<PAGE> 1
Registration No. 2-74285
811-3274
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 23
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23
CASH INCOME TRUST
-----------------
(Exact name of Registrant)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (203) 277-0111
--------------
ERNEST J. WRIGHT
Secretary to the Board of Trustees
Cash Income Trust
One Tower Square
Hartford, Connecticut 06183
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: _____________________
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b).
X on May 1, 1996 pursuant to paragraph (b).
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___ 60 days after filing pursuant to paragraph (a)(1).
___ on ___________ pursuant to paragraph (a)(1) of Rule 485.
___ 75 days after filing pursuant to paragraph (a)(2).
___ on ___________ pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
AN INDEFINITE NUMBER OF SHARES OF BENEFICIAL INTEREST OF THE REGISTRANT WERE
REGISTERED PURSUANT TO RULE 24f-2 OF THE INVESTMENT COMPANY ACT OF 1940. A
RULE 24f-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED DECEMBER 31, 1995 WAS
FILED ON FEBRUARY 29, 1996.
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CASH INCOME TRUST
Cross-Reference Sheet pursuant to Rule 495 under the Securities Act of 1933
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Cover Page
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Fund Description; Investment
Objective and Policies
5. Management of the Fund Board of Trustees; Investment Adviser;
Securities
Transactions; Fund Expenses;
Additional Information
6. Capital Stock and Other Securities Fund Description; Dividends and Tax Status;
Fund Shares; Pricing Shares
7. Purchase of Securities Being Offered Fund Shares
8. Redemption or Repurchase Share Redemption
9. Legal Proceedings Legal Proceedings
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions; Appendix
14. Management of the Registrant Trustees and Officers
15. Control Persons and Principal Additional Information
Holders of Securities
16. Investment Advisory and Investment Adviser; Additional Information
Other Services
17. Brokerage Allocation Brokerage
18. Capital Stock and Other Securities Declaration of Trust
19. Purchase, Redemption and Pricing Valuation of Securities
of Securities Being Offered
20. Tax Status Distributions
21. Underwriters Not Applicable
22. Calculation of Performance Data Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
CASH INCOME TRUST
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TELEPHONE 860-422-3985
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Cash Income Trust (the "Fund") is a diversified open-end management investment
company (mutual fund) which seeks high current income from short-term money
market instruments while preserving capital and maintaining a high degree of
liquidity.
Shares of the Fund are currently offered without a sales charge only to separate
accounts of The Travelers Insurance Company and The Travelers Life and Annuity
Company (the "Company" or "The Travelers"). The Fund may serve as one of the
investment vehicles for certain variable life insurance and variable annuity
contracts issued by the Company. The term "shareholder" as used herein refers to
any insurance company separate account that may use shares of the Fund as an
investment vehicle now or in the future.
This Prospectus concisely sets forth the information about the Fund that you
should know before investing. Please read it and retain it for future reference.
