<PAGE> PAGE 1
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007 C010400 4
007 C020400 THE INTERNATIONAL EQUITY FUND
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007 C020500 THE INTERMEDIATE TERM INCOME FUND
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007 C010600 6
007 C020600 THE LIMITED DURATION GOV'T SECURITIES FUND
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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
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<PAGE> PAGE 19
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<PAGE> PAGE 20
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<PAGE> PAGE 21
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<PAGE> PAGE 22
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<PAGE> PAGE 23
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<PAGE> PAGE 24
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<PAGE> PAGE 25
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<PAGE> PAGE 26
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<PAGE> PAGE 27
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<PAGE> PAGE 28
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<PAGE> PAGE 29
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<PAGE> PAGE 30
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<PAGE> PAGE 31
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<PAGE> PAGE 32
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<PAGE> PAGE 33
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<PAGE> PAGE 34
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<PAGE> PAGE 35
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<PAGE> PAGE 36
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<PAGE> PAGE 37
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<PAGE> PAGE 38
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<PAGE> PAGE 39
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<PAGE> PAGE 40
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<PAGE> PAGE 41
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072 K000800 0
072 L000800 0
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072 N000800 0
072 O000800 0
072 P000800 0
072 Q000800 13
072 R000800 0
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072 U000800 0
072 V000800 0
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072 Y000800 22
072 Z000800 1
072AA000800 0
072BB000800 0
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072CC020800 0
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072DD020800 0
072EE000800 0
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073 B000800 0.0000
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074 A000800 0
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074 C000800 0
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074 F000800 0
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074 J000800 0
074 K000800 9
074 L000800 1
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074 N000800 161
074 O000800 0
074 P000800 0
074 Q000800 0
074 R010800 0
074 R020800 0
074 R030800 0
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074 S000800 0
<PAGE> PAGE 42
074 T000800 150
074 U010800 15
074 U020800 0
074 V010800 10.15
074 V020800 0.00
074 W000800 0.0000
074 X000800 14
074 Y000800 0
075 A000800 0
075 B000800 59
076 000800 0.00
008 A000901 GOVERNORS GROUP ADVISORS, INC.
008 B000901 A
008 C000901 801-0000
008 D010901 HARRISBURG
008 D020901 PA
008 D030901 17101
008 A000902 MARTINDALE ANDRES & COMPANY, INC.
008 B000902 S
008 C000902 801-0000
008 D010902 WEST CONSHOHOCKEN
008 D020902 PA
008 D030902 19428
024 000900 N
028 A010900 0
028 A020900 0
028 A030900 0
028 A040900 0
028 B010900 50
028 B020900 0
028 B030900 0
028 B040900 0
028 C010900 60
028 C020900 0
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028 D010900 105
028 D020900 0
028 D030900 0
028 D040900 8
028 E010900 45
028 E020900 0
028 E030900 0
028 E040900 2
028 F010900 26
028 F020900 0
028 F030900 0
028 F040900 0
028 G010900 286
028 G020900 0
028 G030900 0
<PAGE> PAGE 43
028 G040900 10
028 H000900 245
029 000900 Y
030 A000900 11
030 B000900 4.50
030 C000900 0.00
031 A000900 0
031 B000900 0
032 000900 11
033 000900 0
034 000900 N
035 000900 0
036 B000900 0
037 000900 N
038 000900 0
039 000900 N
040 000900 Y
041 000900 Y
042 A000900 0
042 B000900 0
042 C000900 0
042 D000900 100
042 E000900 0
042 F000900 0
042 G000900 0
042 H000900 0
043 000900 0
044 000900 0
045 000900 Y
046 000900 N
047 000900 Y
048 000900 0.250
048 A010900 0
048 A020900 0.000
048 B010900 0
048 B020900 0.000
048 C010900 0
048 C020900 0.000
048 D010900 0
048 D020900 0.000
048 E010900 0
048 E020900 0.000
048 F010900 0
048 F020900 0.000
048 G010900 0
048 G020900 0.000
048 H010900 0
048 H020900 0.000
048 I010900 0
048 I020900 0.000
048 J010900 0
<PAGE> PAGE 44
048 J020900 0.000
048 K010900 0
048 K020900 0.000
058 A000900 N
059 000900 Y
060 A000900 Y
060 B000900 Y
061 000900 1000
062 A000900 N
062 B000900 0.0
062 C000900 0.0
062 D000900 0.0
062 E000900 0.0
062 F000900 0.0
062 G000900 0.0
062 H000900 0.0
062 I000900 0.0
062 J000900 0.0
062 K000900 0.0
062 L000900 0.0
062 M000900 0.0
062 N000900 0.0
062 O000900 0.0
062 P000900 0.0
062 Q000900 0.0
062 R000900 0.0
066 A000900 Y
066 B000900 N
066 C000900 Y
066 D000900 N
066 E000900 N
066 F000900 N
066 G000900 N
067 000900 N
068 A000900 N
068 B000900 N
069 000900 N
070 A010900 N
070 A020900 N
070 B010900 N
070 B020900 N
070 C010900 N
070 C020900 N
070 D010900 N
070 D020900 N
070 E010900 N
070 E020900 N
070 F010900 N
070 F020900 N
070 G010900 N
070 G020900 N
<PAGE> PAGE 45
070 H010900 N
070 H020900 N
070 I010900 N
070 I020900 N
070 J010900 N
070 J020900 N
070 K010900 Y
070 K020900 Y
070 L010900 N
070 L020900 N
070 M010900 N
070 M020900 N
070 N010900 N
070 N020900 N
070 O010900 N
070 O020900 N
070 P010900 N
070 P020900 N
070 Q010900 N
070 Q020900 N
070 R010900 N
070 R020900 N
071 A000900 277
071 B000900 8
071 C000900 145
071 D000900 6
072 A000900 5
072 B000900 0
072 C000900 2
072 D000900 0
072 E000900 0
072 F000900 0
072 G000900 0
072 H000900 0
072 I000900 10
072 J000900 0
072 K000900 0
072 L000900 0
072 M000900 0
072 N000900 0
072 O000900 0
072 P000900 0
072 Q000900 13
072 R000900 0
072 S000900 0
072 T000900 0
072 U000900 0
072 V000900 0
072 W000900 0
072 X000900 23
072 Y000900 22
<PAGE> PAGE 46
072 Z000900 1
072AA000900 0
072BB000900 0
072CC010900 8
072CC020900 0
072DD010900 1
072DD020900 0
072EE000900 0
073 A010900 0.0400
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073 B000900 0.0000
073 C000900 0.0000
074 A000900 0
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074 F000900 0
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074 I000900 286
074 J000900 0
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074 L000900 1
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074 O000900 0
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074 R010900 0
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074 R040900 11
074 S000900 0
074 T000900 285
074 U010900 27
074 U020900 0
074 V010900 10.56
074 V020900 0.00
074 W000900 0.0000
074 X000900 58
074 Y000900 0
075 A000900 0
075 B000900 157
076 000900 0.00
008 A001001 GOVERNORS GROUP ADVISORS, INC.
008 B001001 A
008 C001001 801-0000
008 D011001 HARRISBURG
008 D021001 PA
008 D031001 17101
<PAGE> PAGE 47
008 A001002 MARTINDALE ANDRES & COMPANY, INC.
008 B001002 S
008 C001002 801-0000
008 D011002 WEST CONSHOHOCKEN
008 D021002 PA
008 D031002 19428
024 001000 N
028 A011000 0
028 A021000 0
028 A031000 0
028 A041000 0
028 B011000 14
028 B021000 0
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028 C011000 44
028 C021000 0
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028 D021000 0
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028 F021000 0
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028 G011000 207
028 G021000 0
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029 001000 Y
030 A001000 7
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030 C001000 0.00
031 A001000 0
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032 001000 7
033 001000 0
034 001000 N
035 001000 0
036 B001000 0
037 001000 N
038 001000 0
039 001000 N
040 001000 Y
<PAGE> PAGE 48
041 001000 Y
042 A001000 0
042 B001000 0
042 C001000 0
042 D001000 100
042 E001000 0
042 F001000 0
042 G001000 0
042 H001000 0
043 001000 0
044 001000 0
045 001000 Y
046 001000 N
047 001000 Y
048 001000 0.250
048 A011000 0
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048 B011000 0
048 B021000 0.000
048 C011000 0
048 C021000 0.000
048 D011000 0
048 D021000 0.000
048 E011000 0
048 E021000 0.000
048 F011000 0
048 F021000 0.000
048 G011000 0
048 G021000 0.000
048 H011000 0
048 H021000 0.000
048 I011000 0
048 I021000 0.000
048 J011000 0
048 J021000 0.000
048 K011000 0
048 K021000 0.000
058 A001000 N
059 001000 Y
060 A001000 Y
060 B001000 Y
061 001000 1000
062 A001000 N
062 B001000 0.0
062 C001000 0.0
062 D001000 0.0
062 E001000 0.0
062 F001000 0.0
062 G001000 0.0
062 H001000 0.0
062 I001000 0.0
<PAGE> PAGE 49
062 J001000 0.0
062 K001000 0.0
062 L001000 0.0
062 M001000 0.0
062 N001000 0.0
062 O001000 0.0
062 P001000 0.0
062 Q001000 0.0
062 R001000 0.0
066 A001000 Y
066 B001000 N
066 C001000 Y
066 D001000 N
066 E001000 N
066 F001000 N
066 G001000 N
067 001000 N
068 A001000 N
068 B001000 N
069 001000 N
070 A011000 N
070 A021000 N
070 B011000 N
070 B021000 N
070 C011000 N
070 C021000 N
070 D011000 N
070 D021000 N
070 E011000 N
070 E021000 N
070 F011000 N
070 F021000 N
070 G011000 N
070 G021000 N
070 H011000 N
070 H021000 N
070 I011000 N
070 I021000 N
070 J011000 N
070 J021000 N
070 K011000 Y
070 K021000 Y
070 L011000 N
070 L021000 N
070 M011000 N
070 M021000 N
070 N011000 N
070 N021000 N
070 O011000 N
070 O021000 N
070 P011000 N
<PAGE> PAGE 50
070 P021000 N
070 Q011000 N
070 Q021000 N
070 R011000 N
070 R021000 N
071 A001000 204
071 B001000 0
071 C001000 108
071 D001000 0
072 A001000 5
072 B001000 0
072 C001000 1
072 D001000 0
072 E001000 0
072 F001000 0
072 G001000 0
072 H001000 0
072 I001000 9
072 J001000 0
072 K001000 0
072 L001000 0
072 M001000 0
072 N001000 0
072 O001000 0
072 P001000 0
072 Q001000 13
072 R001000 0
072 S001000 0
072 T001000 0
072 U001000 0
072 V001000 0
072 W001000 1
072 X001000 23
072 Y001000 22
072 Z001000 0
072AA001000 0
072BB001000 0
072CC011000 11
072CC021000 0
072DD011000 0
072DD021000 0
072EE001000 0
073 A011000 0.0200
073 A021000 0.0000
073 B001000 0.0000
073 C001000 0.0000
074 A001000 0
074 B001000 0
074 C001000 0
074 D001000 0
074 E001000 0
<PAGE> PAGE 51
074 F001000 0
074 G001000 0
074 H001000 0
074 I001000 218
074 J001000 0
074 K001000 9
074 L001000 1
074 M001000 0
074 N001000 228
074 O001000 0
074 P001000 0
074 Q001000 0
074 R011000 0
074 R021000 0
074 R031000 0
074 R041000 10
074 S001000 0
074 T001000 218
074 U011000 20
074 U021000 0
074 V011000 10.77
074 V021000 0.00
074 W001000 0.0000
074 X001000 38
074 Y001000 0
075 A001000 0
075 B001000 122
076 001000 0.00
008 A001101 GOVERNORS GROUP ADVISORS, INC.
008 B001101 A
008 C001101 801-0000
008 D011101 HARRISBURG
008 D021101 PA
008 D031101 17101
008 A001102 MARTINDALE ANDRES & COMPANY, INC.
008 B001102 S
008 C001102 801-0000
008 D011102 WEST CONSHOHOCKEN
008 D021102 PA
008 D031102 19428
024 001100 Y
025 A001101 LEHMAN BROTHERS
025 B001101 13-2518466
