________________ Print: ____________________________
Title: ______________________________ Title: ____________________________
Date: ______________________________ Date:______________________________
Attest:______________________________ Attest: ___________________________
8
<PAGE>
EXHIBIT A
MUTUAL FUND CUSTODIAL AGENT SERVICE
DOMESTIC PORTFOLIOS
ANNUAL FEE SCHEDULE
o The Samuel A. Ramirez Funds
o Annual fee based on market value of assets:
o .00015 (1.5 basis points)
o Minimum Annual fee per fund: $3,000
o Investment transactions: (purchase, sale, exchange, tender, redemption,
maturity, receipt delivery)
o $12.00 per book entry security (depository or Federal Reserve system)
o $25.00 per definitive security (physical)
o $75.00 per Euroclear
o $8.00 per principal reduction on pass-through certificates
o $35.00 per option/future contracts
o Variable Amount Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which is
1/4 of 1%, is deducted from the variable amount note income at the time it
is credited to your account
o Extraordinary expenses: Based on time and complexity involved
o Out-of-pocket expenses: Charged to the account, including but not limited
to:
o $10.00 per variation margin transaction
o $10.00 per Fed wire deposit or withdrawal
o Fees are billed monthly, based on market value at the beginning of the
month
9
THE RAMIREZ TRUST
SHAREHOLDER SERVICING PLAN
This Shareholder Servicing Plan (the "Plan") is adopted by The Ramirez
Trust, a business trust organized under the laws of Delaware (the "Trust"), on
behalf of the shares of each of its Funds (individually, a "Fund", and
collectively, the "Funds") as set forth in Schedule I, as amended from time to
time, subject to the following terms and conditions:
SECTION 1. ANNUAL FEES.
Shareholder Services Fee. The shares of a Fund may pay to the
distributor of its shares (the "Distributor") or financial institutions that
provide certain services to the shares of the Fund, a shareholder services fee
under the Plan at the annual rate of 0.15% of the average daily net assets of
such shares of the Fund (the "Services Fee").
Adjustment to Fees. Any Fund may pay a Services Fee to the Distributor
or financial institution at a lesser rate than the fees specified in Section 1
hereof as agreed upon by the Board of Trustees and each Distributor or financial
institution and approved in the manner specified in Section 3 of this Plan.
Payment of Fees. The Services Fees will be calculated daily and paid
monthly by the shares of the Fund at the annual rates indicated above.
SECTION 2. EXPENSES COVERED BY THE PLAN.
Services Fees may be used by the Distributor or financial institution
for payments to financial institutions and persons who provide administrative
and support services to their customers who may from time to time beneficially
own shares, which may include: (i) establishing and maintaining accounts and
records relating to shareholders; (ii) processing dividend and distribution
payments from the Fund on behalf of shareholders; (iii) providing information
periodically to shareholders showing their positions in shares and integrating
such statements with those of other transactions and balances in shareholders'
other accounts serviced by such financial institution; (iv) arranging for bank
wires; (v) responding to shareholder inquiries relating to the services
performed; (vi) responding to routine inquiries from shareholders concerning
their investments; (vii) providing subaccounting with respect to shares
beneficially owned by shareholders, or the information to the Fund necessary for
subaccounting; (viii) if required by law, forwarding shareholder communications
from the Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to
shareholders; (ix) assisting in processing purchase, exchange and redemption
requests from shareholders and in placing such orders with service contractors;
(x) assisting shareholders in changing dividend options, account designations
and addresses; (xi) providing shareholders with a service that invests the
assets of their accounts in shares pursuant to specific or pre-authorized
instructions; and (xii) providing such other similar services as the Fund may
reasonably request to the extent the Distributor or financial institution is
permitted to do so under applicable statutes, rules and regulations.
<PAGE>
SECTION 3. APPROVAL OF TRUSTEES.
Neither the Plan nor any related agreements will take effect until
approved by a majority of both (a) the full Board of Trustees of the Trust and
(b) those 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 any
agreements related to it (the "Disinterested Trustees"), cast in person at a
meeting called for the purpose of voting on the Plan and the related agreements.
SECTION 4. CONTINUANCE OF THE PLAN.
The Plan will continue in effect until two years from the date of
effectiveness as it pertains to the shares of the Fund, and thereafter for
successive twelve-month periods; provided, however, that such continuance is
specifically approved at least annually by the Trustees of the Fund and by a
majority of the Disinterested Trustees.
SECTION 5. TERMINATION.
The Plan may be terminated at any time with respect to the shares of
the Fund (i) by the Fund without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the shares of the Fund or (ii)
by a vote of the Disinterested Trustees. The Plan may remain in effect with
respect to the shares of the Fund even if the Plan has been terminated in
accordance with this Section 5 with respect to any other Fund.
SECTION 6. AMENDMENTS.
No material amendment to the Plan may be made unless approved by the
Trust's Board of Trustees in the manner described in Section 3 above.
SECTION 7. LIMIT OF LIABILITY.
The obligations of the Funds under this Plan, if any, shall not be
binding upon the Trustees individually or upon holders of shares of the Funds
individually but shall be binding only upon the assets and property of the
Funds.
SECTION 8. MEANINGS OF CERTAIN TERMS.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the Investment Company Act of 1940, as amended, by the
Securities and Exchange Commission.
Approved: September 15, 1998
2
<PAGE>
SCHEDULE I
This Ramirez Fund Servicing Plan shall be adopted with respect to the
shares of the following Funds of The Ramirez Trust:
Funds
The Ramirez Cash Management Money Market Fund
The Ramirez New York Tax-Free Fund
The Ramirez U.S. Treasury Money Market Fund
<PAGE>
FORM OF SHAREHOLDER SERVICING AGREEMENT
THE RAMIREZ TRUST
C/O RAMIREZ ASSET MANAGEMENT, INC.
61 BROADWAY
NEW YORK, NY
To: Ramirez & Co., Inc.
We (the "Trust") wish to enter into this Servicing Agreement with you
concerning the provision of support services to your client ("Clients") who may
from time to time beneficially own shares ("Shares") of the Funds (the "Funds")
offered by us.
The terms and conditions of this Servicing Agreement are as follows:
SECTION 1. You agree to provide the following support services to
Clients who may from time to time beneficially own Shares:/1/ (i) establishing
and maintaining accounts and records relating to Clients that invest in Shares;
(ii) processing dividend and distribution payments from us on behalf of Clients;
(iii) providing information periodically to Clients showing their positions in
Shares and integrating such statements with those of other transactions and
balances in Clients' other accounts serviced by you; (iv) arranging for bank
wires; (v) responding to Client inquiries relating to the services performed by
you; (vi) responding to routine inquiries from Clients concerning their
investments in Shares; (vii) providing subaccounting with respect to Shares
beneficially owned by Clients, or the information to us necessary for
subaccounting; (viii) if required by law, forwarding shareholder communications
from us (such as proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to Clients; (ix)
assisting in processing purchase, exchange and redemption requests from Clients
and in placing such orders with our service contractors; (x) assisting Clients
in changing dividend options, account designations and addresses; (xi) providing
Clients with a service that invests the assets of their accounts in Shares
pursuant to specific or pre-authorized instructions; and (xii) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules and regulations.
SECTION 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
services and assistance to Clients.
SECTION 3. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the Shares except
those contained in our then current Prospectuse and Statement of Additional
Information, copies of which will be supplied by us to you, or in such
supplemental literature or advertising as may be authorized by us in writing.
- --------
/1/ Series may be modified or omitted in the particular case and items
renumbered.
<PAGE>
SECTION 4. For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for us in
any matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions, or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of Shares (or orders relating to the same) by or on
behalf of Clients. You and your employees will, upon request, be available
during normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
SECTION 5. In consideration of the services and facilities provided by
you hereunder, we will pay to you, and you will accept as full payment therefor,
a fee at the annual rate of __ one-hundredths of one percent (.__%) of the
average daily net asset value of the Shares beneficially owned by your Clients
for whom you are the dealer of record or holder of record or with whom you have
a servicing relationship (the "Clients' Shares"), which fee will be computed
daily (on the basis of 365-day year) and payable monthly. For purposes of
determining the fees payable under this Section 5, the average daily net asset
value of the Clients' Shares will be computed in the manner specified in our
Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of Shares for purposes of
purchases and redemptions. By your written acceptance of this Agreement, you
agree to and do waive such portion of any fee payable to you hereunder to the
extent necessary to assure that such fee and other expenses required to be
accrued by us on any day with respect to the Clients' Shares in any Fund that
declares its net investment income as a dividend to shareholders on a daily
basis does not exceed the income to be accrued by us to such Shares on that day.