Additional information about the Fund is contained in a Statement of Additional
Information ("SAI") dated May 1, 1996 which has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus. A copy may be obtained, without charge, by writing to The Travelers
Insurance Company, One Tower Square, Hartford, Connecticut 06183-5030, or by
calling 860-422-3985.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR A VARIABLE
ANNUITY OR VARIABLE LIFE INSURANCE CONTRACT ISSUED BY THE TRAVELERS. BOTH THIS
PROSPECTUS AND THE CONTRACT PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR
FUTURE REFERENCE.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE UNITED STATES
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF A DOLLAR PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
FINANCIAL HIGHLIGHTS.................................................................. 3
FUND DESCRIPTION...................................................................... 4
INVESTMENT OBJECTIVE AND POLICIES..................................................... 4
INVESTMENT RESTRICTIONS............................................................... 5
RISK FACTORS.......................................................................... 5
BOARD OF TRUSTEES..................................................................... 5
INVESTMENT ADVISER.................................................................... 5
Portfolio Manager................................................................... 6
SECURITIES TRANSACTIONS............................................................... 6
FUND EXPENSES......................................................................... 6
TRANSFER AGENT........................................................................ 6
FUND SHARES........................................................................... 7
PRICING SHARES........................................................................ 7
SHARE REDEMPTION...................................................................... 7
DIVIDENDS AND TAX STATUS.............................................................. 8
LEGAL PROCEEDINGS..................................................................... 8
ADDITIONAL INFORMATION................................................................ 8
EXHIBIT A............................................................................. 9
</TABLE>
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FINANCIAL HIGHLIGHTS
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CASH INCOME TRUST
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
The following information on per share data for the six years ended December 31,
1995, has been audited by Coopers & Lybrand L.L.P., Independent Accountants. All
other periods presented have been audited by the Fund's prior auditors. Coopers
& Lybrand L.L.P.'s report on the per share data for each of the applicable years
in the period ended December 31, 1995 is contained in the SAI. Refer to the
cover of this Prospectus for information on obtaining a free copy of the SAI.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1995 1994 1993 1992 1991 1990 1989
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<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
year.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from
operations.......... 0.0417 0.0278 0.0214 0.0322 0.0650 0.0744 0.0753
Less distributions
from net investment
income.............. (0.0417) (0.0278) (0.0214) (0.0322) (0.0650) (0.0744) (0.0753)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end
of year (unchanged
during the year).... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
TOTAL RETURN*......... 4.17% 2.78% 2.14% 3.22% 6.50% 7.44% 7.57%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
year (thousands).. $ 1,417 $ 1,203 $ 647 $ 697 $ 690 $ 619 $ 656
Ratio of expenses to
average net
assets............ 1.25%** 1.25%** 0.94%** 0.38%** 0.38%** 0.08%** 1.00%+
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1988 1987 1986
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<S> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
year.............. $ 1.00 $ 1.00 $ 1.00
Income from
operations.......... 0.0690 0.0606 0.0616
Less distributions
from net investment
income.............. (0.0690) (0.0606) (0.0616)
-------- -------- --------
Net asset value, end
of year (unchanged
during the year).... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
TOTAL RETURN*......... 6.82% 6.09% 6.13%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
year (thousands).. $ 107,850 $ 116,849 $ 80,456
Ratio of expenses to
average net
assets............ 0.67% 0.65% 0.65%
</TABLE>
* Total return is determined after reflecting the reinvestment of dividends
declared during the year, by dividing net investment income by average net
assets. Shares in Fund CIT are only sold to The Travelers separate accounts
in connection with the issuance of variable life insurance contracts. The
above total return does not reflect the deduction of any contract charges or
fees assessed by The Travelers separate accounts.
** The ratios of expenses to average net assets for 1990 and later years reflect
an expense reimbursement by Travelers Insurance in connection with voluntary
expense limitations. Without the expense reimbursement, the ratio of expenses
to average net assets would have been 7.37%, 6.40%, 8.47%, 7.70%, 11.61% and
20.99% for the years ended December 31, 1995, 1994, 1993, 1992, 1991 and
1990, respectively.
+ The amount represented reflects an expense reimbursement by Keystone
Custodian Funds, Inc. (the prior investment adviser) in connection with a
voluntary expense limitation. Before the expense reimbursement, the "Ratio of
expenses to average net assets" would have been 8.95%.
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<PAGE> 7
FUND DESCRIPTION
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Cash Income Trust (the "Fund") is registered with the SEC as a diversified
open-end management investment company, commonly known as a mutual fund. The
Fund was created under Massachusetts law as a Massachusetts business trust on
October 1, 1981.