025 C001101 D
025 D001101 376
025 A001102 MERRILL LYNCH & CO.
025 B001102 13-5674085
025 C001102 D
025 D001102 5000
025 D001103 0
025 D001104 0
<PAGE> PAGE 52
025 D001105 0
025 D001106 0
025 D001107 0
025 D001108 0
028 A011100 2515
028 A021100 19
028 A031100 0
028 A041100 2356
028 B011100 1818
028 B021100 16
028 B031100 0
028 B041100 3069
028 C011100 3446
028 C021100 15
028 C031100 0
028 C041100 2220
028 D011100 2975
028 D021100 14
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028 D041100 3587
028 E011100 4446
028 E021100 14
028 E031100 0
028 E041100 4884
028 F011100 2925
028 F021100 13
028 F031100 0
028 F041100 4404
028 G011100 18125
028 G021100 91
028 G031100 0
028 G041100 20520
028 H001100 0
029 001100 N
030 A001100 0
030 B001100 0.00
030 C001100 0.00
034 001100 N
035 001100 0
036 B001100 0
037 001100 N
038 001100 0
039 001100 N
040 001100 N
045 001100 Y
046 001100 N
047 001100 Y
048 001100 0.400
048 A011100 0
048 A021100 0.000
048 B011100 0
<PAGE> PAGE 53
048 B021100 0.000
048 C011100 0
048 C021100 0.000
048 D011100 0
048 D021100 0.000
048 E011100 0
048 E021100 0.000
048 F011100 0
048 F021100 0.000
048 G011100 0
048 G021100 0.000
048 H011100 0
048 H021100 0.000
048 I011100 0
048 I021100 0.000
048 J011100 0
048 J021100 0.000
048 K011100 0
048 K021100 0.000
058 A001100 N
059 001100 Y
060 A001100 Y
060 B001100 Y
061 001100 1000
062 A001100 Y
062 B001100 51.0
062 C001100 20.9
062 D001100 27.5
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062 G001100 0.0
062 H001100 0.0
062 I001100 0.0
062 J001100 0.0
062 K001100 0.0
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062 M001100 0.0
062 N001100 0.0
062 O001100 0.0
062 P001100 0.0
062 Q001100 0.0
062 R001100 0.0
063 A001100 78
063 B001100 0.0
064 A001100 N
064 B001100 N
066 A001100 N
067 001100 N
068 A001100 N
068 B001100 N
069 001100 N
<PAGE> PAGE 54
070 A011100 Y
070 A021100 Y
070 B011100 N
070 B021100 N
070 C011100 N
070 C021100 N
070 D011100 N
070 D021100 N
070 E011100 N
070 E021100 N
070 F011100 N
070 F021100 N
070 G011100 N
070 G021100 N
070 H011100 N
070 H021100 N
070 I011100 N
070 I021100 N
070 J011100 N
070 J021100 N
070 K011100 Y
070 K021100 Y
070 L011100 N
070 L021100 N
070 M011100 N
070 M021100 N
070 N011100 Y
070 N021100 N
070 O011100 Y
070 O021100 N
070 P011100 N
070 P021100 N
070 Q011100 N
070 Q021100 N
070 R011100 N
070 R021100 N
071 A001100 0
071 B001100 0
071 C001100 0
071 D001100 0
072 A001100 12
072 B001100 1057
072 C001100 15
072 D001100 0
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072 F001100 87
072 G001100 28
072 H001100 0
072 I001100 23
072 J001100 14
072 K001100 0
<PAGE> PAGE 55
072 L001100 3
072 M001100 0
072 N001100 0
072 O001100 0
072 P001100 0
072 Q001100 31
072 R001100 8
072 S001100 1
072 T001100 29
072 U001100 2
072 V001100 0
072 W001100 3
072 X001100 229
072 Y001100 72
072 Z001100 915
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072DD021100 0
072EE001100 0
073 A011100 0.0420
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074 C001100 14090
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074 H001100 0
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074 N001100 19670
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074 U011100 19576
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<PAGE> PAGE 56
074 V011100 1.00
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074 W001100 0.9999
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074 Y001100 0
075 A001100 21790
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076 001100 0.00
008 A001201 GOVERNORS GROUP ADVISORS, INC.
008 B001201 A
008 C001201 801-0000
008 D011201 HARRISBURG
008 D021201 PA
008 D031201 17101
008 A001202 MARTINDALE ANDRES & COMPANY, INC.
008 B001202 S
008 C001202 801-0000
008 D011202 WEST CONSHOHOCKEN
008 D021202 PA
008 D031202 19428
024 001200 Y
025 A001201 ZIONS BANCORP
025 B001201 87-0432248
025 C001201 D
025 D001201 11976
025 A001202 GOLDMAN SACHS & CO.
025 B001202 13-510880
025 C001202 D
025 D001202 10011
025 A001203 JP MORGAN CO.
025 B001203 13-3224016
025 C001203 D
025 D001203 11998
025 A001204 FEDERATED
025 B001204 25-1203925
025 C001204 D
025 D001204 100
025 A001205 LEHMAN BROTHERS
025 B001205 13-2518466
025 C001205 D
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025 A001206 MERRILL LYNCH
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<PAGE> PAGE 57
028 B011200 56269
028 B021200 95
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028 D011200 34101
028 D021200 103
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028 E021200 104
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028 F011200 38417
028 F021200 102
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038 001200 0
039 001200 N
040 001200 N
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<PAGE> PAGE 58
048 F021200 0.000
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062 H001200 0.0
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062 J001200 0.0
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062 M001200 0.0
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062 O001200 0.0
062 P001200 0.0
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062 R001200 0.0
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063 B001200 0.0
064 A001200 N
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066 A001200 N
067 001200 N
068 A001200 N
068 B001200 N
069 001200 N
070 A011200 Y
070 A021200 Y
070 B011200 N
070 B021200 N
070 C011200 N
070 C021200 N
070 D011200 N
070 D021200 N
<PAGE> PAGE 59
070 E011200 N
070 E021200 N
070 F011200 N
070 F021200 N
070 G011200 N
070 G021200 N
070 H011200 N
070 H021200 N
070 I011200 N
070 I021200 N
070 J011200 Y
070 J021200 N
070 K011200 Y
070 K021200 Y
070 L011200 Y
070 L021200 N
070 M011200 N
070 M021200 N
070 N011200 Y
070 N021200 N
070 O011200 Y
070 O021200 N
070 P011200 N
070 P021200 N
070 Q011200 N
070 Q021200 N
070 R011200 N
070 R021200 N
071 A001200 0
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072 B001200 13063
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072 F001200 1012
072 G001200 330
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072 L001200 81
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<PAGE> PAGE 60
072 T001200 359
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072 X001200 2013
072 Y001200 769
072 Z001200 11840
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072EE001200 0
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074 B001200 104872
074 C001200 157869
074 D001200 0
074 E001200 0
074 F001200 0
074 G001200 0
074 H001200 0
074 I001200 100
074 J001200 0
074 K001200 0
074 L001200 493
074 M001200 19
074 N001200 263353
074 O001200 0
074 P001200 0
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074 R011200 0
074 R021200 0
074 R031200 0
074 R041200 1107
074 S001200 0
074 T001200 262246
074 U011200 261562
074 U021200 685
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074 W001200 0.9999
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075 A001200 253029
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<PAGE> PAGE 61
SIGNATURE BRIAN JENKINS
TITLE SUPERVISOR
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001069806
<NAME> GOVERNOR FUNDS
<SERIES>
<NUMBER> 01
<NAME> ESTABLISHED GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 112144232
<INVESTMENTS-AT-VALUE> 260693849
<RECEIVABLES> 272657
<ASSETS-OTHER> 21967
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 260988473
<PAYABLE-FOR-SECURITIES> 197800
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NAME> AGGRESSIVE GROWTH FUND
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NAME> EMERGING GROWTH FUND
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<TABLE> <S> <C>
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NAME> INTERNATIONAL EQUITY FUND
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<TABLE> <S> <C>
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NAME> INTERMEDIATE TERM INCOME FUND
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<TABLE> <S> <C>
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NAME> LIMITED DURATION GOVERNMENT SECURITIES FUND
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<TABLE> <S> <C>
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NUMBER> 07
<NAME> PENNSYLVANIA MUNICIPAL BOND FUND
<S> <C>
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<TABLE> <S> <C>
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
<SERIES>
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<NAME> LIFESTYLE CONSERVATIVE GROWTH FUND
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<TABLE> <S> <C>
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NAME> LIFESTYLE MODERATE GROWTH FUND
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<CIK> 0001069806
<NAME> GOVERNOR FUNDS
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<NAME> LIFESTYLE GROWTH FUND
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<ACCUM-APPREC-OR-DEPREC> 10679
<NET-ASSETS> 217812
<DIVIDEND-INCOME> 834
<INTEREST-INCOME> 0
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<EXPENSES-NET> 802
<NET-INVESTMENT-INCOME> 32
<REALIZED-GAINS-CURRENT> 12
<APPREC-INCREASE-CURRENT> 10679
<NET-CHANGE-FROM-OPS> 10723
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 95
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20235
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 108
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<GROSS-EXPENSE> 22695
<AVERAGE-NET-ASSETS> 121880
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.77
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<EXPENSE-RATIO> 1.81
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<TABLE> <S> <C>
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<NAME> GOVERNOR FUNDS
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<NUMBER> 11
<NAME> U.S. TREASURY OBLIGATIONS MONEY MARKET FUND
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<NAME> PRIME MONEY MARKET FUND
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<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
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<OTHER-ITEMS-LIABILITIES> 1107171
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<EXPENSES-NET> 1243738
<NET-INVESTMENT-INCOME> 11840184
<REALIZED-GAINS-CURRENT> (940)
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<NET-CHANGE-FROM-OPS> 11839244
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<DISTRIBUTIONS-OF-INCOME> 11837016<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
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<NUMBER-OF-SHARES-SOLD> 539505448
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<SHARES-REINVESTED> 1410478
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<ACCUMULATED-NII-PRIOR> 3531
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1012098
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2012532
<AVERAGE-NET-ASSETS> 252953953<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> 0.047<F1>
<PER-SHARE-GAIN-APPREC> 0.000<F1>
<PER-SHARE-DIVIDEND> 0.047<F1>
<PER-SHARE-DISTRIBUTIONS> 0.000<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> 0.49<F1>
<FN>
<F1>INVESTOR SHARES
</FN>
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SUB-ITEM 77C: Submission of matters to a vote of
security holders.