The fee rate stated above may be prospectively increased or decreased by us, in
our sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of Shares, including
the sale of Shares to you for the account of any Client or Clients.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by us pursuant to this Agreement will provide to our Board of
Trustees, and our trustees will review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
In addition, you will furnish us or our designees with such information as we or
they may reasonably request (including, without limitation, periodic
certifications confirming the provision to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Trustees concerning this Agreement and
the monies paid or payable by us pursuant hereto, as well as any other reports
or filings that may be required by law.
SECTION 7. We may enter into other similar Servicing Agreements with
any other person or persons without your consent.
SECTION 8. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) the compensation payable to you in connection with
the investment of your Clients' assets in Shares will be disclosed by you to
your Clients, will be authorized by your
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Clients and will not be excessive; and (ii) the services provided by you under
this Agreement will in no event be primarily intended to result in the sale of
Shares.
SECTION 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. This
Agreement is terminable without penalty at any time by us (which termination may
be by a vote of a majority of the Disinterested Trustees as defined in Section
12) or by you upon written notice to the other party hereto.
SECTION 10. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunication device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
SECTION 11. This Agreement will be construed in accordance with the
laws of the State of New York and is non-assignable by the parties hereto.
SECTION 12. This Agreement has been approved by vote of a majority of
(i) our Board of Trustees and (ii) those Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) of us and have no
direct or indirect financial interest in this Agreement ("Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on such
approval.
SECTION 13. The names "The Ramirez Trust" and the "Board of Trustees"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Certificate of
Trust filed at the office of the State Secretary of Delaware on June 30, 1998.
The obligations of "The Ramirez Trust" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually but in such capacities, and are not binding upon any of the
Trustees, Shareholders or representatives of the Trust personally, but bind only
the Trust Property (as defined in the Declaration of Trust), and all persons
dealing with any class of Shares of our must look solely to the Trust Property
belonging to such class for the enforcement of any claims against us.
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If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, c/o Ramirez Asset Management, 61 Broadway, New York, New York 10006.
Very truly yours,
THE RAMIREZ TRUST
Date: September 15, 1998 By: /s/John Kick
----------------
John Kick
Title: Chief Financial Officer
Accepted and Agreed to: Ramirez & Co.,
Inc.
Date: September 15, 1998 By: /s/Samuel A. Ramirez
---------------------
Samuel A. Ramirez
Title: President
4
FORM OF FUND ADMINISTRATION SERVICING AGREEMENT
This Agreement is made and entered into on this fifteenth day of September,
1998, by and between THE RAMIREZ TRUST (hereinafter referred to as the "Funds")
and Firstar Trust Company, a corporation organized under the laws of the State
of Wisconsin (hereinafter referred to as "FTC").
WHEREAS, The Funds are an open-ended management investment companies which are
registered under the Investment Company Act of 1940;
WHEREAS, FTC is a trust company and, among other things, is in the business of
providing fund administration services for the benefit of its customers;
NOW, THEREFORE, the Funds and FTC do mutually promise and agree as follows:
I. Appointment of Administrator
The Funds hereby appoints FTC as Administrator of the Funds on the terms
and conditions set forth in this Agreement, and FTC hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
II. Duties and Responsibilities of FTC
A. General Funds Management
1. Act as liaison among all fund service providers
2. Coordinate board communication by:
a. Assisting fund counsel in establishing meeting agendas
b. Preparing board reports based on financial and
administrative data
c. Evaluating independent auditor
d. Securing and monitoring fidelity bond and director and
officers liability coverage, and making the necessary SEC
filings relating thereto
3. Audits
a. Prepare appropriate schedules and assist independent
auditors
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
<PAGE>
4. Assist in overall operations of the Funds
B. Compliance
1. Regulatory Compliance
a. Periodically monitor compliance with Investment Company Act
of 1940 requirements
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of ethics for the independent trustees
b. Periodically monitor Funds' compliance with the policies and
investment limitations of the Funds as set forth in its
prospectus and statement of additional information
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings relating
to the registration of the securities of the Funds so as to
enable the Funds to make a continuous offering of its shares
b. Monitor status and maintain registrations in each state
3. SEC Registration and Reporting
a. Assisting the Funds' counsel in updating prospectus and
statement of additional information; and in preparing proxy
statements, and Rule 24f-2 notice,
b. Annual and semiannual reports
4. IRS Compliance
a. Periodically monitor the Funds' status as a regulated
investment company under Subchapter M through review of the
following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short short testing
c. Calculate required distributions (including excise tax
distributions)
<PAGE>
C. Financial Reporting
1. Provide financial data required by the fund's prospectus and
statement of additional information
2. Prepare financial reports for shareholders, the board, the SEC,
and independent auditors
3. Supervise the Funds' Custodian and Funds Accountants in the
maintenance of the Funds' general ledger and in the preparation
of the Funds' financial statements including oversight of expense
accruals and payments, of the determination of net asset value of
the Funds' net assets and of the Funds' shares, and of the
declaration and payment of dividends and other distributions to
shareholders
D. Tax Reporting
1. Prepare and file on a timely basis appropriate federal and state
tax returns including forms 1120/8610 with any necessary
schedules
2. Prepare state income breakdowns where relevant
3. File 1099 Miscellaneous for payments to directors and other
service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate shareholders
III. Compensation
The Funds agree to pay FTC for performance of the duties listed in this
Agreement and the fees and out-of-pocket expenses as set forth in the
attached Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Funds and FTC.
The Funds agree to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
IV. Additional Series
In the event that The Ramirez Trust a Delaware business trust which is
organized as a
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series fund currently offering three fund: The Ramirez Cash Management
Money Market Fund, The Ramirez New York Tax-Free Money Market Fund and The
Ramirez U.S. Treasury Money Market Fund, establishes one or more series of
shares with respect to which it desires to have FTC render fund
administration services, under the terms hereof, it shall so notify FTC in
writing, and if FTC agrees in writing to provide such services, such series
will be subject to the terms and conditions of this Agreement, and shall be
maintained and accounted for by FTC on a discrete basis. The fund currently
covered by this Agreement is: The Ramirez Cash Management Money Market
Fund, The Ramirez New York Tax-Free Money Market Fund and The Ramirez U.S.
Treasury Money Market Fund.
V. Performance of Service; Limitation of Liability
A. FTC shall exercise reasonable care in the performance of its duties
under this Agreement. FTC shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds in connection with
matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies
beyond FTC's control, except a loss resulting from FTC's refusal or failure
to comply with the terms of this Agreement or from bad faith, negligence,
or willful misconduct on its part in the performance of its duties under
this Agreement. Notwithstanding any other provision of this Agreement, the
Funds shall indemnify and hold harmless FTC from and against any and all
claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or which may be asserted
against FTC by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder (i) in accordance with the
foregoing standards, or (ii) in reliance upon any written or oral
instruction provided to FTC by any duly authorized officer of the Funds,
such duly authorized officer to be included in a list of authorized
officers furnished to FTC and as amended from time to time in writing by
resolution of the Board of Trustees of the Funds.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FTC shall take all reasonable steps to
minimize service interruptions for any period that such interruption
continues beyond FTC's control. FTC will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such
a breakdown at the expense of FTC. FTC agrees that it shall, at all times,
have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available. Representatives
of the Funds shall be entitled to inspect FTC's premises and operating
capabilities at any time during regular business hours of FTC, upon
reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct
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<PAGE>
administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Funds may be
asked to indemnify or hold FTC harmless, the Funds shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that FTC will use all reasonable
care to notify the Funds promptly concerning any situation which presents
or appears likely to present the probability of such a claim for
indemnification against the Funds. The Funds shall have the option to
defend FTC against any claim which may be the subject of this
indemnification. In the event that the Funds so elects, it will so notify
FTC and thereupon the Funds shall take over complete defense of the claim,
and FTC shall in such situation initiate no further legal or other expenses
for which it shall seek indemnification under this section. FTC shall in no
case confess any claim or make any compromise in any case in which the
Funds will be asked to indemnify FTC except with the Funds' prior written
consent.