INVESTMENT OBJECTIVE AND POLICIES
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The Fund's investment objective is to provide high current income from
short-term money market instruments while emphasizing preservation of capital
and maintaining a high degree of liquidity. The Fund pursues this objective by
investing in securities maturing in one year or less as follows: (1) obligations
issued or guaranteed by the United States government or by any agency or
instrumentality of the United States; (2) certificates of deposit and bankers'
acceptances of banks which are members of the Federal Deposit Insurance
Corporation and which have total assets of at least $1 billion, including U.S.
branches of foreign banks and foreign branches of U.S. banks; (3) prime
commercial paper, including master demand notes; and (4) repurchase agreements
secured by United States government securities. Securities issued or guaranteed
by the United States government include a variety of Treasury securities that
differ only in their interest rates, maturities and dates of issuance. Treasury
Bills have maturities of one year or less, Treasury Notes have maturities of one
to ten years, and Treasury Bonds generally have maturities of greater than ten
years at the date of issuance.
Securities issued or guaranteed by the United States government or its agencies
or instrumentalities include direct obligations of the United States Treasury
and securities issued or guaranteed by the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Central Bank for Cooperatives, Federal Home Loan Banks,
Federal Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal
Land Banks, Maritime Administration, The Tennessee Valley Authority, District of
Columbia Armory Board and Federal National Mortgage Association. Some
obligations of United States government agencies and instrumentalities, such as
Treasury Bills and Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of the United States;
others, such as securities of Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the Treasury; still others, such as bonds
issued by the Federal National Mortgage Association, a private corporation, are
supported only by the credit of the instrumentality. Because the United States
government is not obligated by law to provide support to an instrumentality it
sponsors, the Fund will invest in the securities issued by such an
instrumentality only when the investment adviser determines that the credit risk
with respect to the instrumentality does not make its securities unsuitable
investments for the Fund. United States government securities do not include
international agencies or instrumentalities in which the United States
government, its agencies or instrumentalities participate, such as the World
Bank, the Asian Development Bank or issues insured by the Federal Deposit
Insurance Corporation. The Fund offers a convenient alternative to investing
directly in money market instruments by eliminating the mechanical problems
normally associated with direct investments while, most importantly, providing
the opportunity to obtain the higher yields often available from money market
investments made in large denominations.
For further information about the types of investments and investment techniques
available to the Fund, including the associated investment risks, see Exhibit A
to this Prospectus.
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<PAGE> 8
INVESTMENT RESTRICTIONS
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The Fund has adopted the following fundamental investment restrictions which may
not be changed without a vote of a majority of the outstanding voting securities
of the Fund, as defined in the Investment Company Act of 1940, as amended. These
restrictions and certain other fundamental restrictions are set forth in the
SAI. Unless otherwise stated, all references to the Fund's assets are in terms
of current market value.
The Fund's fundamental policies permit it to invest up to 100% of its assets in
securities issued or guaranteed by the United States government, its agencies or
instrumentalities. The Fund will not: (1) invest more than 5% of its assets in
the securities of other single issuers; (2) borrow money, except that the Fund
may borrow money from banks for temporary or emergency purposes in amounts of up
to one-third of its assets, including the amount borrowed, and such borrowings
will be repaid before additional investments are made; (3) pledge more than 15%
of its assets to secure borrowings; and (4) invest more than 10% of its assets
in repurchase agreements maturing in more than seven days and securities for
which market quotations are not readily available.
RISK FACTORS
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Because interest rates on money market instruments fluctuate in response to
economic factors, the rates on short-term investments made by the Fund and the
daily dividend paid to shareholders will vary, rising or falling with short-term
rates generally. Yields from short-term securities may be lower than yields from
longer-term securities. Also, the value of the Fund's securities will fluctuate
inversely with interest rates, the amount of outstanding debt and other factors.
In addition, the Fund's investments in certificates of deposit issued by U.S.
branches of foreign banks and foreign branches of U.S. banks involve somewhat
more risk, but also more potential reward, than investments in comparable
domestic obligations.
There can be no assurance that the Fund will achieve its investment objective
since there is uncertainty in every investment.
BOARD OF TRUSTEES
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Under Massachusetts law, the Fund's Board of Trustees has absolute and exclusive
control over the management and disposition of all assets of the Fund. Subject
to the provisions of the Declaration of Trust, the business and affairs of the
Fund shall be managed by the Trustees of other parties so designated by the
Trustees. Information relating to the Board of Trustees, including its members
and their compensation, is contained in the SAI.