(a) On January 4, 1999, BISYS Fund Services Limited
Partnership, the Initial and Sole Shareholder of
the Prime Money Market, U.S. Treasury Obligations
Money Market, Established Growth, Aggressive Growth,
Emerging Growth, International Equity, Intermediate
Term Income, Limited Duration Government Securities,
Pennsylvania Municipal Bond, Lifestyle Conservative
Growth, Lifestyle Moderate Growth, and Lifestyle Growth
Funds of Governor Funds, approved the following
proposals by means of a Consent of Initial and Sole
Shareholder:
(1) Election of Trustees - John J. Bolger, James L.
Brock, Lana V. Burkhardt, John S. Cramer and Robert
E. Leech, being all of the Trustees, were elected
as Trustees of Trust to hold office during existence
of the Trust or (1) until the qualification of his
or her successor, (2) until the Trust's termination
as provided in the Agreement and Declaration of Trust
("Agreement") or (3) until his or her term shall
earlier terminate as provided in the Agreement.
(2) Selection of Auditors - KPMG Peat Marwick LLP
were elected as independent accountants for the
Trust's organizational period and the remainder of
its initial fiscal year.
(3) Approval of Investment Advisory Agreement
between Governor Funds (the "Registrant") and
Governor Group Advisers, Inc. ("Governor").
(4) Approval of Investment Sub-Advisory Agreement
between Governor and Martindale Andres & Company, Inc.
(5) Approval Sub-Advisory Agreement between Governor
and Brinson Partners, Inc.
(6) Approval of Administration Agreement among the
Registrant, Governor and BISYS Fund Services Ohio, Inc.
(7) Approval of the Fund Accounting Agreement between
the Registrant and BISYS Fund Services, Inc.
(8) Approval of Transfer Agency Agreement between the
Registrant and BISYS Fund Services, Inc.
(9) Approval of Distribution Agreement between the
Registrant and BISYS Fund Services Limited Partnership.
(10) Approval of the Trust's Distribution Plan and
Related Agreements.
SUB-ITEM 77D: Policies with respect to security
investments.
Effective February 25, 1999, each of the
Registrant's investment portfolios are permitted
to purchase securities from underwriting syndicates
in which an officer, director, member of an advisory
board, investment advisor or sub-advisor of a
particular portfolio or employee of the Registrant
or in which a person of which any such officer,
director, member of any advisory board, investment
advisor or sub-advisor of the particular portfolio
or employee is an affiliated person participates as
a syndicate manager or member, pursuant to procedures
approved by Registrant's Board of Trustees which are
reasonably designed to ensure that any such purchases
will comply with the provisions of Rule 10f-3 under the
Investment Company Act of 1940 ("Act").
SUB-ITEM 77I: Terms of new or amended securities
(b) The response to Sub-Item 77I(b) is incorporated
herein by reference to the Registrant's Prospectuses
and Statement of Additional Information, each dated
January 4, 1999, as filed with the Securities
and Exchange Commission ("SEC") on February 16, 1999
pursuant to Rule 497 (c) of the Securities Act of 1933
(Accession No. 0000950152-99-001163).
SUB-ITEM 77M: Mergers
(a) and (b) The responses to Sub-Item 77M (a) and (b)
are incorporated herein by reference to the definitive
proxy statement of The Sessions Group as filed with the
SEC on November 24, 1998 pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Accession No.
0000950152-98-009209) ("Definitive Proxy Statement").
The transaction reorganizing the KeyPremier Funds of The
Sessions Group into the Registrant was approved by
shareholders of such funds on January 15, 1999 and
consummated on February 1, 1999. The Sessions Group
intends to continue operations as an open-end management
investment company registered pursuant to the Act and,
accordingly, has not applied for an order pursuant to
Section 8(f) thereof to cease operations as an investment
company.
SUB-ITEM 77Q1: Exhibits
(a) As of September 16, 1998 the following Section
3.11 is added to Article III of the Registrant's Bylaws:
Section 3.11. Qualification of Directors.
No person over the age 70 shall be eligible to serve
as a trustee of the Trust. Trustees of the Trust
shall retire as trustees when they attain the age of 70.
(e) Copies of new Registrant investment advisory
and sub-advisory contracts are attached hereto.
(f) The Agreement and Plan of Reorganization
dated as of October 5, 1998 by and between The
Sessions Group and the Registrant is incorporated
herein by reference to Exhibit A to the Definitive
Proxy Statement.
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of
November 16, 1998, by and
between GOVERNOR FUNDS, a Delaware
business trust (the "Trust"),
and GOVERNORS GROUP ADVISORS, INC.,
a Delaware corporation
(the "Advisor").
WHEREAS, the Trust is registered
as an open-end management investment
company under the Investment Company Act
of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain
the Advisor to provide, or to arrange for
the provision of, investment advisory services to
twelve newly created investment portfolios
of the Trust and may retain the Advisor to serve
in such capacity to certain additional investment
portfolios of the Trust, all as now or hereafter
may be identified in Schedule A hereto (such new
investment portfolios and any such additional
investment portfolios together called the "Funds")
and the Advisor represents that it is willing and
possesses legal authority to so furnish
such services without violation of applicable laws
(including the Glass- Steagall Act) and regulations;
NOW, THEREFORE, in consideration of the premises
and mutual covenants herein contained, it is agreed
between the parties hereto as follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints
the Advisor to act as Advisor to the Funds for the
period and on the terms set forth in this Agreement.
The Advisor accepts such appointment and agrees to
furnish the services herein set
forth for the compensation herein provided.
Additional investment portfolios may from time to
time be added to those covered by this Agreement
by the parties executing a new Schedule A which
shall become effective upon its
execution and shall supersede any
Schedule A having an earlier date.
SECTION 2. DELIVERY OF DOCUMENTS. The Trust
has furnished the Advisor with copies properly certified
or authenticated of each of the following:
(a) the Trust's Declaration of Trust (such
Declaration of Trust, as presently in effect and
as it shall from time to time be amended and
restated, is herein called the
"Declaration of Trust");
(b) the Trust's By-Laws and any amendments thereto;
(c) resolutions of the Trust's Board of Trustees
authorizing the appointment of the Advisor and
approving this Agreement;
(d) the Trust's Notification of Registration
on Form N-8A under the 1940 Act as filed with
the Securities and Exchange Commission
on October 1, 1998 and all amendments thereto;
(e) all of the Trust's procedures and
guidelines and all resolutions
of the Trust's Board relevant to the services
to be provided by the
Advisor hereunder;
(f) the Trust's Registration Statement on Form
N-lA under the Securities Act of 1933, as amended
("1933 Act"),(File No. 333-65213), and under the
1940 Act as filed with the Securities and Exchange
Commission and the most recent
amendment thereto; and
(g) the most recent Prospectus and Statement
of Additional Information of each of the Funds
(such Prospectus and Statement of Additional
Information, as presently in effect,
and all amendments and supplements thereto,
are herein collectively called the "Prospectus").
The Trust will furnish the Advisor from
time to time with copies of all amendments of or
supplements to the foregoing.
SECTION 3. MANAGEMENT. Subject
to the supervision of the
Trust's Board of Trustees, the
Advisor will provide a
continuous investment program
for each of the Funds,
including investment research
and management with respect
to all securities and investments
and cash equivalents
in the Funds. The Advisor will
determine from time to time
what securities and other
investments will be purchased,
retained or sold by the Trust
with respect to the Funds and
will implement such determinations
through the placement,
in the name of the Funds, of
orders for the execution of
portfolio transactions with or
through such brokers or
dealers as it may select. The
Advisor will provide the
services under this Agreement in
accordance with each of
the Fund's investment objectives,
policies, and restrictions
as stated in the Prospectus, as
the same may be amended,
supplemented or restated from
time to time, and resolutions
of the Trust's Board of Trustees.