C. FTC shall indemnify and hold the Funds harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Funds by any
person arising out of any action taken or omitted to be taken by FTC as a
result of FTC's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
VI. Confidentiality
FTC shall handle, in confidence, all information relating to the Funds'
business which is received by FTC during the course of rendering any
service hereunder.
VII. Data Necessary to Perform Service
The Funds' or its agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at times and in such
form as mutually agreed upon.
VIII. Terms of Agreement
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue automatically
in effect for successive annual periods. The Agreement may be terminated by
either party upon giving ninety (90) days prior written notice to the other
party or such shorter period as is mutually agreed upon by the parties.
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<PAGE>
IX. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
FTC's duties or responsibilities hereunder is designated by the Funds by
written notice to FTC, FTC will promptly, upon such termination and at the
expense of the Funds, transfer to such successor all relevant books,
records, correspondence, and other data established or maintained by FTC
under this Agreement in a form reasonably acceptable to the Funds (if such
form differs from the form in which FTC has maintained, the Funds shall pay
any expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from FTC's personnel in the establishment of
books, records, and other data by such successor.
X. Choice of Law
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin.
XI. Notices
Notices of any kind to be given by either party to the other party shall be
in writing and shall be duly given if mailed or delivered as follows:
Notice to FTC shall be sent to Mutual Funds Services located at 615 East
Michigan Street, Milwaukee, Wisconsin 53202 and notice to the Funds shall
be sent to The Ramirez Trust located at 61 Broadway, New York, N.Y. 10006.
XII. Records
FTC shall keep records relating to the services to be performed hereunder,
in the form and manner, and for such period as it may deem advisable and is
agreeable to the Funds but not inconsistent with the rules and regulations
of appropriate government authorities, in particular, Section 31 of the
Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. FTC agrees that all such records prepared or
maintained by FTC relating to the services to be performed by FTC hereunder
are the property of the Funds and will be preserved, maintained, and made
available with such section and rules of the Investment Company Act and
will be promptly surrendered to the Funds on and in accordance with its
request.
6
<PAGE>
THE RAMIREZ TRUST FIRSTAR TRUST COMPANY
By: __________________________ By: __________________________________
Print: __________________________ Print: _________________________________
Title: __________________________ Title: _________________________________
Date: ___________________________ Date: __________________________________
Attest: _______________________ Attest: ______________________________
7
<PAGE>
EXHIBIT A
FUND ADMINISTRATION AND COMPLIANCE
ANNUAL FEE SCHEDULE
o Minimum annual fee per fund:
- Money Market Funds/Muni Bond Fund = $30,000 each
- Equity Funds = $30,000 each
o 6 basis points (.0006) on the first $200,000,000
o 5 basis points (.0005) on the next $500,000,000
o 3 basis points (.0003) on the balance
o Out-of-Pocket expenses, including, but not limited to:
o Postage
o Stationary
o Programming
o Proxies
o Retention of records
o Special reports
o Federal and state regulatory filing fees
o Certain insurance premiums
o All other out-of-pocket expenses
o Expenses from Board of Directors meetings
o Auditing and legal expenses
o Fees are billed monthly
-------
8
FORM OF TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this fifteenth day of
September, 1998, by and between THE RAMIREZ TRUST a Delaware business trust
consisting of three funds: The Ramirez Cash Management Money Market Fund, The
Ramirez New York Tax-Free Money Market Fund and The Ramirez U.S. Treasury Money
Market Fund (hereinafter referred to as the "Funds") and Firstar Trust Company,
a corporation organized under the laws of the State of Wisconsin (hereinafter
referred to as the "Agent").
WHEREAS, the Funds are open-ended management investment companies which
are registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and, among other things, is in
the business of administering transfer and dividend disbursing agent functions
for the benefit of its customers;
NOW, THEREFORE, the Funds and the Agent do mutually promise and agree
as follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE AGENT
Subject to the terms and conditions set forth in this Agreement, the
Funds hereby employ and appoint the Agent to act as transfer agent and dividend
disbursing agent.
The Agent shall perform all of the customary services of a transfer
agent and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares, with prompt delivery, where
relevant, of payment and supporting documentation to the Fund's
custodian;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated shares
being held in the appropriate shareholder account;
C. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Fund's custodian;
D. Pay monies upon receipt from the Fund's custodian, where relevant in
<PAGE>
accordance with the instructions of redeeming shareholders;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of fund;
G. Issue and/or cancel certificates as instructed; replace lost, stolen
or destroyed certificates upon receipt of satisfactory indemnification
or surety bond;
H. Prepare and transmit payments for dividends and distributions declared
by the Funds;
I. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Funds and maintain, pursuant to
Securities Exchange Act of 1934 Rule 17ad-10(e), a record of the total
number of shares of the Funds which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail, receive
and tabulate proxies;
L. Mail shareholder reports and prospectuses to current shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;
N. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all
purchases, redemptions and other confirmable transactions as agreed
upon with the Funds; and
O. Provide a Blue Sky System which will enable the Funds to monitor the
total number of shares sold in each state. In addition, the Funds
shall identify to the Agent in writing those transactions and assets
to be treated as exempt from the Blue Sky reporting to the Funds for
each state. The responsibility of the Agent for the Funds' Blue Sky
state registration status is solely limited to the initial compliance
by the Funds and the reporting of such transactions to the Funds.
2. COMPENSATION
<PAGE>
The Funds agree to pay the Agent for performance of the duties listed
in this Agreement; the fees and out-of-pocket expenses include, but are not
limited to the following: printing, postage, forms, stationery, record
retention, mailing, insertion, programming, labels, shareholder lists and proxy
expenses. If the Fund elects to terminate this Agreement prior to the
anniversary of this Agreement, the Fund agrees to reimburse Agent for the
difference between the standard fee schedule and the discounted fee schedule
agreed to between the parties.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Funds and the Agent.
The Funds agree to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
3. REPRESENTATIONS OF AGENT
The Agent represents and warrants to the Funds that:
A. It is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the Securities Exchange Act of
1934 as amended.
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement;
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement; and
G. It will comply with all applicable requirements of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended,
the Investment Company Act of 1940, as amended, and any laws, rules,
and regulations of governmental authorities having jurisdiction.
4. REPRESENTATIONS OF THE FUNDS
3
<PAGE>
The Funds represent and warrant to the Agent that:
A. The Funds are open-ended diversified investment companies under the
Investment Company Act of 1940;
B. The Funds are a Delaware business trust organized, existing, and in
good standing under the laws of Delaware;
C. The Funds are empowered under applicable laws and by their Declaration
of Trust and bylaws to enter into and perform this Agreement;
D. All necessary proceedings required by the Declaration of Trust have
been taken to authorize them to enter into and perform this Agreement;
E. The Funds will comply with all applicable requirements of the
Securities Act of 1933, as amended, Securities Exchange Act of 1934,
as amended, the Investment Company Act of 1940, as amended, and any
laws, rules and regulations of governmental authorities having
jurisdiction; and
F. A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect
to all shares of the Funds being offered for sale.
5. COVENANTS OF THE FUNDS AND AGENT
The Funds shall furnish the Agent a certified copy of the resolution of
the Board of Trustees of the Funds authorizing the appointment of the Agent and
the execution of this Agreement. The Funds shall provide to the Agent a copy of
the Declaration of Trust, bylaws of the Funds, and all amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the rules thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the Funds and will be preserved, maintained and
made available in accordance with such section and rules and will be surrendered
to the Funds on and in accordance with their request.