INVESTMENT ADVISER
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Travelers Asset Management International Corporation (TAMIC) provides investment
advice and, in general, supervises the management and investment program of the
Fund.
TAMIC is a registered investment adviser which has provided investment advisory
services since its incorporation in 1978. Under its Advisory Agreement with the
Fund, TAMIC is paid an amount equivalent on an annual basis to 0.3233% of the
average daily net assets of the Fund. The fee is computed daily and paid weekly.
TAMIC is an indirect wholly owned subsidiary of Travelers Group Inc., a
financial services holding company, and its principal offices are located at One
Tower Square, Hartford, Connecticut 06183.
In addition to providing investment advice to the Fund, TAMIC acts as investment
adviser for other investment companies which fund variable contracts issued by
the Company. TAMIC also provides
CIT-5
<PAGE> 9
investment advice to individual and pooled pension and profit-sharing accounts,
domestic insurance companies affiliated with The Travelers and nonaffiliated
insurance companies.
PORTFOLIO MANAGER
The Cash Income Trust has been managed by Emil J. Molinaro, Jr. since March
1995. Mr. Molinaro joined an affiliate of The Travelers Insurance Company in
1980 and is a Vice President of The Travelers Insurance Company's Securities
Department. For the past six years he has managed short term investment
portfolios backing various insurance company products and is currently
responsible for managing the Travelers Money Market Pool.
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Under policies established by the Board of Trustees, TAMIC selects
broker-dealers to execute transactions for the Fund, subject to the receipt of
best execution. When selecting broker-dealers to execute portfolio transactions
for the Fund, TAMIC may consider the number of shares of the Fund sold by such
broker-dealers. In addition, broker-dealers may from time to time be affiliated
with the Fund, TAMIC or their affiliates. The Fund will not trade in securities
for short-term profits but, when circumstances warrant, securities may be sold
without regard to the length of time held.
FUND EXPENSES
- --------------------------------------------------------------------------------
In addition to the investment advisory fees discussed above, other expenses of
the Fund include the charges and expenses of the transfer agent, the custodian,
the independent auditors, and any outside legal counsel employed by either the
Fund or the Board of Trustees; the compensation for the disinterested members of
the Board of Trustees; the costs of printing and mailing the Fund's
prospectuses, proxy solicitation materials, and annual, semiannual and periodic
reports; brokerage commissions, interest charges and taxes; and any
registration, filing and other fees payable to government agencies in connection
with the registration of the Fund and its shares under federal and state
securities laws.
Pursuant to a Management Agreement dated May 1, 1996 between the Fund and The
Travelers Insurance Company, the Company has agreed to reimburse the Fund for
the amount by which the Fund's aggregate annual expenses, including investment
advisory fees but excluding brokerage commissions, interest charges and taxes,
exceed 1.25% of the Fund's average net assets for any fiscal year.
For the fiscal year ended December 31, 1995, the Fund paid 1.25% of its average
net assets in expenses. These expenses would have been 7.37% of the Fund's
average net assets if the Company had not paid for any of the Fund's expenses.
TRANSFER AGENT
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The Travelers Insurance Company, One Tower Square, Hartford, Connecticut 06183,
serves as the Fund's transfer agent and dividend disbursing agent.
FUND SHARES
- --------------------------------------------------------------------------------
The Fund currently issues one class of shares which participates equally in
dividends and distributions and have equal voting, liquidation and other rights.
When issued and paid for, the shares will be fully paid and nonassessable by the
Fund and will have no preference, conversion, exchange or preemptive rights.
CIT-6
<PAGE> 10
Shareholders are entitled to one vote for each full share owned and fractional
votes for fractional shares. Shares are redeemable, transferable and freely
assignable as collateral. There are no sinking fund provisions. (See the
accompanying separate account prospectus for a discussion of voting rights
applicable to purchasers of variable life insurance contracts.)