In fulfilling its responsibilities
hereunder, the Advisor further
agrees that it will:
(a) use the same skill and care
in providing such services
(b) as it uses in providing services
to fiduciary accounts
(c) for which it has investment
responsibilities;
(b) conform with all applicable
Rules and Regulations of
the Securities and Exchange
Commission and in addition will
conduct its activities under
this Agreement in accordance
with any applicable regulations
of any governmental authority
pertaining to the investment
advisory activities of the Advisor;
(d) not make loans to any person to purchase
or carry shares (e) of beneficial interest in the
Trust or make loans to the Trust;
(d) place orders pursuant to its
investment determinations
for the Funds either directly with
the issuer or with any
broker or dealer. In placing orders
with brokers and dealers,
the Advisor will attempt to obtain
prompt execution of orders
in an effective manner at the most
favorable price. In
assessing the best execution
available for any transaction,
the Advisor shall consider all
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-dealer
and the reasonableness of
the commission, if any (for the
specific transaction and
on a continuing basis). Consistent
with this obligation,
the Advisor may, in its discretion
and to the extent
permitted by law, purchase and
sell portfolio securities
to and from brokers and dealers
who provide brokerage and
research services (within the
meaning of Section 28(e) of
the Securities Exchange Act of
1934) to or for the benefit
of the Funds and/or other
accounts over which the Advisor
exercises investment discretion.
Subject to the review of
the Trust's Board of Trustees
from time to time with respect
to the extent and continuation
of the policy, the Advisor is
authorized to pay a broker or
dealer who provides such
brokerage and research services
a commission for effecting
a securities transaction for any
of the Funds which is in
excess of the amount of commission
another broker or dealer
would have charged for effecting
that transaction if, but
only if, the Advisor determines
in good faith that such
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 transaction
or the overall responsibilities of
the Advisor with respect
to the accounts as to which it
exercises investment discretion.
In placing orders with brokers and
dealers, consistent with
applicable laws, rules and
regulations, the Advisor may
consider the sale of shares of
the Trust. Except as otherwise
permitted by applicable laws, rules
and regulations, in no
instance will portfolio securities
be purchased from or sold
to BISYS Fund Services Ohio Inc.,
the Advisor or any affiliated
person of the Trust, BISYS Fund
Services Ohio Inc.
or the Advisor. In executing
portfolio transactions
for any Fund, the Advisor may,
but shall not be obligated to,
to the extent permitted by
applicable laws and regulations,
aggregate the securities to
be sold or purchased with those
of other Funds and its other
clients where such aggregation
is not inconsistent with the
policies set forth in the Trust's
registration statement.
In such event, the Advisor will
allocate the securities so
purchased or sold, and the
expenses incurred in the transaction,
pursuant to any applicable law
or regulation and in the manner
it considers to be the most
equitable and consistent with its
fiduciary obligations to the
Funds and such other clients.
(f) will maintain all books
and records with respect to the
(g) securities transactions of
the Funds and will furnish the
(h) Trust's Board of Trustees
such periodic and special reports
(i) as the Board may request;
(f) will treat confidentially and
as proprietary information of
the Trust all records and other
information relative to the Trust
and the Funds and prior, present,
or potential shareholders, and
will not use such records and
information for any purpose other
than performance of its responsibilities
and duties hereunder,
except after prior notification to
and approval in writing by
the Trust, which approval shall not
be withheld where the
Advisor may be exposed to civil or
criminal contempt proceedings
for failure to comply, when
requested to divulge such
information by duly constituted
authorities, or when so
requested by the Trust; and
(g) will maintain its policy and
practice of conducting its
fiduciary functions independently.
In making investment
recommendations for the Funds,
the Advisor's personnel will
not inquire or take into consideration
whether the issuers
of securities proposed for purchase
or sale for the Trust's
account are customers of the Advisor
or of its parents,
subsidiaries or affiliates.
In dealing with such customers,
the Advisor and its parents,
subsidiaries, and affiliates
will not inquire or take into
consideration whether
securities of those customers
are held by the Trust.
SECTION 4. SUB-ADVISOR. It is
understood that the Advisor
may from time to time employ or
associate with itself such
person or persons as the Advisor
believes to be fitted to
assist it in the performance of
this Agreement
(each a "Sub-Advisor"); provided,
however, that the
compensation of such person or
persons shall be paid by
the Advisor and that the Advisor
shall be as fully
responsible to the Trust for the
acts and omissions of
any such person as it is for its
own acts and omissions;
and provided further, that the
retention of any Sub-Advisor
shall be approved as may be
required by the 1940 Act.
In the event that any Sub-Advisor
appointed hereunder is
terminated, the Advisor may provide
investment advisory
services pursuant to this Agreement
to the Funds without
further shareholder approval.
SECTION 5. SERVICES NOT EXCLUSIVE.
The Advisor will for all
purposes herein be deemed to be
an independent contractor
and will, unless otherwise
expressly provided herein or
authorized by the Board from
time to time, have no
authority to act for or represent
the Trust in any way
or otherwise be deemed its agent.
The investment management
services furnished by the Advisor
hereunder are not to be
deemed exclusive, and the Advisor
shall be free to furnish
similar services to others so
long as its services under
this Agreement are not impaired
thereby.
SECTION 6. BOOKS AND RECORDS.
In compliance with the
requirements of Rule 3la-3 under
the 1940 Act, the Advisor
hereby agrees that all records
which it maintains for the
Funds are the property of the
Trust and further agrees to
surrender promptly to the Trust
any of such records upon
the Trust's request. The Advisor
further agrees to preserve
for the periods prescribed by Rule
3la-2 under the 1940 Act
the records required to be maintained
by Rule 3la-1 under
the 1940 Act.
SECTION 7. EXPENSES. During the
term of this Agreement,
the Advisor will pay all expenses
incurred by it in connection
with its activities under this
Agreement other than the
cost of securities (including
brokerage commissions, if any)
purchased for the Funds.
SECTION 8. COMPENSATION. For the
services provided and the
expenses assumed pursuant to this
Agreement, each of the Funds
will pay the Advisor and the Advisor
will accept as full
compensation therefor a fee as set
forth on Schedule A hereto.
The obligations of the Funds to pay
the above-described fee to
the Advisor will begin as of the
respective dates of the
initial public sale of shares in
the Funds; provided, however,
that the Advisor may from time to
time waive some or all of
such fees until such time as it
notifies the Trust that it
has terminated such waiver.
Upon any termination of this
Agreement before the end of any
month, the fee for such part
of a month shall be prorated
according to the proportion
which such period bears to the
full monthly period and shall
be payable upon the date of
termination of this Agreement.
For the purpose of determining
fees payable to the
Advisor, the value of the net
assets of a particular Fund
shall be computed in the manner
described in the Trust's
Declaration of Trust or in the
Prospectus or Statement of
Additional Information respecting
that Fund as from time to
time is in effect for the computation
of the value of such
net assets in connection with the
determination of the
liquidating value of the
shares of such Fund.
SECTION 9. LIMITATION OF LIABILITY.
Notwithstanding
anything herein to the contrary,
the Advisor shall
not be liable for any error of
judgment or
mistake of law or for any loss
suffered by the Funds in connection
with the performance of
this 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 Advisor
in the performance of its duties or
from reckless disregard
by it of its obligations and duties
under this Agreement.
SECTION 10. DURATION AND TERMINATION.
This Agreement will
become effective as of the date first
written above (or, if
a particular Fund is not in existence
on that date, on the
date a registration statement or
post-effective amendment to
a registration statement relating to
that Fund becomes
effective with the Securities and
Exchange Commission and
Schedule A hereto is amended to add
such Fund), provided
that it shall have been approved by
vote of a majority of
the outstanding voting securities of
such Fund, in accordance
with the requirements under the 1940
Act, and, unless sooner
terminated as provided herein, shall
continue in effect until
June 30, 2000.
Thereafter, if not terminated,
this Agreement shall
continue in effect as to a particular
Fund for successive
periods of twelve months each ending on
June 30 of each
year, provided such continuance is
specifically approved
at least annually (a) by the vote of
a majority of those
members of the Trust's Board of Trustees
who are not parties
to this Agreement or interested persons
of any party to this
Agreement, cast in person at a meeting
called for the purpose
of voting on such approval, and (b)
by the vote of a majority
of the Trust's Board of Trustees
or by the vote of a majority
of all votes attributable to the
outstanding Shares of such
Fund. Notwithstanding the foregoing,
this Agreement may be
terminated as to a particular Fund
at any time on sixty days'
written notice to the other party,
without the payment of any
penalty, by the Trust (by vote of
the Trust's Board of Trustees
or by vote of a majority of the
outstanding voting securities
of such Fund) or by the Advisor.
This Agreement will
immediately terminate in the event
of its assignment.
(As used in this Agreement, the
terms "majority of the
utstanding voting securities,"
"interested persons" and
"assignment" shall have the same
meanings as ascribed to
such terms in the 1940 Act.)
SECTION 11. ADVISOR'S REPRESENTATIONS.
The Advisor hereby
represents that it is willing and
possesses all requisite
legal authority to provide the
services contemplated by this
Agreement without violation of
applicable laws and regulations,
including but not limited to the
Glass-Steagall Act and the
regulations promulgated thereunder.
SECTION 12. AMENDMENT OF THIS AGREEMENT.
No provision of this
Agreement may be changed, waived,
discharged or terminated
orally, but only by an instrument
in writing signed by the
party against which enforcement of
the change, waiver, discharge
or termination is sought.
SECTION 13. NAME. The Trust hereby
acknowledges that the name
"Governor(s)" is a property right of
the Advisor. The Advisor
agrees that the Trust and the Funds
may, so long as
this Agreement remains in effect,
use "Governor(s)" as
part of its name. The Advisor may
permit other persons,
firms or corporations, including
other investment
companies, to use such name and
may, upon termination
of this Agreement, require the
Trust and the Funds to
refrain from using the name
"Governor(s)" in any form or combination
in its name or in its business or
in the name of any of its Funds,
and the Trust shall, as
soon as practicable following its
receipt of any such request
from the Advisor, so refrain from
using such name.
SECTION 14. YEAR 2000 COMPLIANT.