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<PAGE>
6. INDEMNIFICATION; REMEDIES UPON BREACH
The Agent shall exercise reasonable care in the performance of its
duties under this Agreement. The Agent shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Funds in connection
with matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
the Agent's control, except a loss resulting from the Agent's refusal or failure
to comply with the terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, the Funds
shall indemnify and hold harmless the Agent from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable attorneys' fees)
which the Agent may sustain or incur or which may be asserted against the Agent
by any person arising out of any action taken or omitted to be taken by it in
performing the services hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction provided to
the Agent by any duly authorized officer of the Funds, such duly authorized
officer to be included in a list of authorized officers furnished to the Agent
and as amended from time to time in writing by resolution of the Board of
Trustees of the Funds.
Further, the Funds will indemnify and hold the Agent harmless against
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action,
or suit as a result of the negligence of the Funds or the principal underwriter
(unless contributed to by the Agent's breach of this Agreement or other
Agreements between the Funds and the Agent, or the Agent's own negligence or bad
faith); or as a result of the Agent acting upon telephone instructions relating
to the exchange or redemption of shares received by the Agent and reasonably
believed by the Agent under a standard of care customarily used in the industry
to have originated from the record owner of the subject shares; or as a result
of acting in reliance upon any genuine instrument or stock certificate signed,
countersigned, or executed by any person or persons authorized to sign,
countersign, or execute the same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond the Agent's control. The Agent will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such a
breakdown at the expense of the Agent. The Agent agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of the Funds
shall be entitled to inspect the Agent's premises and operating capabilities
5
<PAGE>
at any time during regular business hours of the Agent, upon reasonable notice
to the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Funds may be asked to
indemnify or hold the Agent harmless, the Funds shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Agent will use all reasonable care to notify the
Funds promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the Funds.
The Funds shall have the option to defend the Agent against any claim which may
be the subject of this indemnification. In the event that the Funds so elect,
the Funds will so notify the Agent and thereupon the Funds shall take over
complete defense of the claim, and the Agent shall in such situation initiate no
further legal or other expenses for which it shall seek indemnification under
this section. The Agent shall in no case confess any claim or make any
compromise in any case in which the Funds will be asked to indemnify the Agent
except with the Funds' prior written consent.
The Agent shall indemnify and hold the Funds harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which may be asserted against the Funds by any person arising
out of any action taken or omitted to be taken by the Agent as a result of the
Agent's refusal or failure to comply with the terms of this Agreement, its bad
faith, negligence, or willful misconduct.
7. CONFIDENTIALITY
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Funds and their
shareholders and shall not disclose to any other party, except after prior
notification to and approval in writing by the Funds, which approval shall not
be unreasonably withheld and may not be withheld where the Agent may be exposed
to civil or criminal contempt proceedings for failure to comply after being
requested to divulge such information by duly constituted authorities.
Additional Series. The Ramirez Trust is authorized to issue separate
Series of shares of beneficial interest representing interests in separate
investment portfolios. The parties intend that each portfolio established by the
Trust, now or in the future, be covered by the terms and conditions of this
agreement.
6
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8. RECORDS
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. The Agent agrees that all such records prepared or
maintained by The Agent relating to the services to be performed by The Agent
hereunder are the property of the Funds and will be preserved, maintained, and
made available with such section and rules of the Investment Company Act and
will be promptly surrendered to the Funds on and in accordance with its request.
9. WISCONSIN LAW TO APPLY
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the state of Wisconsin.
10. AMENDMENT, ASSIGNMENT, TERMINATION AND NOTICE
A. This Agreement may be amended by the mutual written consent of the
parties.
B. This Agreement may be terminated upon ninety (90) day's written notice
given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of the
other party.
D. Any notice required to be given by the parties to each other under the
terms of this Agreement shall be in writing, addressed and delivered,
or mailed to the principal place of business of the other party. If to
the agent, such notice should be sent to Firstar Trust Company/Mutual
Funds Services located at 615 East Michigan Street, Milwaukee,
Wisconsin 53202. If to the Funds, such notice should be sent to: The
Ramirez Trust located at 500 Fifth Avenue, New York, N.Y. 10110.
E. In the event that the Funds give to the Agent their written intention
to terminate and appoint a successor transfer agent, the Agent agrees
to cooperate in the transfer of its duties and responsibilities to the
successor, including any and all relevant books, records and other
data established or maintained by the Agent under this Agreement.
7
<PAGE>
F. Should the Funds exercise their right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
paid by the Funds.
THE RAMIREZ TRUST FIRSTAR TRUST COMPANY
By: _____________________________ By: ______________________________
Print:_____________________________
Print:____________________________
Title:____________________________
Title:____________________________
Date:_____________________________
Date:_____________________________
Attest: _________________________ Attest: ____________________________
Assistant Secretary
- -
<PAGE>
EXHIBIT A
SHAREHOLDER ACCOUNTING SERVICES
LOAD FUNDS
ANNUAL FEE SCHEDULE
o Greater of the shareholders account fee or annual minimum
o $20.00 per Taxable or Tax Exempt Money Market Fund Shareholders Account
o $16.00 per Bond or Equity Funds' Shareholders account
OR
o Annual Minimum Fee of $22,000 for the New York Tax Exempt Money Market Fund
o Annual Minimum Fee of $22,000 for the Taxable Money Market Fund
o Annual Minimum Fee of $14,000 per Bond or Equity Fund
o Plus out-of-pocket expenses, including but not limited to:
o Telephone-toll-free lines
o Postage
o Programming
o Stationery/envelopes
o Mailing
o Insurance
o Proxies
o Retention of records
o Microfilm/fiche of records
o Special reports
o All other out-of-pocket expenses
o ACH fees
o Fees are billed monthly
- -
<PAGE>
Exhibit B
SHAREHOLDER ACCOUNTING SERVICES
AUTOMATIC INVESTMENT PLAN PROCESSING
ACH SERVICE
o Automatic Investment Plan
o Telephone Purchase, Liquidation
o EFT Payments of Dividends, Capital Gains, SWP's
o $125.00 per month
o $0.50 per account set-up and/or change
o $0.50 per item for EFT payments, purchases
o $3.50 per correction, reversal, or return item
o $0.50 per item for AIP Purchases
o Fees are billed monthly
- -
<PAGE>
Exhibit C
SHAREHOLDER FEES
(CHARGED TO INVESTORS)
I. Qualified Plan Fees IRA ACCOUNTS Defined Contribution
403(b)(7), 401(k)
PLAN ACCOUNTS
Annual Maintenance fee per account $12.50 $12.50
Transfer Successor trustee $15.00 $15.00
Distribution to a participant $15.00 $15.00
(exclusive of systematic withdrawal plans
Refund of excess contribution $15.00 $15.00
II. ADDITIONAL SHAREHOLDER FEES AMOUNT
Any outgoing wire $10.00/wire
Telephone exchange $5.00/telephone exchange
Return Check Fee $20.00/return check
Stop payment fee (liquidation, dividend, draft check) $20.00/stop payment
Research fee(For requested items of the second $5.00/research item
calendar year or previous] to the request)
These fees are subject to change upon
notification by Firstar Trust Company to the
Mutual Fund client
- -
FORM OF FUND ACCOUNTING SERVICING AGREEMENT
This contract between THE RAMIREZ TRUST, a Delaware Business Trust consisting of
three funds, The Ramirez Cash Management Money Market Fund, The Ramirez New York
Tax Free Money Market Fund and The Ramirez U.S. Treasury Money Market Fund
hereinafter called the "Funds," and Firstar Trust Company, a Wisconsin
corporation, hereinafter called "FTC," is entered into on this fifteenth day of
September, 1998.
WHEREAS, The Ramirez Trust, is an open-ended management investment
company registered under the Investment Company Act of 1940; and
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. SERVICES. FTC agrees to provide the following mutual fund accounting
services to the Funds:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date +1 basis
using security trade information communicated from the investment
manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Trustees and apply those prices
to the portfolio positions. For those securities where market
quotations are not readily available, the Board of Trustees shall
approve, in good faith, the method for determining the fair value
for such securities.
(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identify
them as to short-short, short- or long-term status; account for
periodic distributions of gains or losses to shareholders and
maintain undistributed gain or loss balances as of each valuation
date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Funds as to methodology, rate or
dollar amount.