Under Massachusetts law it is possible that a Fund shareholder may be held
personally liable for the Fund's obligations. However, the Fund's Declaration of
Trust provides that shareholders shall not be subject to any personal liability
for the Fund's obligations and provides indemnification from Fund assets for any
shareholder held personally liable for the Fund's obligations. Disclaimers of
such liability are included in each Fund agreement.
Shares of the Fund are currently sold only to insurance company separate
accounts in connection with variable annuity and variable life insurance
contracts issued by the Company. Shares are not sold to the general public. Fund
shares are sold on a continuing basis, without a sales charge, at the net asset
value next computed after payment is made by the insurance company to the Fund's
custodian. However, separate accounts to which shares are sold may impose sales
and other charges, as described in the appropriate contract prospectus.
In the event that the Fund serves as an investment vehicle for both variable
annuity and variable life insurance contracts, an irreconcilable material
conflict may conceivably arise between contract owners of different separate
accounts investing in the Fund due to differences in tax treatment, management
of the Fund's investments, or other considerations. The Fund's Board of Trustees
will monitor events in order to identify any material conflicts between variable
annuity contract owners and variable life insurance policy owners, and will
determine what action, if any, should be taken in the event of such a conflict.
PRICING SHARES
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The net asset value of a Fund share, which is expected to remain constant at
$1.00, is computed as of the close of trading on each day on which the New York
Stock Exchange ("Exchange") is open, except on days when changes in the value of
the Fund's securities do not affect the current net asset value of its shares.
The net asset value per share is arrived at by determining the value of the
Fund's assets, subtracting its liabilities, and dividing the result by the
number of shares outstanding.
The Fund values short-term money market instruments with maturities of sixty
days or less at amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount) which when combined with
accrued interest approximates market. All other investments are valued at market
value or, where market quotations are not readily available, at fair value as
determined in good faith by the Fund's Board of Trustees.
SHARE REDEMPTION
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Fund shares are redeemed at the net asset value per share, normally $1.00, next
determined after the Fund receives a redemption request. The Fund computes the
net asset value at the close of the Exchange at the end of the day on which it
has received all documentation from the shareholder. Redemption proceeds are
normally wired or mailed either the same or the next business day, but in no
event later than seven days thereafter.
The Fund may temporarily suspend the right to redeem its shares when: (1) the
Exchange is closed, other than customary weekend and holiday closings; (2)
trading on the Exchange is restricted; (3) an emergency exists as determined by
the SEC so that disposal of the Fund's investments or determination of its net
asset value is not reasonably practicable; or (4) the SEC, for the protection of
shareholders, so orders.
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<PAGE> 11
DIVIDENDS AND TAX STATUS
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The Fund has qualified and intends to qualify in the future as a regulated
investment company under Subchapter M of the Internal Revenue Code. The Fund
qualifies if, among other things, it distributes to its shareholders at least
90% of its net investment income for each fiscal year.
Capital gains and dividends are distributed in cash or reinvested in additional
shares of the Fund, without a sales charge. Although purchasers of variable
insurance contracts are not subject to federal income taxes on distributions by
the Fund they may be subject to state and local taxes and should review the
accompanying contract prospectus for a discussion of the tax treatment
applicable to purchasers of variable life insurance contracts.
LEGAL PROCEEDINGS
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There are no pending material legal proceedings affecting the Fund.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Except as otherwise stated in this Prospectus or as required by law, the Fund
reserves the right to change the terms of the offer stated in this Prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
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<PAGE> 12
EXHIBIT A
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DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS
AND INVESTMENT TECHNIQUES AVAILABLE TO THE FUND
UNITED STATES GOVERNMENT SECURITIES
Securities issued or guaranteed by the United States Government include a
variety of Treasury securities that differ only in their interest rates,
maturities and dates of issuance. Treasury bills have maturities of one year or
less; Treasury notes have maturities of one to ten years; and Treasury bonds
generally have maturities of greater than ten years at the date of issuance.