The Advisor represents and
warrants that all services rendered
and all computer systems
used in the performance of the
Advisor's obligations under
this Agreement shall be Year
2000 Compliant. "Year 2000
Compliant" means that the services
and systems are designed
to and shall:
(a) operate in the year 2000 and
later with four
digit year date capability;
(b) operate fault-free in the
processing of date
and date-dependent data before,
during and after
January 1, 2000, including but
not limited to
accepting date input, providing
date output, and
performing date calculations,
comparison and sequencing;
(c) function accurately and
without interruption
before, during, and after
January 1, 2000, without
any adverse effect on operations
and associated with
the advent of the new century;
(d) store and provide output of date information
in ways that are unambiguous as to century.
The representations and warranties contained
herein may not be disclaimed or limited by
operation of law.
SECTION 15. LIMITATION OF LIABILITY OF THE
TRUSTEES AND SHAREHOLDERS. Governor
Funds is a business trust organized
under Delaware law and under a
Declaration of Trust, to
which reference is hereby made and
a copy of which is on
file at the Office of the Secretary
of State of Delaware as
required by law, and to any and all
amendments thereto so
filed or hereafter filed. The
obligations of "Governor
Funds" entered into in the name
or on behalf thereof by
any of the Trustees, officers,
employees or agents are
made not individually, but in
such capacities, and are
not binding upon any of the
Trustees, officers, employees,
agents or shareholders of the
Trust personally, but bind
only the assets of the Trust,
and all persons dealing with
any of the Funds of the Trust
must look solely to the
assets of the Trust belonging
to such Fund for the
enforcement of any claims
against the Trust.
SECTION 16. MISCELLANEOUS. The captions
in this Agreement are included for
convenience of reference only and in no
way define or delimit any of the
provisions hereof or
otherwise affect their construction
or effect. If any provision of this
Agreement shall be held or made invalid
by a court decision, statute, rule or
otherwise, the remainder of this
Agreement shall not be affected thereby.
This Agreement shall be binding
upon and shall inure to
the benefit of the parties hereto
and their respective
successors and shall be governed by
the law of the State
of Delaware; provided that nothing
herein shall be
construed in a manner inconsistent
with the 1940 Act,
the Advisers Act of 1940,
as amended, or any rule or
regulation of the Securities
and Exchange Commission
thereunder. This Agreement
may be executed in two or
more counterparts which
together shall constitute a
single Agreement.
IN WITNESS WHEREOF, the
parties hereto have caused
this instrument to be executed
by their officers
designated below as of the day
and year first above written.
Governor Funds
By Lana V. Burkhardt
Name Lana V. Burkhardt
Title President
GOVERNORS GROUP ADVISORS,
INC.
Governor Funds
By Lana V. Burkhardt
Name Lana V. Burkhardt
Title President
Dated: November 16, 1998
Schedule A
to the
Investment Advisory Agreement
between Governor Funds and
Governors Group Advisors, Inc.
dated as of November 16, 1998
NAME OF FUND
COMPENSATION*
DATE
Prime Money Market Fund
Annual Rate of .40% of such Fund's
average net assets
November 16, 1998
Pennsylvania Municipal Bond Fund
Annual Rate of .60% of such Fund's
average daily net assets
November 16, 1998
Established Growth Fund
Annual Rate of .75% of such Fund's
average daily net assets
November 16, 1998
Intermediate Term Income Fund
Annual Rate of .60% of such Fund's
average daily net assets
November 16, 1998
Aggressive Growth Fund
Annual Rate of 1.00% of such Fund's
average daily net assets
November 16, 1998
U.S. Treasury Obligations Money Market Fund
Annual Rate of .40% of such Fund's
average daily net assets
November 16, 1998
Limited Duration Government Securities Fund
Annual Rate of .60% of such Fund's
average daily net assets
November 16, 1998
Emerging Growth Fund
Annual Rate of 1.25% of such Fund's
average daily net assets
November 16, 1998
International Equity Fund
Annual Rate of 1.25% of such Fund's
average daily net assets
November 16, 1998
Lifestyle Conservative Growth Fund
Annual Rate of .25% of such Fund's
average daily net assets
November 16, 1998
Lifestyle Moderate Growth Fund
Annual Rate of .25% of such Fund's
average daily net assets
November 16, 1998
Lifestyle Growth Fund
Annual Rate of .25% of such Fund's
average daily net assets
November 16, 1998
*All Fees are computed daily and paid monthly.
GOVERNORS GROUP ADVISORS, INC.
GOVERNOR FUNDS
Governor Funds
By Lana V. Burkhardt
Name Lana V. Burkhardt
Title President
INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made as of
November 16, 1998, by and
between GOVERNORS GROUP
ADVISORS, INC., a Delaware corporation
(the "Advisor"), and MARTINDALE ANDRES &
COMPANY, INC., a Pennsylvania corporation
(the "Sub-Advisor").
WHEREAS, Governor Funds, a
Delaware business trust
(the "Trust"), is registered as an
open-end management
investment company under the Investment
Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an
Investment Advisory
Agreement dated as of October 5,
1998, by and between
the Trust and the Advisor (the
"Advisory Agreement"),
the Advisor has agreed to furnish
investment advisory
services to the Trust with respect
to each of its
investment portfolios; and
WHEREAS, the Advisory
Agreement expressly
authorizes the Advisor to
employ or associate
itself with one or more investment
sub-advisers
provided that the retention of any
such sub-adviser
shall be approved in accordance with
the provisions
of the 1940 Act; and
WHEREAS, the Advisor
desires to appoint the
Sub-Advisor as investment
sub-adviser to each
investment portfolio of the
Trust set forth on
Schedule A hereto (each, a "Fund,"
collectively,
the "Funds"), and the Sub-Advisor
wishes to accept
such appointment; and
WHEREAS, the Board of
Trustees of the Trust
and the shareholders of each
Fund have approved
this Agreement and the appointment
of the
Sub-Advisor as investment
sub-adviser to such Fund.
NOW, THEREFORE, in
consideration of the
premises and mutual covenants
herein contained,
it is agreed between the parties
hereto as follows:
SECTION 17. APPOINTMENT. The Advisor hereby
appoints the Sub-Advisor to act as investment
sub-adviser to the Funds for the period and on
the terms set forth in this Agreement. The
Sub-Advisor accepts such appointment and agrees
to furnish the services herein set forth for the
compensation herein provided. Additional
investment portfolios may from time to time be
added to those covered by this Agreement by the
parties executing a new Schedule A which shall
become effective upon its execution and shall
supersede any Schedule A having an earlier date.
SECTION 18. DELIVERY OF DOCUMENTS. The Trust or
Advisor has furnished the Sub-Advisor with copies
properly certified or authenticated of each of the
following:
(a) the Trust's Certificate of Trust, as filed
with the Secretary of State of Delaware on
September 3, 1998, as amended or restated to
the date hereof;
(b) the Trust's Declaration of Trust, as amended
or restated to the date hereof (such Declaration,
as presently in effect and as it shall from time
to time be amended and restated, is herein called
the "Declaration of Trust");
(c) the Trust's By-Laws and any amendments thereto;
(c) resolutions of the Trust's Board of Trustees
authorizing the appointment of the Sub-Advisor and
approving this Agreement;
(d) the Trust's Notification of
Registration on Form
N-8A under the 1940 Act as filed
with the Securities
and Exchange Commission on October
1, 1998 and all
amendments thereto;
(e) all of the Trust's procedures and guidelines
and all resolutions of the Trust's Board relevant
to the services to be provided by the Sub-Advisor
hereunder;
(f) the Trust's Registration Statement on Form N-lA
under the Securities Act of 1933, as amended ("1933
Act"), (File No. 333-65213), and under the 1940 Act
as filed with the Securities and Exchange Commission
and the most recent amendment thereto; and
(g) the most recent Prospectus
and Statement of
Additional Information of each
of the Funds (such
Prospectus and Statement of
Additional Information,
as presently in effect, and
all amendments and
supplements thereto, are herein
collectively called the
"Prospectus").
The Trust will furnish
the Sub-Advisor from time
to time with copies of all
amendments of or supplements
to the foregoing.
SECTION 19. MANAGEMENT. Subject to
the supervision of
the Advisor and the Trust's Board of
Trustees, the
Sub-Advisor will provide a
continuous investment
program for each of the Funds,
including investment
research and management with
respect to all securities
and investments and cash
equivalents in the Funds.
The Sub-Advisor will determine
from time to time what
securities and other investments
will be purchased,
retained or sold by the Trust
with respect to the
Funds and will implement such
determinations through
the placement, in the name of
the Funds, of orders for
the execution of portfolio
transactions with or through
such brokers or dealers as
it may select. The
Sub-Advisor will provide the
services under this
Agreement in accordance with
each of the Fund's
investment objectives, policies,
and restrictions
as stated in the Prospectus,
as the same may be
amended, supplemented or
restated from time to time,
and resolutions of the
Trust's Board of Trustees.
In fulfilling its responsibilities hereunder,
the Sub-Advisor further agrees that it will:
(a) use the same skill and care in providing such
services as it uses in providing services to
fiduciary accounts for which it has investment
responsibilities;
(b) conform with all applicable
Rules and Regulations
of the Securities and Exchange
Commission and in
addition will conduct its
activities under this Agreement
in accordance with any
applicable regulations of
any governmental authority
pertaining to the
investment advisory activities
of the Sub-Advisor;
(c) not make loans to any
person to purchase or
carry shares of beneficial
interest in the Trust
or make loans to the Trust;
(d) place orders pursuant to its investment
determinations for the Funds either directly
with the issuer or with any broker or dealer.