(2) Record payments for Funds expenses upon receipt of
written authorization
<PAGE>
from the Funds.
(3) Account for fund expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed
upon by FTC and the Funds.
(4) Provide expense accrual and payment reporting.
C. Funds Valuation and Financial Reporting Services:
(1) Account for Funds share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Funds share activity
as reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Funds.
(3) Determine net investment income (earnings) for the Funds
as of each valuation date. Account for periodic distributions of
earnings to shareholders and maintain undistributed net
investment income balances as of each valuation date.
(4) Maintain a general ledger for the Funds in the form as
agreed upon.
(5) For each day the Funds is open as defined in the
prospectus, determine the net asset value according to the
accounting policies and procedures set forth in the prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of fund
operation at such time as required by the nature and
characteristics of the Funds.
(7) Communicate, at an agreed upon time, the per share price
for each valuation date to parties as agreed upon from time to
time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolio
of the Funds to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolios.
(3) Calculate taxable gain/loss on security sales using the
tax lot relief method
2
<PAGE>
designated by the Funds.
(4) Provide the necessary financial information to support
the taxable components of income and capital gains distributions
to the transfer agent to support tax reporting to the
shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the fund accounting
records available to The Ramirez Trust, the Securities and
Exchange Commission, and the outside auditors.
(2) Maintain accounting records according to the Investment
Company Act of 1940 and regulations provided thereunder.
2. PRICING OF SECURITIES. For each valuation date, obtain prices from a
pricing source selected by FTC but approved by the Funds' Board and apply those
prices to the portfolios positions. For those securities where market quotations
are not readily available, the Funds' Board shall approve, in good faith, the
method for determining the fair value for such securities.
If the Funds desires to provide a price which varies from the
pricing source, the Funds shall promptly notify and supply FTC with the
valuation of any such security on each valuation date. All pricing changes made
by the Funds will be in writing and must specifically identify the securities to
be changed by CUSIP, name of security, new price or rate to be applied, and, if
applicable, the time period for which the new prices are effective.
3. CHANGES IN ACCOUNTING PROCEDURES. Any resolution passed by the Board
of Trustees that affects accounting practices and procedures under this
agreement shall be effective upon written receipt and acceptance by the FTC.
4. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC. FTC reserves the right
to make changes from time to time, as it deems advisable, relating to its
services, systems, programs, rules, operating schedules and equipment, so long
as such changes do not adversely affect the service provided to the Funds under
this Agreement.
5. COMPENSATION. FTC shall be compensated for providing the services set
forth in this Agreement in accordance with the Fee Schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time. If the Fund
elects to terminate this Agreement prior to the anniversay of this Agreement,
the Fund agrees to reimburse Agent for the differrence between the standard fee
schedule and the discounted fee schedule agreed to between the parties.
3
<PAGE>
6. PERFORMANCE OF SERVICE.
A. FTC shall exercise reasonable care in the performance
of its duties under this Agreement. FTC shall not be liable for
any error of judgment or mistake of law or for any loss suffered
by the Funds in connection with matters to which this Agreement
relates, including losses resulting from mechanical breakdowns or
the failure of communication or power supplies beyond FTC's
control, except a loss resulting from FTC's refusal or failure to
comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance
of its duties under this Agreement. Notwithstanding any other
provision of this Agreement, the Funds shall indemnify and hold
harmless FTC from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis
in fact or law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or which may be
asserted against FTC by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii)
in reliance upon any written or oral instruction provided to FTC
by any duly authorized officer of the Funds, such duly authorized
officer to be included in a list of authorized officers furnished
to FTC and as amended from time to time in writing by resolution
of the Board of Trustees of the Funds.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall
take all reasonable steps to minimize service interruptions for
any period that such interruption continues beyond FTC's control.
FTC will make every reasonable effort to restore any lost or
damaged data and correct any errors resulting from such a
breakdown at the expense of FTC. FTC agrees that it shall, at all
times, have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use of
electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Funds shall be
entitled to inspect FTC's premises and operating capabilities at
any time during regular business hours of FTC, upon reasonable
notice to FTC.
Regardless of the above, FTC reserves the right to
reprocess and correct administrative errors at its own expense.
B. In order that the indemnification provisions contained
in this section shall apply, it is understood that if in any case
the Funds may be asked to indemnify or hold FTC harmless, the
Funds shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that FTC will use all reasonable care to notify the
Funds promptly concerning any situation which presents or appears
likely to present the probability of such a claim for
indemnification against the Funds. The Funds shall have the
option to defend FTC
4
<PAGE>
against any claim which may be the subject of this
indemnification. In the event that the Funds so elects, it will
so notify FTC and thereupon the Funds shall take over complete
defense of the claim, and FTC shall in such situation initiate no
further legal or other expenses for which it shall seek
indemnification under this section. FTC shall in no case confess
any claim or make any compromise in any case in which the Funds
will be asked to indemnify FTC except with the Funds' prior
written consent.
C. FTC shall indemnify and hold the Funds harmless from
and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any
and every nature (including reasonable attorneys' fees) which may
be asserted against the Funds by any person arising out of any
action taken or omitted to be taken by FTC as a result of FTC's
refusal or failure to comply with the terms of this Agreement,
its bad faith, negligence, or willful misconduct.
7. RECORDS. FTC shall keep records relating to the services to be
performed hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. FTC agrees that all such records prepared or
maintained by FTC relating to the services to be performed by FTC hereunder are
the property of the Funds and will be preserved, maintained, and made available
with such section and rules of the Investment Company Act and will be promptly
surrendered to the Funds on and in accordance with its request.
8. CONFIDENTIALITY. FTC shall handle in confidence all information
relating to the Funds' business, which is received by FTC during the course of
rendering any service hereunder.
9. DATA NECESSARY TO PERFORM SERVICES. The Funds or its agent, which may
be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
10. NOTIFICATION OF ERROR. The Funds will notify FTC of any balancing or
control error caused by FTC within three (3) business days after receipt of any
reports rendered by FTC to the Funds, or within three (3) business days after
discovery of any error or omission not covered in the balancing or control
procedure, or within three (3) business days of receiving notice from any
shareholder.
5
<PAGE>
11. ADDITIONAL SERIES. In the event that The Ramirez Trust establishes
additional series of shares with respect to which it desires to have FTC render
accounting services, under the terms hereof, it shall so notify FTC in writing,
and if FTC agrees in writing to provide such services, such series will be
subject to the terms and conditions of this Agreement, and shall be maintained
and accounted for by FTC on a discrete basis. The portfolio currently covered by
this Agreement is: The Ramirez Cash Management Money Market Fund, The Ramirez
New York Tax-Free Money Market Fund and The Ramirez U.S. Treasury Money Market
Fund.
12. TERM OF AGREEMENT. This Agreement may be terminated by either party
upon giving ninety (90) days prior written notice to the other party or such
shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
13. DUTIES IN THE EVENT OF TERMINATION. In the event that in connection
with termination a Successor to any of FTC's duties or responsibilities
hereunder is designated by The Ramirez Trust by written notice to FTC, FTC will
promptly, upon such termination and at the expense of The Ramirez Trust,
transfer to such Successor all relevant books, records, correspondence and other
data established or maintained by FTC under this Agreement in a form reasonably
acceptable to The Ramirez Trust (if such form differs from the form in which FTC
has maintained the same, The Ramirez Trust shall pay any expenses associated
with transferring the same to such form), and will cooperate in the transfer of
such duties and responsibilities, including provision for assistance from FTC's
personnel in the establishment of books, records and other data by such
successor.
14. NOTICES. Notices of any kind to be given by either party to the
other party shall be in writing and shall be duly given if mailed or delivered
as follows: Notice to FTC shall be sent to Mutual Funds Services located at 615
East Michigan Street, Milwaukee, Wisconsin 53202 and notice to the Funds shall
be sent to The Ramirez Trust located at 61 Broadway, New York, N.Y. 10006.
15. CHOICE OF LAW. This Agreement shall be construed in accordance with
the laws of the State of Wisconsin.