Securities issued or guaranteed by the United States Government or its agencies
or instrumentalities include direct obligations of the United States Treasury
and securities issued or guaranteed by the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Central Bank for Cooperatives, Federal Home Loan Banks,
Federal Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal
Land Banks, Maritime Administration, The Tennessee Valley Authority, District of
Columbia Armory Board, Student Loan Marketing Association and Federal National
Mortgage Association.
Some obligations of United States Government agencies and instrumentalities,
such as Treasury bills and Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of the United States;
others, such as securities of Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the Treasury; still others, such as bonds
issued by the Federal National Mortgage Association, a private corporation, are
supported only by the credit of the instrumentality. Because the United States
Government is not obligated by law to provide support to an instrumentality it
sponsors, the Fund will invest in the securities issued by such an
instrumentality only when TAMIC determines that the credit risk with respect to
the instrumentality does not make its securities unsuitable investments. United
States Government securities will not include international agencies or
instrumentalities in which the United States Government, its agencies or
instrumentalities participate, such as the World Bank, the Asian Development
Bank or the Inter-American Development Bank, or issues insured by the Federal
Deposit Insurance Corporation.
CERTIFICATES OF DEPOSIT
Certificates of deposit are receipts issued by a bank in exchange for the
deposit of funds. The issuer agrees to pay the amount deposited plus interest to
the bearer of the receipt on the date specified on the certificate. The
certificate usually can be traded in the secondary market prior to maturity.
Certificates of deposit will be limited to U.S. dollar-denominated certificates
of United States banks which have at least $1 billion in deposits as of the date
of their most recently published financial statements (including foreign
branches of U.S. banks, U.S. branches of foreign banks which are members of the
Federal Reserve System or the Federal Deposit Insurance Corporation, and savings
and loan associations which are insured by the Federal Deposit Insurance
Corporation).
The Fund will not acquire time deposits or obligations issued by the
International Bank for Reconstruction and Development, the Asian Development
Bank or the Inter-American Development Bank. Additionally, the Fund does not
currently intend to purchase such foreign securities (except to the extent that
certificates of deposit of foreign branches of U.S. banks may be deemed foreign
securities) or purchase certificates of deposit, bankers' acceptances or other
similar obligations issued by foreign banks.
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<PAGE> 13
OBLIGATIONS OF FOREIGN BRANCHES OF UNITED STATES BANKS
The obligations of foreign branches of United States banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by government regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as sovereign risk). In addition, evidences of ownership of such securities
may be held outside the United States and the Fund may be subject to the risks
associated with the holding of such property overseas. Various provisions of
federal law governing domestic branches do not apply to foreign branches of
domestic banks.
OBLIGATIONS OF UNITED STATES BRANCHES OF FOREIGN BANKS
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation as well as by governmental action in the country in which the foreign
bank has its head office. In addition, there may be less publicly available
information about a United States branch of a foreign bank than about a domestic
bank.
COMMERCIAL PAPER
The Fund's investments in commercial paper are limited to those rated A-1 by
Standard & Poor's Corporation (S&P) or Prime-1 by Moody's Investors Service,
Inc. (Moody's). Commercial paper rated A-1 by Standard & Poor's has the
following characteristics: liquidity ratios are adequate to meet cash
requirements. The issuer's long-term senior debt is rated "A" or better,
although in some cases "BBB" credits may be allowed. The issuer has access to at
least two additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist with
the issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public preparations to meet such
obligations. Relative strength or weakness of the above factors determines how
the issuer's commercial paper is rated within various categories.
MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the investment of
fluctuating amounts by the Fund at varying rates of interest pursuant to direct
arrangements between the Fund as lender and the issuer as borrower. The Fund has
the right to increase the amount under the note at any time up to the full
amount provided by the note agreement, or to decrease the amount, and the
borrower may repay up to the full amount of the note without penalty. Notes
purchased by the Fund permit the Fund to demand payment of principal and accrued
interest at any time (on not more than seven days notice). Notes acquired by the
Fund may have maturities of more than one year, provided that (i) the Fund is
entitled to payment of principal and accrued interest upon not more than seven
days notice, and (ii) the rate of interest on such notes is adjusted
automatically at periodic intervals which normally will not exceed 31 days but
may extend up to one year. The notes will be deemed to have a maturity equal to
the longer of the period remaining to the next interest rate adjustment or the
demand notice period. Because these types of notes are direct lending
arrangements between the lender and the borrower, such instruments are not
normally traded and there is no secondary market
CIT-10
<PAGE> 14
for these notes, although they are redeemable and thus repayable by the borrower
at face value plus accrued interest at any time. Accordingly, the Fund's right
to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. In connection with master demand notes, TAMIC considers,
under standards established by the Board of Trustees, earning power, cash flow
and other liquidity ratios of the borrower and will monitor the ability of the
borrower to pay principal and interest on demand. These notes are not typically
rated by credit rating agencies. Unless rated, the Fund will invest in them only
if the issuer meets the criteria established for commercial paper.
REPURCHASE AGREEMENTS
Interim cash balances may be invested from time to time in repurchase agreements
with approved counterparties. Approved counterparties are limited to national
banks or reporting broker-dealers meeting the investment adviser's credit
quality standards as presenting minimal risk of default. All repurchase
transactions must be collateralized by U.S. Government securities with market
value no less than 102% of the amount of the transaction, including accrued
interest. Repurchase transactions generally mature the next business day but, in
the event of a transaction of longer maturity, collateral will be marked to
market daily and, when required, additional cash or qualifying collateral will
be required from the counterparty.
In executing a repurchase agreement, the Fund purchases eligible securities
subject to the seller's simultaneous agreement to repurchase them on a mutually
agreed upon date and at a mutually agreed upon price. The purchase and resale
prices are negotiated with the counterparty on the basis of current short-term
interest rates, which may be more or less than the rate on the securities
collateralizing the transaction. Physical delivery or, in the case of
"book-entry" securities, segregation in the counterparty's account at the
Federal Reserve for the benefit of the Fund is required to establish a perfected
claim to the collateral for the term of the agreement in the event the
counterparty fails to fulfill its obligation.
As the securities collateralizing a repurchase transaction are generally of
longer maturity than the term of the transaction, in the event of default by the
counterparty on its obligation, the Fund would bear the risks of delay, adverse
market fluctuation and transaction costs in disposing of the collateral.
BANKERS' ACCEPTANCES
Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by the bank which, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
Bankers' acceptances acquired by the Fund must have been accepted by U.S.
commercial banks, including foreign branches of U.S. commercial banks, having
total deposits at the time of purchase in excess of $1 billion, and must be
payable in U.S. dollars.
CIT-11
<PAGE> 15
CASH INCOME TRUST
PROSPECTUS
TIC Ed. 5-96
L-11170 Printed in U.S.A.
<PAGE> 16
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 17
STATEMENT OF ADDITIONAL INFORMATION
CASH INCOME TRUST
MAY 1, 1996
This Statement of Additional Information ("SAI") is not a prospectus
but relates to, and should be read in conjunction with, the Fund's prospectus
dated May 1, 1996. A copy of the prospectus is available from The Travelers
Insurance Company, Life Services One Tower Square, Hartford, Connecticut
06183-5030, or by calling 860-422-3985.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES. . . . . . . . . . . . . . . . . . . 2
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . 2
VALUATION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 3
DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . 4
DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . 7
REDEMPTIONS IN KIND. . . . . . . . . . . . . . . . . . . . . . . . . . 7
BROKERAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 8
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 18
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Cash Income Trust (the "Fund") is to
provide the highest possible current income from short-term money market
instruments while emphasizing preservation of capital and maintaining a high
degree of liquidity. The Fund pursues this objective by investing in
short-term money market securities maturing in one year or less which are
deemed to present minimal credit risks.