In placing orders with brokers and dealers,
the Sub-Advisor will attempt to obtain prompt
execution of orders in an effective manner at
the most favorable price. In assessing the best
execution available for any transaction, the
Sub-Advisor shall consider all 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-dealer and the reasonableness of
the commission, if any (for the specific
transaction and on a continuing basis). Consistent
with this obligation, the Sub-Advisor may, in its
discretion and to the extent permitted by law,
purchase and sell portfolio securities to and from
brokers and dealers who provide brokerage and
research services (within the meaning of Section
28(e) of the Securities Exchange Act of 1934) to
or for the benefit of the Funds and/or other
accounts over which the Sub-Advisor exercises
investment discretion. Subject to the review
of the Advisor and the Trust's Board of Trustees
from time to time with respect to the extent and
continuation of the policy, the Sub-Advisor is
authorized to pay a broker or dealer who provides
such brokerage and research services a commission
for effecting a securities transaction for any of
the Funds which is in excess of the amount of
commission another broker or dealer would have
charged for effecting that transaction if, but
only if, the Sub-Advisor determines in good
faith that such 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
transaction or the overall responsibilities of
the Sub-Advisor with respect to the accounts as
to which it exercises investment discretion. In
placing orders with brokers and dealers, consistent
with applicable laws, rules and regulations, the
Sub-Advisor may consider the sale of shares of the
Trust. Except as otherwise permitted by applicable
laws, rules and regulations, in no instance will
portfolio securities be purchased from or sold to
BISYS Fund Services Ohio Inc., the Advisor, the
Sub-Advisor or any affiliated person of the Trust,
BISYS Fund Services Ohio Inc., the Advisor or the
Sub-Advisor. In executing portfolio transactions
for any Fund, the Sub-Advisor may, but shall not
be obligated to, to the extent permitted by applicable
laws and regulations, aggregate the securities to
be sold or purchased with those of other Funds and
its other clients where such aggregation is not
inconsistent with the policies set forth in the
Trust's registration statement. In such event,
the Sub-Advisor will allocate the securities so
purchased or sold, and the expenses incurred in
the transaction, pursuant to any applicable law or
regulation and in the manner it considers to be
the most equitable and consistent with its fiduciary
obligations to the Funds and such other clients.
(e) will maintain all books and records with respect
to the securities transactions of the Funds and
will furnish the Advisor and the Trust's Board
of Trustees such periodic and special reports as
the Advisor or the Board may request;
(f) will treat confidentially and as proprietary
information of the Trust all records and other
information relative to the Trust and the Funds
and prior, present, or potential shareholders,
and will not use such records and information
for any purpose other than performance of its
responsibilities and duties hereunder, except
after prior notification to and approval in writing
by the Trust, which approval shall not be withheld
where the Sub-Advisor may be exposed to civil or
criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly
constituted authorities, or when so requested by the
Trust; and
(g) will maintain its policy and practice of conducting
its fiduciary functions independently. In making
investment recommendations for the Funds, the
Sub-Advisor's personnel will not inquire or take
into consideration whether the issuers of
securities proposed for purchase or sale for the
Trust's account are customers of the Sub-Advisor
or of its parents, subsidiaries or affiliates.
In dealing with such customers, the Sub-Advisor
and its parents, subsidiaries, and affiliates will
not inquire or take into consideration whether
securities of those customers are held by the Trust.
SECTION 20. SERVICES NOT EXCLUSIVE. The Sub-Advisor
will for all purposes herein be deemed to be an
independent contractor and will, unless otherwise
expressly provided herein or authorized by the
Board from time to time, have no authority to
act for or represent the Trust in any way or
otherwise be deemed its agent. The investment
management services furnished by the Sub-Advisor
hereunder are not to be deemed exclusive, and
the Sub-Advisor shall be free to furnish similar
services to others so long as its services under
this Agreement are not impaired thereby.
SECTION 21. BOOKS AND RECORDS. In compliance with
the requirements of Rule 3la-3 under the 1940 Act,
the Sub-Advisor hereby agrees that all records which
it maintains for the Funds are the property of the
Trust and further agrees to surrender promptly to
the Trust any of such records upon the Trust's request.
The Sub-Advisor further agrees to preserve for the
periods prescribed by Rule 3la-2 under the 1940 Act
the records required to be maintained by Rule 3la-1
under the 1940 Act.
SECTION 22. EXPENSES. During the term of this
Agreement, the Sub-Advisor will pay all expenses
incurred by it in connection with its activities
under this Agreement other than the cost of
securities (including brokerage commissions, if
any) purchased for the Funds.
SECTION 23. COMPENSATION. For the services
provided and the expenses assumed pursuant to
this Agreement, the Advisor will pay the Sub-Advisor
and the Sub-Advisor will accept as full compensation
therefor a fee as set forth on Schedule A hereto.
The obligations of the Advisor to pay the
above-described fee to the Sub-Advisor will
begin as of the respective dates of the initial
public sale of shares in the Funds; provided,
however, that the Sub-Advisor may from time to
time voluntarily waive any or all such fees.
Upon any termination of this Agreement before
the end of any month, the fee for such part of
a month shall be prorated according to the
proportion which such period bears to the full
monthly period and shall be payable upon the date
of termination of this Agreement.
For the purpose of determining fees payable
to the Sub-Advisor, the value of the net assets
of a particular Fund shall be computed in the manner
described in the Trust's Declaration of Trust or
in the Prospectus or Statement of Additional Information
respecting that Fund as from time to time is in effect
for the computation of the value of such net assets in
connection with the determination of the liquidating
value of the shares of such Fund.
SECTION 24. LIMITATION OF LIABILITY. Notwithstanding
anything herein to the contrary, the Sub-Advisor shall
not be liable for any error of judgment or mistake of
law or for any loss suffered by the Funds or the Advisor
in connection with the performance of this 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 Sub-Advisor in the
performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement.
SECTION 25. DURATION AND TERMINATION. This Agreement
will become effective as of the date first written
above (or, if a particular Fund is not in existence
on that date, on the date a registration statement or
post-effective amendment to a registration statement
relating to that Fund becomes effective with the
Securities and Exchange Commission and Schedule A
hereto is amended to add such Fund), provided that
it shall have been approved by vote of a majority of
the outstanding voting securities of such Fund, in
accordance with the requirements under the 1940 Act,
and, unless sooner terminated as provided herein,
shall continue in effect until June 30, 2000.
Thereafter, if not terminated, this
Agreement shall continue in effect as to a
particular Fund for successive periods of
twelve months each ending on June 30 of each
year, provided such continuance is specifically
approved at least annually (a) by the vote of
a majority of those members of the Trust's
Board of Trustees who are not parties to this
Agreement or interested persons of any party
to this Agreement, cast in person at a meeting
called for the purpose of voting on such
approval, and (b) by the vote of a majority
of the Trust's Board of Trustees or by the
vote of a majority of all votes attributable
to the outstanding Shares of such Fund.
Notwithstanding the foregoing, this Agreement
may be terminated as to a particular Fund at
any time on sixty days' written notice to
the other parties, without the payment of
any penalty, by the Advisor or by the
Trust (by vote of the Trust's Board of
Trustees or by vote of a majority of the
outstanding voting securities of such
Fund) or by the Sub-Advisor. This Agreement
will immediately terminate in the event
of its assignment and in the event of the
termination of the Advisory Agreement.
(As used in this Agreement, the terms
"majority of the outstanding voting
securities," "interested persons" and
"assignment" shall have the same meanings
as ascribed to such terms in the 1940 Act.)
SECTION 26. SUB-ADVISOR'S REPRESENTATIONS.
The Sub-Advisor hereby represents that it is
willing and possesses all requisite legal
authority to provide the services contemplated
by this Agreement without violation of
applicable laws and regulations, including
but not limited to the Glass-Steagall Act
and the regulations promulgated thereunder.
SECTION 27. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed,
waived, discharged or terminated orally,
but only by an instrument in writing signed
by the party against which enforcement of the
change, waiver, discharge or termination is sought.
SECTION 28. YEAR 2000 COMPLIANT. The Sub-Advisor
represents and warrants that all services rendered
and all computer systems used in the performance
of the Sub-Advisor's obligations under this Agreement
shall be Year 2000 Compliant. "Year 2000 Compliant"
means that the services and systems are designed to
and shall:
(a) operate in the year 2000 and later with
four digit year date capability;
(b) operate fault-free in the processing of
date and date-dependent data before, during
and after January 1, 2000, including but not
limited to accepting date input, providing
date output, and performing date calculations,
comparison and sequencing;
(c) function accurately
and without interruption
before, during, and after
January 1, 2000, without
any adverse effect on operations
and associated with
the advent of the new century;
(d) store and provide
output of date information
in ways that are unambiguous as to century.
The representations and
warranties contained herein
may not be disclaimed or
limited by operation of law.
SECTION 29. LIMITATION OF
LIABILITY OF THE TRUSTEES
AND SHAREHOLDERS. Governor
Funds is a business
trust organized under Delaware
law and under a
Declaration of Trust, to which
reference is
hereby made and a copy of
which is on file at
the Office of the Secretary
of State of Delaware
as required by law, and to
any and all amendments
thereto so filed or hereafter
filed. The obligations
of "Governor Funds" entered
into in the name or on
behalf thereof by any of the
Trustees, officers,
employees or agents are made
not individually, but in
such capacities, and are not
binding upon any of the
Trustees, officers, employees,
agents or shareholders
of the Trust personally, but
bind only the assets of
the Trust, and all persons
dealing with any of the Funds
of the Trust must look solely
to the assets of the Trust
belonging to such Fund for
the enforcement of any claims
against the Trust.
SECTION 30. MISCELLANEOUS. The captions in this
Agreement are included for convenience of reference
only and in no way define or delimit any of the
provisions hereof or otherwise affect their
construction or effect. If any provision of this
Agreement shall be held or made invalid by a
ll not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit
of the parties hereto and their respective
successors and shall be governed by the law of
the State of Delaware; provided that nothing herein
shall be construed in a manner inconsistent with
the 1940 Act, the Investment Advisers Act of 1940,
as amended, or any rule or regulation of the
Securities and Exchange Commission thereunder.
This Agreement may be executed in two or more
counterparts which together shall constitute a
single Agreement.
IN WITNESS WHEREOF, the parties
hereto have caused this instrument to be
executed by their officers designated below
as of the day and year first above written.
GOVERNORS GROUP ADVISORS, INC.
Governor Funds
By Lana V. Burkhardt
Name Lana V. Burkhardt
Title President
MARTINDALE ANDRES & COMPANY, INC.
By William C. Marindale Jr.
Name William C. Martindale Jr.