6
<PAGE>
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
THE RAMIREZ TRUST FIRSTAR TRUST COMPANY
By__________________________________ By_________________________________
Print: ______________________________ Print: ____________________________
Title: ______________________________ Title: ____________________________
Date: ______________________________ Date: _____________________________
Attest: ______________________________ Attest:____________________________
7
<PAGE>
EXHIBIT A
FUND VALUATION AND ACCOUNTING
ASSET PRICING COST
ASSET TYPE CHARGE PER ITEM PER VALUATION
(DAILY, WEEKLY, ETC.)
Domestic and Canadian Equities $0.15
Options $0.15
Corporate/Government/Agency Bonds $0.50
CMOs $0.80
International Equities and Bonds $0.50
Municipal Bonds $0.80
Money Market Instruments $0.80
8
<PAGE>
EXHIBIT B
FUND VALUATION AND ACCOUNTING
DOMESTIC PORTFOLIOS
ANNUAL FEE SCHEDULE
Fixed Income Funds
o Annual fee per fund based on market value of assets:
- - $25,000 for the first $40,000,000
- - 2/100 of 1% (2 basis points) on the next $200,000,000
- - 1/100 or 1% (1 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
Equity Funds
o Annual fee per fund based on market value of assets:
- - $24,000 for the first $40,000,000
- - 1/100 of 1% (1 basis point) on the next $200,000,000
- - 5/1000 of 1% (1/2 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
Money Market Funds
o Annual fee per fund based on market value of assets:
- - $25,000 for the first $40,000,000
- - 1/100 of 1% (1/2 basis point) on the next $200,000,000
- - 5/1000 of 1% (1/2 basis point) on the balance
o Out-of-pocket expenses, including daily pricing service
All fees and out-of-pocket expenses are billed monthly.
9
FORM OF FULFILLMENT SERVICING AGREEMENT
This Agreement between Firstar Trust Company (FTC) and The Ramirez Trust, a
Delaware business trust consisting of three funds: The Ramirez Cash Management
Money Market Fund, The Ramirez New York Tax-Free Money Market Fund and The
Ramirez U.S. Treasury Money Market Fund, (hereinafter called the "Funds") is
entered into on this fifteenth day of September, 1998.
WHEREAS, the Fund provides investment opportunities to prospective shareholders
through a open end mutual fund; and
WHEREAS, FTC provides fulfillment services to mutual funds;
NOW THEREFORE, the parties agree as follows:
DUTIES AND RESPONSIBILITIES OF FTC
1. Answer all prospective shareholder calls concerning any of The Ramirez
Cash Management Money Market Fund, The Ramirez New York Tax-Free Money
Market Fund and The Ramirez U.S. Treasury Money Market Fund listed in
the attached Schedule A which may be modified from time to time.
2. Send all available fund(s) materials requested by the prospect which
may include but not limited to, prospectus, financial statements, new
account forms, fact sheets, and sales literature or other materials at
the direction of the Fund within 24 hours from time of call.
3. Receive and update all fund fulfillment literature so that most
current information is sent and quoted.
4. Provide 24 hour answering service to record prospect calls made after
hours (8 p.m. to 9 a.m. NYT).
5. Maintain and store fund fulfillment inventory.
6. Send periodic fulfillment reports to the fund as agreed upon between
the parties.
DUTIES AND RESPONSIBILITIES OF THE FUND
1. Provide fund fulfillment literature updates to FTC as necessary.
2. Supply FTC with sufficient inventory of fulfillment materials as
requested from time to time by FTC.
<PAGE>
3. Provide FTC with any sundry information about the Funds in
order to answer prospect questions.
COMPENSATION
Funds agree to compensate FTC for the services performed under this agreement in
accordance with the attached Schedule B; the Funds agree to pay all invoices
within ten days of receipt.
PROPRIETARY AND CONFIDENTIAL INFORMATION
FTC agrees on behalf of itself and its directors, officers, and employees to
treat confidentiality and as proprietary information of the Fund all records and
other information relative to the Funds and prior, present, or potential
shareholders of the Funds (and clients of said shareholders), and not to use
such records and information for any purpose other than performance of its
responsibilities and duties thereunder, except after prior notification to and
approval in writing by the Funds, which approval shall not be unreasonably
withheld and may not be withheld where FTC may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Funds.
TERMINATION
This agreement may be terminated by either party upon 30 days written notice.
<PAGE>
Dated this fifteenth day of September, 1998.
THE RAMIREZ TRUST FIRSTAR TRUST COMPANY
By:___________________________ By: ______________________________
Print:_________________________ Print:____________________________
Title:_________________________ Title:____________________________
Date:__________________________ Date:_____________________________
Attest:________________________ Attest: __________________________
[Letterhead of Morris, Nichols, Arsht & Tunnell]
October 30, 1998
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Re: The Ramirez Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel to The Ramirez
Trust, a Delaware business trust (the "Trust"), in connection with certain
matters relating to the creation of the Trust and the issuance of Shares of
beneficial interest therein. Capitalized terms used herein and not otherwise
herein defined are used as defined in the Amended Trust Instrument of the Trust
dated September 15, 1998 (the "Governing Instrument").
In rendering this opinion, we have examined copies of the
following documents, each in the form provided to us: the Certificate of Trust
of the Trust as filed in the Office of the Secretary of State of the State of
Delaware (the "Recording Office") on June 30, 1998 (the "Certificate") and the
Amended Certificate of Trust of the Trust as filed in the Recording Office on
October 2, 1998; the Trust Instrument of the Trust dated June 30, 1998 (the
"Original Governing Instrument"); the Governing Instrument; the Bylaws of the
Trust; certain resolutions of the Trustees of the Trust prepared for adoption at
the September 15, 1998 meeting of the
<PAGE>
Trustees relating to the organization of the Trust (the "Resolutions" and
together with the Governing Instrument and the Bylaws, the "Governing
Documents"); the Trust's Notification of Registration Filed Pursuant to Section
8(a) of the Investment Company Act of 1940 on Form N-8A as filed with the
Securities and Exchange Commission on July 14, 1998; the Trust's Registration
Statement under the Securities Act of 1933 on Form N-1A as filed with the
Securities and Exchange Commission on July 14, 1998 (the "Registration
Statement"); and a certification of good standing of the Trust obtained as of a
recent date from the Recording Office. In such examinations, we have assumed the
genuineness of all signatures, the conformity to original documents of all
documents submitted to us as copies or drafts of documents to be executed, and
the legal capacity of natural persons to complete the execution of documents. We
have further assumed for the purpose of this opinion: (i) the due adoption,
authorization, execution and delivery by, or on behalf of, each of the parties
thereto of the above-referenced resolutions, instruments, certificates and other
documents, and of all documents contemplated by the Governing Instrument and
applicable resolutions of the Trustees to be executed by investors desiring to
become Shareholders; (ii) the payment of consideration for Shares, and the
application of such consideration, as provided in the Governing Instrument, and
compliance with the other terms, conditions and restrictions set forth in the
Governing Instrument and all applicable resolutions of the Trustees in
connection with the issuance of Shares (including, without limitation, the
taking of all appropriate action by the Trustees to designate Series of Shares
and the rights and preferences attributable thereto as contemplated by the
Governing Instrument); (iii) that appropriate notation of the names and
addresses of, the number of Shares held by, and the consideration paid by,
Shareholders will be maintained in the appropriate registers and other books and
records of the Trust in connection with the issuance or transfer of Shares; (iv)
that no event has occurred subsequent to the filing of the Certificate that
would cause a termination or reorganization of the Trust under Sections 11.04 or
11.05 of the Original Governing Instrument or the Governing Instrument; (v) that
the activities of the Trust have been and will be conducted in accordance with
the terms of the Original Governing Instrument or the Governing Instrument, as
applicable, and the Delaware Act; (vi) that the Trust is, becomes, or will
become prior to or within 180 days following the first issuance of beneficial
interest therein, a registered investment company under the Investment Company
Act of 1940, as amended; and (vii) that each of the documents examined by us is
in full force and effect and has not been amended, supplemented or otherwise
modified. No opinion is expressed herein with respect to the requirements of, or
compliance with, federal or state securities or "blue sky" laws. Further, we
express no opinion on the sufficiency or accuracy of any registration or
offering materials relating to the Trust or the Shares. As to any facts material
to our opinion, other than those assumed, we have relied without independent
investigation on the above-referenced documents and on the accuracy, as of the
date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all
respects to matters of Delaware law, it is our opinion that:
1. The Trust is a duly created and validly existing business
trust in good standing under the laws of the State of Delaware.