Title Chief Investment Officer
Schedule A
to the
Investment Advisory Agreement
between
Governors Group Advisors, Inc.
and
Martindale Andres & Company, Inc.
dated as of November 16, 1998
NAME OF FUND
COMPENSATION*
DATE
Prime Money Market Fund
Annual Rate of .20% of such Fund's average
net assets
November 16, 1998
Pennsylvania Municipal Bond Fund
Annual Rate of .30% of such Fund's average
daily net assets
November 16, 1998
Established Growth Fund
Annual Rate of .40% of such Fund's
average daily net assets
November 16, 1998
Intermediate Term Income Fund
Annual Rate of .30% of such Fund's
average daily net assets
November 16, 1998
Aggressive Growth Fund
Annual Rate of .50% of such Fund's
average daily net assets
November 16, 1998
U.S. Treasury Obligations Money Market Fund
Annual Rate of .10% of such Fund's
average daily net assets
November 16, 1998
Limited Duration Government Securities Fund
Annual Rate of .30% of such Fund's
average daily net assets
November 16, 1998
Emerging Growth Fund
Annual Rate of .50% of such Fund's
average daily net assets
November 16, 1998
Lifestyle Conservative Growth Fund
Annual Rate of .05% of such Fund's
average daily net assets
November 16, 1998
Lifestyle Moderate Growth Fund
Annual Rate of .05% of such Fund's
average daily net assets
November 16, 1998
Lifestyle Growth Fund
Annual Rate of .05% of such Fund's
average daily net assets
November 16, 1998
*All Fees are computed daily and paid monthly.
GOVERNORS GROUP ADVISORS, INC.
MARTINDALE ANDRES & COMPANY, INC.
Governor Funds
By Lana V. Burkhardt
Name Lana V. Burkhardt
Title President
Title President Title
Chief Investment Officer
INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made as of November 16, 1998,
by and between GOVERNORS GROUP ADVISORS, INC., a
Delaware corporation (the "Advisor"), and BRINSON
PARTNERS, INC., a Delaware corporation (the "Sub-Advisor").
WHEREAS, Governor Funds, a Delaware business
trust (the "Trust"), is registered as an open-end
management investment company under the
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Investment Advisory
Agreement dated as of October 5, 1998, by and between
the Trust and the Advisor (the "Advisory Agreement"),
the Advisor has agreed to furnish investment advisory
services to the Trust with respect to each of its
investment portfolios; and
WHEREAS, the Advisory Agreement expressly
authorizes the Advisor to employ or associate itself
with one or more investment sub-advisers provided
that the retention of any such sub-adviser shall
be approved in accordance with the provisions of
the 1940 Act; and
WHEREAS, the Advisor desires to appoint the
Sub-Advisor as investment sub-adviser to the
International Equity Fund, an investment portfolio
of the Trust, and to each additional investment
portfolio of the Trust as may from time to time
be identified on Schedule A hereto (each, a "Fund,
" collectively, the "Funds"), and the Sub-Advisor
wishes to accept such appointment; and
WHEREAS, the Board of Trustees of the Trust
and the shareholders of each Fund have approved
this Agreement and the appointment of the
Sub-Advisor as investment sub-adviser to such Fund.
NOW, THEREFORE, in consideration of the
premises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
SECTION 31. APPOINTMENT. The Advisor hereby
appoints the Sub-Advisor to act as investment
sub-adviser to the Funds for the period and on
the terms set forth in this Agreement. The
Sub-Advisor accepts such appointment and agrees
to furnish the services herein set forth for
the compensation herein provided. Additional
investment portfolios may from time to time be
added to those covered by this Agreement by
the parties executing a new Schedule A which
shall become effective upon its execution and
shall supersede any Schedule A having an earlier
date.
SECTION 32. DELIVERY OF DOCUMENTS. The Trust
or Advisor has furnished the Sub-Advisor with
copies properly certified or authenticated of
each of the following:
(a) the Trust's Certificate of Trust, as filed
with the Secretary of State of Delaware on
September 3, 1998, as amended or restated to
the date hereof;
(b) the Trust's Declaration of Trust, as a
mended or restated to the date hereof (such
Declaration, as presently in effect and as
it shall from time to time be amended and
restated, is herein called the "Declaration
of Trust");
(c) the Trust's By-Laws and any amendments thereto;
(d) resolutions of the Trust's Board of Trustees
authorizing the appointment of the Sub-Advisor
and approving this Agreement;
(e) the Trust's Notification of Registration on
Form N-8A under the 1940 Act as filed with the
Securities and Exchange Commission on October
1, 1998 and all amendments thereto;
(f) all of the Trust's procedures and guidelines
and all resolutions of the Trust's Board relevant
to the services to be provided
by the Sub-Advisor hereunder;
(g) the Trust's Registration Statement on Form
N-lA under the Securities Act of 1933, as amended
("1933 Act"), (File No. 333-65213), and under the
1940 Act as filed with the Securities and Exchange
Commission and the most recent amendment thereto; and
(h) the most recent Prospectus and Statement of
Additional Information of each of the Funds
(such Prospectus and Statement of Additional
Information, as presently in effect, and all
amendments and supplements thereto, are herein
collectively called the "Prospectus").
The Trust will furnish the Sub-Advisor
from time to time with copies of all amendments
of or supplements to the foregoing.
SECTION 33. MANAGEMENT. Subject to the supervision
of the Advisor and the Trust's Board of Trustees,
the Sub-Advisor will provide a continuous investment
program for each of the Funds, including investment
research and management with respect to all
securities and investments and cash equivalents
in the Funds. The Sub-Advisor will determine
from time to time what securities and other
investments will be purchased, retained or sold
by the Trust with respect to the Funds and will
implement such determinations through the placement,
in the name of the Funds, of orders for the execution
of portfolio transactions with or through such
brokers or dealers as it may select. The Sub-Advisor
will provide the services under this Agreement
in accordance with each of the Fund's investment
objectives, policies, and restrictions as stated
in the Prospectus, as the same may be amended,
supplemented or restated from time to time, and
resolutions of the Trust's Board of Trustees.
In fulfilling its responsibilities
hereunder, the Sub-Advisor
further agrees that it will:
(a) use the same skill and care in providing
such services as it uses in providing services
to fiduciary accounts for which it has investment
responsibilities;
(b) conform with all applicable Rules and
Regulations of the Securities and Exchange
Commission and in addition will conduct its
activities under this Agreement in accordance
with any applicable regulations of any governmental
authority pertaining to the investment advisory
activities of the Sub-Advisor;
(c) not make loans to any person to purchase or
carry shares of beneficial interest in the Trust
or make loans to the Trust;
(d) place orders pursuant to its investment
determinations for the Funds either directly
with the issuer or with any broker or dealer.
In placing orders with brokers and dealers,
the Sub-Advisor will attempt to obtain prompt
execution of orders in an effective manner at
the most favorable price. In assessing the best
execution available for any transaction, the
Sub-Advisor shall consider all 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-dealer and the reasonableness of the
commission, if any (for the specific transaction
and on a continuing basis). Consistent with this
obligation, the Sub-Advisor may, in its discretion
and to the extent permitted by law, purchase and sell
portfolio securities to and from brokers and dealers
who provide brokerage and research services (within
the meaning of Section 28(e) of the Securities Exchange
Act of 1934) to or for the benefit of the Funds
and/or other accounts over which the Sub-Advisor
exercises investment discretion. Subject to
the review of the Advisor and the Trust's Board
of Trustees from time to time with respect to
the extent and continuation of the policy, the
Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research
services a commission for effecting a securities
transaction for any of the Funds which is in
excess of the amount of commission another broker
or dealer would have charged for effecting that
transaction if, but only if, the Sub-Advisor
determines in good faith that such 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 transaction or the overall
responsibilities of the Sub-Advisor with respect
to the accounts as to which it exercises
investment discretion. In placing orders with
brokers and dealers, consistent with applicable
laws, rules and regulations, the Sub-Advisor may
consider the sale of shares of the Trust. Except
as otherwise permitted by applicable laws, rules
and regulations, in no instance will portfolio
securities be purchased from or sold to BISYS Fund
Services Ohio Inc., the Advisor, the Sub-Advisor
or any affiliated person of the Trust, BISYS Fund
Services Ohio Inc., the Advisor or the Sub-Advisor.
In executing portfolio transactions for any Fund,
the Sub-Advisor may, but shall not be obligated to,
to the extent permitted by applicable laws and
regulations, aggregate the securities to be sold or
purchased with those of other Funds and its other
clients where such aggregation is not inconsistent
with the policies set forth in the Trust's registration
statement. In such event, the Sub-Advisor will
allocate the securities so purchased or sold, and
the expenses incurred in the transaction, pursuant
to any applicable law or regulation and in the manner
it considers to be the most equitable and consistent
with its fiduciary obligations to the Funds and such
other clients.
(e) will maintain all books and records with respect
to the securities transactions of the Funds and will
furnish the Advisor and the Trust's Board of Trustees
such periodic and special reports as the Advisor or
the Board may request;
(f) will treat confidentially
and as proprietary
information of the Trust all
records and other
information relative to the
Trust and the Funds
and prior, present, or potential
shareholders, and will not use
such records and information for
any purpose other than performance of its
responsibilities and duties
hereunder, except where
the Sub-Advisor may be exposed
to civil or criminal
contempt proceedings for
failure to comply, when
requested to divulge such
information by duly constituted
authorities, or when so
requested by the Trust; and
(g) will maintain its policy
and practice of conducting
its fiduciary functions
independently. In making
investment recommendations
for the Funds, the
Sub-Advisor's personnel will
not inquire or take
into consideration whether
the issuers of securities
proposed for purchase or sale
for the Trust's account
are customers of the
Sub-Advisor or of its parents,
subsidiaries or affiliates.
In dealing with such
customers, the Sub-Advisor
and its parents, subsidiaries,
and affiliates will not inquire
or take into consideration
whether securities of those
customers are held by the Trust.
SECTION 34. SERVICES NOT EXCLUSIVE.
The Sub-Advisor
will for all purposes herein be
deemed to be an ndependent contractor
and will, unless otherwise
expressly provided herein or
authorized by the Board
from time to time, have no
authority to act for or
represent the Trust in any
way or otherwise be deemed
its agent. The investment
management services
furnished by the Sub-Advisor
hereunder are not to be
deemed exclusive, and the
Sub-Advisor shall be free
to furnish similar services
to others so long as its
services under this Agreement
are not impaired thereby.
SECTION 35. BOOKS AND RECORDS.