<PAGE>
2. The Shares, when issued to Shareholders in accordance with
the terms, conditions, requirements and procedures set forth in the Governing
Documents, will constitute legally issued, fully paid and non-assessable Shares
of beneficial interest in the Trust.
3. Under the Delaware Act and the terms of the Governing
Instrument, each Shareholder of the Trust, in such capacity, will be entitled to
the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the general corporation law of
the State of Delaware; provided, however, that we express no opinion with
respect to the liability of any Shareholder who is, was or may become a named
Trustee of the Trust.
We understand that you wish to rely on this opinion in
connection with the delivery of your opinion to the Trust dated on or about the
date hereof and we hereby consent to such reliance. Except as provided in the
immediately preceding sentence, this opinion may not be relied on by any person
on or for any purpose without our prior written consent. We hereby consent to
the filing of a copy of this opinion with the Securities and Exchange Commission
as a pre-effective amendment to the Trust's Registration Statement. In giving
this consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. This opinion speaks only as of the date hereof and is
based on our understandings and assumptions as to present facts, and on the
application of Delaware law as the same exists on the date hereof, and we
undertake no obligation to update or supplement this opinion after the date
hereof for the benefit of any person or entity with respect to any facts or
circumstances that may herafter come to our attention or any changes in facts of
law that may hereafter occur or take effect.
Sincerely,
/s/ MORRIS, NICHOLS, ARSHT & TUNNELL
[LETTERHEAD OF KRAMER LEVIN NAFTALIS & FRANKEL LLP]
October 30, 1998
The Ramirez Trust
61 Broadway
New York, New York 10006
Re: The Ramirez Trust
Registration Statement on Form N-1A
File No. 33-59083; ICA No. 811-08877
------------------------------------
Dear Gentlemen:
We hereby consent to the reference of our firm as Counsel in this
Registration Statement on Form N-1A.
Very truly yours,
/s/Kramer Levin Naftalis & Frankel LLP
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, N.Y. 10022 - 3852
(212) 715 - 9100
ARTHUR H. AUFSES III MONICA C. LORD ARTHUR B. KRAMER
THOMAS D. BALLIETT RICHARD MARLIN MAURICE N. NESSEN
JAY G. BARIS THOMAS MOERS MAYER FOUNDING PARTNERS
PHILIP BENTLEY THOMAS E. MOLNER RETIRED
SAUL E. BURIAN THOMAS H. MORELAND -------
BARRY MICHAEL CASS ELLEN R. NADLER MARTIN BALSAM
NICHOLAS L. COCH GARY P. NAFTALIS JOSHUA M. BERMAN
THOMAS E. CONSTANCE MICHAEL J. NASSAU JULES BUCHWALD
JOHN E. DANIEL MICHAEL S. NELSON S. ELLIOTT COHAN
MICHAEL J. DELL JAY A. NEVELOFF RUDOLPH DE WINTER
KENNETH H. ECKSTEIN MICHAEL S. OBERMAN MEYER EISENBERG
CHARLOTTE M. FISCHMAN PAUL S. PEARLMAN SAMUEL M. EISENSTAT
DAVID S. FRANKEL SUSAN J. PENRY-WILLIAMS ARTHUR D. EMIL
MARVIN E. FRANKEL BRUCE RABB MARIA T. JONES
ALAN R. FRIEDMAN ALLAN E. REZNICK SHERWIN KAMIN
CARL FRISCHLING DONALD L. RHOADS ANDREW J. MALONEY
MARK J. HEADLEY SCOTT S. ROSENBLUM GEORGE M. MURPHY
ROBERT M. HELLER MICHELE D. ROSS MAXWELL M. RABB
GEORGE P. HOARE HOWARD J. ROTHMAN JAMES SCHREIBER
PHILIP S. KAUFMAN MARK B. SEGALL COUNSEL
PETER S. KOLEVZON JUDITH SINGER ------
KENNETH P. KOPELMAN PETER G. SMITH M. FRANCES BUCHINSKY
MICHAEL PAUL KOROTKIN HOWARD A. SOBEL JEFFREY W. DAVIS
SHARI K. KROUNER JEFFREY S. TRACHTMAN ABBE L. DIENSTAG
KEVIN B. LEBLANG NEIL R. TUCKER MARILYN FEUER
DAVID P. LEVIN JONATHAN M. WAGNER RONALD S. GREENBERG
EZRA G. LEVIN HAROLD P. WEINBERGER ROBERT T. SCHMIDT
RANDY LIPSITZ ALAN S. WILMIT HELAYNE O. STOOPACK
LARRY M. LOEB E. LISK WYCKOFF, JR. SPECIAL COUNSEL
------
FACSIMILE
(212) 715-8000
---
Writer's Direct Number
(212) 715-9100
-------------
October 30, 1998
The Ramirez Trust
61 Broadway
New York, New York
Re: The Ramirez Trust
-----------------
Ladies and Gentlemen:
We have acted as counsel for The Ramirez Trust, a Delaware business
trust (the "Trust"), in connection with certain matters relating to the creation
of the Trust and the issuance of shares of beneficial interest therein of the
Ramirez Cash Management Money Market Fund, the Ramirez New York Tax-Free Money
Market Fund and the Ramirez U.S. Treasury Money Market Fund, three series of the
Trust (the "Shares"), pursuant to a registration statement on Form N-1A (File
No. 333-59083) (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, and the Investment Company
Act of 1940, as amended. Capitalized terms used herein and not otherwise herein
defined are used as defined in the Amended Trust Instrument of the Trust dated
September 15, 1998 (the "Governing Instrument").
In rendering this opinion, we have examined the following documents:
the Certificate of Trust of the Trust as filed in the Office of the Secretary of
State of the State of Delaware (the "Recording Office") on June 30, 1998 (the
"Certificate") and the Amended Certificate of Trust of the Trust as filed in the
Recording Office on October 2, 1998; the Trust Instrument of the Trust dated
June 30, 1998 (the "Original Governing Instrument"); the Governing Instrument;
the Bylaws of the Trust; certain resolutions of the Trustees of the Trust
prepared for adoption at the September 15, 1998 meeting of the Trustees relating
to the organization of the Trust (the "Resolutions" and together with the
Governing Instrument and the
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Kramer Levin Naftalis & Frankel LLP
The Ramirez Trust
October 30, 1998
Page 2
By-laws, the "Governing Documents"); the Trust's Notification of Registration
Filed Pursuant to Section 8(a) of the Investment Company Act of 1940 on Form
N-8A as filed with the Securities and Exchange Commission on July 14, 1998; the
Trust's Registration Statement; and a certification of good standing of the
Trust obtained as of a recent date from the Recording Office. In such
examinations, we have assumed the genuineness of all signatures, the conformity
to original documents of all documents submitted to us as copies or drafts of
documents to be executed, and the legal capacity of natural persons to complete
the execution of documents.
We have further assumed for the purpose of this opinion: (i) the due
adoption, authorization, execution and delivery by, or on behalf of, each of the
parties thereto of the above-referenced resolutions, instruments, certificates
and other documents, and of all documents contemplated by the Governing
Instrument and applicable resolutions of the Trustees to be executed by
investors desiring to become shareholders; (ii) the payment of consideration for
Shares, and the application of such consideration, as provided in the Governing
Instrument, and compliance with the other terms, conditions and restrictions set
forth in the Governing Instrument and all applicable resolutions of the Trustees
in connection with the issuance of Shares (including, without limitation, the
taking of all appropriate action by the Trustees to designate Series of Shares
and the rights and preferences attributable thereto as contemplated by the
Governing Instrument); (iii) that appropriate notation of the names and
addresses of, the number of Shares held by, and the consideration paid by,
shareholders will be maintained in the appropriate registers and other books and
records of the Trust in connection with the issuance or transfer of Shares; (iv)
that no event has occurred subsequent to the filing of the Certificate that
would cause a termination or reorganization of the Trust under Sections 11.04 or
11.05 of the Original Governing Instrument or the Governing Instrument; (v) that
the activities of the Trust have been and will be conducted in accordance with
the terms of the Original Governing Instrument or the Governing Instrument, as
applicable, and the Delaware Act; (vi) that the Trust is, becomes, or will
become prior to or within 180 days following the first issuance of beneficial
interest therein, a registered investment company under the Investment Company
Act of 1940, as amended; and (vii) that each of the documents examined by us is
in full force and effect and has not been amended, supplemented or otherwise
modified.
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Kramer Levin Naftalis & Frankel LLP
The Ramirez Trust
October 30, 1998
Page 3
We are members of the Bar of the State of New York and do not hold
ourselves out as experts as to the law of any other state or jurisdiction. We
have received and relied upon an opinion from Morris, Nichols, Arsht & Tunnell,
special Delaware counsel, a copy of which is attached hereto as Exhibit A,
concerning the organization of the Trust and the authorization and issuance of
the Shares, and our opinion is subject to the qualifications and limitations set
forth therein, which are incorporated herein by reference as though fully set
forth herein.
Based upon and subject to the foregoing, we are of the opinion, and so
advise you as follows:
i. The Trust is duly organized and validly existing as a
business trust in good standing under the laws of the State
of Delaware.
ii. The Shares, when issued to shareholders in accordance with
the terms, conditions, requirements and procedures set forth
in the Governing Documents, will constitute legally issued,
fully paid and non-assessable shares of beneficial interest
in the Trust.
This opinion is solely for your benefit and is not to be quoted in
whole or in part, summarized or otherwise referred to, nor is it to be filed
with or supplied to any government agency or other person without the written
consent of this firm. This opinion letter is rendered as of the date hereof, and
we specifically disclaim any responsibility to update or supplement this letter
to reflect any events or state of facts which may hereafter come to our
attention or any changes in statutes or regulations or any court decisions which
may hereafter occur.
Notwithstanding the previous paragraph, we consent to the filing of
this opinion as an exhibit to the Trust's Registration Statement on Form N-1A.
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Kramer Levin Naftalis & Frankel LLP
The Ramirez Trust
October 30, 1998
Page 4
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/Kramer Levin, Naftalis & Frankel LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 1 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
September 30, 1998, relating to the financial statements of The Ramirez Trust,
which appears in such Statement of Additional Information, and to the
incorporation by reference of our report into the Prospectus which constitutes
part of this Registration Statement. We also consent to the references to us
under the heading "Independent Accountants" in such Prospectus and the heading
"Independent Accountants" in such Statement of Additional Information.
/s/PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 27, 1998
THE RAMIREZ TRUST
SERVICE AND DISTRIBUTION PLAN
This Service and Distribution Plan (the "Plan") is adopted as of this
fifteenth day of September, 1998 by the Board of Trustees of The Ramirez Trust,
a Delaware business trust (the "Fund"), an open-end, diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act").
1. The Plan is adopted pursuant to Rule 12b-1 of the Investment Company Act (the
"Act") to allow the Fund to make payments as contemplated herein, in conjunction
with the distribution of shares of Common Stock of the Fund ("Shares"). Payments
also may be made by Ramriez Asset Management, Inc., the Fund's investment
adviser (the "Adviser"), out of its fees, it past profits or any other source
available to it.
2. Ramirez & Co., Inc., a New York corporation (the "Distributor"), acts as the
principal underwriter of the Fund's shares pursuant to a Distribution Agreement.
3. The Plan is designed to finance activities of the Distributor principally
intended to result in sale of the Shares and to include the following: (a) to
provide incentive to securities dealers to sell Shares and to provide
administrative support services to the Fund and its shareholders; (b) to
compensate other participating financial institutions and organizations
(including individuals) for providing administrative support services to the
Fund and its shareholders; (c) to pay for costs incurred in conjunction with
advertising and marketing of Shares including expenses of preparing, printing
and distributing prospectuses and sales literature to prospective shareholders,
securities dealers and others, and for servicing the accounts of shareholders
and (d) other costs incurred in the implementation and operation of the Plan.
4. As compensation for the services to be provided under this Plan, the
Distributor shall be paid a fee at the annual rate of 0.25% of the Fund's
average daily net assets.
5. All payments to securities dealers, participating financial institutions and
other organizations shall be made pursuant to the terms of a Distribution
Agreement between the Distributor and such dealer, institution, organization or
individual.
6. Quarterly, in each year that this Plan remains in effect, the Fund's
Treasurer shall prepare and furnish to the Board of Trustees who shall review a
written report, complying with the requirements of Rule 12b-1, setting forth the
amounts expended by the Fund under the Plan and purposes for which such
expenditures were made.
7. The Plan will become effective immediately upon approval by (a) a majority of
the outstanding shares of Common Stock of the Fund and (b) a majority of the
Board of Trustees who are not "interested persons" (as defined in the Act) of
the Fund and have
<PAGE>
no direct or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan, pursuant to a vote cast in
person at a meeting called for the purpose of voting on the approval of the
Plan.
8. This Plan shall remain in effect for one year from its adoption date and may
be continued thereafter if this Plan and all related agreements are approved at
least annually by a majority vote of the Board of Trustees of the Fund,
including a majority of the Trustees who are not "interested persons", cast in
person at a meeting called for the purpose of voting on such Plan and
agreements. The Plan shall thereafter continue automatically for successive
annual periods, provided such continuance is approved at least annually in the
manner provided by the Act.
9. The Plan may be amended at any time by the Board of Trustees provided that
(a) any amendment to increase materially the costs which the Fund may bear
pursuant to the Plan shall be effective only on approval by a vote of a majority
of the outstanding voting securities of the Fund and (b) any material amendments
of the terms of the Plan shall become effective only on approval as provided in
paragraph 7(b) hereof.
10. This Plan may be terminated without penalty at any time by (a) a majority
vote of the Board of Trustees of the Fund, including a majority of the Trustees
who are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan, or (b) a vote of a majority
of the outstanding voting securities of the Fund.
11. While this Plan is in effect, the selection and nomination of Trustees who
are not "interested persons" (as defined in the Act) of the Fund shall be
committed to the discretion of the Trustees who are not "interested persons."
12. Any termination or non-continuance of (a) a Selected Dealer Agreement
between the Distributor and a particular broker or (b) a Shareholder Service
Agreement between the Distributor and a particular person or organization, shall
have no effect on any similar agreements between brokers or other persons and
the Fund or the Distributor pursuant to this Plan.
13. The Fund shall preserve copies of the Plan and any related agreements and
all reports made pursuant to paragraph 6 hereof, for a period not less than six
years from the date thereof, the first two years in an easily accessible place.
Approved September 15, 1998
2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned Trustees of
The Ramirez Trust, a Delaware Business Trust, (the "Funds") constitute and
appoint Peter O'Rourke and Peter Sylver our true and lawful attorneys-in-fact,
with full power of substitution and resubstitution, for us and in our name,
place and stead, in any and all capacities as a Trustee of the Funds, to sign
for me and in our names in the appropriate capacities, any and all Pre-Effective
Amendments to any Registration Statement of the Funds, any and all
Post-Effective Amendments to said Registration Statements, any Registration
Statements on Form N-14, and any supplements or other instruments in connection
therewith, and generally to do all such things in my name and behalf in
connection therewith as said attorneys-in-fact deem necessary or appropriate, to
comply with the provisions of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes may do or cause to be done by virtue
hereof.
Witness our hands on this 15th Day of September, 1998.
/s/Alexander Vermitsky /s/Alfonse Santagata
- ---------------------- --------------------
Alexander Vermitsky Alfonse Santagata
/s/Alan J. Dlugash /s/Charles H. Falk
- ------------------ ------------------
Alan J. Dlugash Charles H. Falk
/s/Paul Voigt
- -------------
Paul Voigt