In compliance with
the requirements of Rule 3la-3
under the 1940 Act,
the Sub-Advisor hereby agrees
that all records which
it maintains for the Funds are
the property of the Trust
and further agrees to surrender
promptly to the Trust
any of such records upon the
Trust's request. The
Sub-Advisor further agrees to
preserve for the periods
prescribed by Rule 3la-2 under
the 1940 Act the records
required to be maintained by
Rule 3la-1 under the 1940 Act.
SECTION 36. EXPENSES. During
the term of this Agreement,
the Sub-Advisor will pay all
expenses incurred by it in
connection with its activities
under this Agreement
other than the cost of securities
(including brokerage
commissions, if any) purchased
for the Funds.
SECTION 37. COMPENSATION.
For the services provided
and the expenses assumed pursuant
to this Agreement,
the Advisor will pay the
Sub-Advisor and the Sub-Advisor
will accept as full compensation
therefor a fee as
set forth on Schedule A hereto.
The obligations of
the Advisor to pay the
above-described fee to the
Sub-Advisor will begin as of
the respective dates
of the initial public sale of
shares in the Funds;
provided, however, that the
Sub-Advisor may from
time to time voluntarily waive
any or all such fees.
Upon any termination of this
Agreement before the
end of any month, the fee for
such part of a month
shall be prorated according to
the proportion which
such period bears to the full
monthly period and
shall be payable upon the date
of termination of
this Agreement.
For the purpose of
determining fees payable
to the Sub-Advisor, the value
of the net assets of
a particular Fund shall be
computed in the manner
described in the Trust's
Declaration of Trust or in
the Prospectus or Statement
of Additional Information
respecting that Fund as from
time to time is in
effect for the computation of
the value of such
net assets in connection with
the determination of
the liquidating value of the
shares of such Fund.
SECTION 38. LIMITATION OF LIABILITY.
Notwithstanding
anything herein to the contrary,
the Sub-Advisor
shall not be liable for any error
of judgment or
mistake of law or for any loss
suffered by the Funds
or the Advisor in connection with
the performance of
this 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 Sub-Advisor
in the performance of
its duties or from reckless
disregard by it of its
obligations and duties under
this Agreement.
SECTION 39. DURATION AND TERMINATION.
This Agreement
will become effective as of
the date first written
above (or, if a particular Fund
is not in existence on
that date, on the date a
registration statement or
post-effective amendment to a
registration statement
relating to that Fund becomes
effective with the
Securities and Exchange
Commission and Schedule A hereto
is amended to add such Fund),
provided that it shall
have been approved by vote of
a majority of the
outstanding voting securities
of such Fund, in accordance
with the requirements under
the 1940 Act, and,
unless sooner terminated as
provided herein, shall
continue in effect
until June 30, 2000.
Thereafter, if not terminated, this
Agreement shall continue in effect
as to a particular
Fund for successive periods of
twelve months each
ending on June 30 of each year,
provided such continuance
is specifically approved at
least annually (a) by the
vote of a majority of those
members of the Trust's Board
of Trustees who are not parties
to this Agreement or
interested persons of any party
to this Agreement, cast
in person at a meeting called
for the purpose of voting
on such approval, and (b) by
the vote of a majority of
the Trust's Board of Trustees
or by the vote of a majority
of all votes attributable to
the outstanding Shares of
such Fund. Notwithstanding
the foregoing, this Agreement
may be terminated as to a
particular Fund at any time
on sixty days' written notice
to the other parties,
without the payment of any
enalty, by the Advisor or
by the Trust (by vote of
the Trust's Board of Trustees
or by vote of a majority of
the outstanding voting
securities of such Fund) or
by the Sub-Advisor. This
Agreement will immediately
terminate in the event of
its assignment and in the
event of the termination of
the Advisory Agreement.
(As used in this Agreement,
the terms "majority of the
outstanding voting securities,
"interested persons" and "assignment"
shall have the
same meanings as ascribed to such
terms in the 1940 Act.)
SECTION 40. SUB-ADVISOR'S REPRESENTATIONS.
The Sub-Advisor
hereby represents that it is
willing and possesses all
requisite legal authority to
provide the services
contemplated by this Agreement
without violation of
applicable laws and regulations,
including but not
limited to the Glass-Steagall
Act and the regulations
promulgated thereunder.
SECTION 41. AMENDMENT OF THIS AGREEMENT.
No provision
of this Agreement may be
changed, waived, discharged
or terminated orally, but only
by an instrument in
writing signed by the party
against which enforcement
of the change, waiver,
discharge or termination is sought.
SECTION 42. YEAR 2000 COMPLIANT.
The Sub-Advisor
represents and warrants that
all services rendered
and all computer systems
licensed, maintained or
controlled by the Sub-Advisor
as well as the Sub-Advisor's
interfaces with third parties
(provided that the
foregoing does not represent
or warrant that the third
party's systems are Year
2000 compliant) utilized in
the performance of the
Sub-Advisor's obligations
under this Agreement shall
be Year 2000 Compliant.
"Year 2000 Compliant" means
that the services and
systems are designed to and shall:
(a) operate in the year 2000 and later
with four digit year date capability;
(b) operate fault-free in the processing
of date and date-dependent data before, during
and after January 1, 2000, including but not
limited to accepting date input, providing date
output, and performing date
calculations, comparison and sequencing;
(c) function accurately and without
interruption before, during,
and after January 1, 2000,
without any adverse effect
on operations and associated
with the advent of the new century;
(d) store and provide
output of date information
in ways that are unambiguous as to century.
The representations and
warranties contained herein
may not be disclaimed or
limited by operation of law.
SECTION 43. LIMITATION OF LIABILITY
OF THE TRUSTEES AND
SHAREHOLDERS. Governor Funds
is a business trust
organized under Delaware law
and under a Declaration
of Trust, to which reference
is hereby made and a
copy of which is on file at
the Office of the
Secretary of State of Delaware
as required by law,
and to any and all amendments
thereto so filed or
hereafter filed. The obligations
of "Governor Funds"
entered into in the name or
on behalf thereof by
any of the Trustees, officers,
employees or agents
are made not individually,
but in such capacities,
and are not binding upon any
of the Trustees,
officers, employees, agents
or shareholders of the
Trust personally, but bind
only the assets of the
Trust, and all persons
dealing with any of the
Funds of the Trust must
look solely to the assets
of the Trust belonging to
such Fund for the
enforcement of any claims
against the Trust.
SECTION 44. MISCELLANEOUS.
The captions in this
Agreement are included for
convenience of
reference only and in no way
define or delimit
any of the provisions hereof
or otherwise affect
their construction or effect.
If any provision
of this Agreement shall be
held or made invalid
by a court decision, statute,
rule or otherwise,
the remainder of this Agreement
shall not be
affected thereby. This
Agreement shall be binding
upon and shall inure to the
benefit of the
parties hereto and their
respective successors
and shall be governed by the
law of the State of
Delaware; provided that
nothing herein shall be
construed in a manner
inconsistent with the 1940
Act, the Investment Advisers
Act of 1940, as amended,
or any rule or regulation
of the Securities and
Exchange Commission thereunder.
This Agreement
may be executed in two or
more counterparts which
together shall constitute
a single Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this instrument
to be executed by their
officers designated below
as of the day and year
first above written.
GOVERNORS GROUP ADVISORS, INC.
Governor Funds
By Lana V. Burkhardt
Name Lana V. Burkhardt
Title President
BRINSON PARTNERS, INC.
By Samuel W. Anderson
Name Samuel W. Anderson
Title Vice President
By Mark F. Kemper
Name Mark F. Kemper
Title Assistant Secretary
Dated: November 16, 1998
Schedule A
to the
Investment Advisory Agreement
between
Governors Group Advisors, Inc.
and
Brinson Partners, Inc.
dated as of November 16, 1998
NAME OF FUND
COMPENSATION*
DATE
International Equity Growth Fund
Annual Rate of .40% of the first $50 million
of such Fund's average daily net assets, .35%
of the next $150 million of such Fund's average
daily net assets, and .30% of such Fund's average
daily net assets in excess of $200 million
November 16, 1998
*All Fees are computed daily and paid monthly.
GOVERNORS GROUP ADVISORS, INC.
BRINSON PARTNERS, INC.
By Lana V. Burkhardt
By Samuel W. Anderson
Title President
Title Vice President
By Mark F. Kemper
Title Assistant Secretary
The Board of Directors
of the Governor Funds:
In planning and performing our
audit of the financial
statements of the Governor Funds
(the Funds) for the
year ended June 30, 1999, we
considered their internal
control, including control
activities for safeguarding
securities, in order to determine
our auditing procedures
for the purpose of expressing our
opinion on the financial
statements and to comply with the
requirements of Form
N-SAR, not to provide assurance
on internal control.
The management of the Funds
is responsible for
establishing and maintaining
internal control. In
fulfilling this responsibility,
estimates and judgments
by management are required to
assess the expected benefits
and related costs of controls.
Generally, controls that
are relevant to an audit pertain
to the entity's objective
of preparing financial statements
for external purposes
that are fairly presented in
conformity with generally
accepted accounting principles.
Those controls include
the safeguarding of assets
against unauthorized
acquisition, use, or disposition.
Because of inherent limitations
in any internal control,
error or fraud may occur and
not be detected. Also,
projection of any evaluation
of internal control to future
periods is subject to the
risk that it may become
inadequate because of changes
in conditions or that
the effectiveness of
the design and operation
may deteriorate.
Our consideration of internal
control would not
necessarily disclose all
matters in internal control
that might be material
weaknesses under standards
established by the American
Institute of Certified
Public Accountants. A
material weakness is a condition
in which the design or
operation of one or more internal
control components does not
reduce to a relatively low
level the risk that misstatements
caused by error or
fraud in amounts that would
be material in relation to
the financial statements
being audited may occur and
not be detected within a
timely period by employees in
the normal course of performing
their assigned functions.
However, we noted no matters
involving internal control
and its operation, including
controls for safeguarding
securities, that we consider
to be material weaknesses
as defined above as of June 30, 1999.
This report is intended solely
for the information and
use of management, the Board
of Trustees of the Funds,
and the Securities and Exchange
Commission and is not
intended to be and should not
be used by anyone other
than these specified parties.
KPMG LLP
Columbus, Ohio
August 13, 1999