INVESTMENT RESTRICTIONS
None of the restrictions enumerated in this paragraph may be changed
without a vote of the holders of a majority of the Fund's outstanding shares,
as defined in the Investment Company Act of 1940 (the "1940 Act"). The Fund
will not:
(1) purchase any security which has a maturity date more than one
year from the date of the Fund's purchase;
(2) invest more than 25% of its assets in the securities of issuers
in any single industry, exclusive of securities issued by banks
or securities issued or guaranteed by the United States
Government, its agencies or instrumentalities;
(3) invest more than 5% of its assets in the securities of any one
issuer, including repurchase agreements with any one bank or
dealer, exclusive of securities issued or guaranteed by the
United States Government, its agencies or instrumentalities;
however, in accordance with Rule 2a-7 of the 1940 Act, to which
the Fund is subject, agencies of the U.S. Government are not
excluded from this 5% limitation;
(4) invest in more than 10% of the outstanding securities of any one
issuer, exclusive of securities issued or guaranteed by the
United States Government, its agencies or instrumentalities;
(5) borrow money except from banks on a temporary basis in an
aggregate amount not to exceed one-third of the Fund's assets,
including the amount borrowed, and to be used exclusively to
facilitate the orderly maturation and sale of portfolio
securities during any periods of abnormally heavy redemption
requests, if they should occur; such borrowings may not be used
to purchase investments and the Fund will not purchase any
investments while any such borrowings exist;
(6) pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by the Fund except as
may be necessary in connection with any borrowing mentioned
above and in an aggregate amount not to exceed 15% of the Fund's
assets;
(7) make loans, provided that the Fund may purchase money market
securities or enter into repurchase agreements;
(8) enter into repurchase agreements if, as a result thereof, more
than 10% of the Fund's assets would be subject to repurchase
agreements maturing in more than seven days;
(9) make investments for the purpose of exercising control;
(10) purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization;
(11) invest in real estate, other than money market securities
secured by real estate or interests therein, or money market
securities issued by companies which invest in real estate or
interests therein,
2
<PAGE> 19
commodities or commodity contracts, interests in oil, gas or
other mineral exploration or development programs;
(12) purchase any securities on margin;
(13) make short sales of securities or maintain a short position or
write, purchase or sell puts, calls, straddles, spreads or
combinations thereof;
(14) invest in securities of issuers, other than agencies and
instrumentalities of the United States Government, having a
record, together with predecessors, of less than three years of
continuous operation if more than 5% of the Fund's assets would
be invested in such securities;
(15) purchase or retain securities of any issuer if those officers,
Trustees or Directors of the Fund or TAMIC who own individually
more than 0.5% of the outstanding securities of such issuer
together own more than 5% of the securities of such issuer; or
(16) act as an underwriter of securities.
The Fund has undertaken to a state insurance authority that, so long
as the state authority requires and shares of the Fund are offered for sale to
fund variable life insurance policies in that state, the Fund will limit
borrowings for general purposes to not more that 10% of its net assets and for
temporary purposes to not more than 25% of its net assets; and, if relevant,
comply with certain foreign security diversification guidelines. These
guidelines provide that (1) as the percentage of the Fund's net asset value
invested in foreign securities increases, a corresponding increase will be made
in the number of countries in whose securities the Fund invests; and (2) the
Fund will invest no more than 20% of its net asset value in the securities of
issuers located in any one country (other than the United States).
Notwithstanding the above, these guidelines permit the Fund to invest any
amount in the securities of issuers located in the United States and to invest
an additional 15% of its net asset value in the securities of issuers located
in Australia, Canada, France, Japan, the United Kingdom or Germany. These
guidelines require that American Depository Receipts be treated as if they were
foreign securities. This undertaking is not a fundamental investment
restriction or policy and may be changed without a vote of shareholders.
VALUATION OF SECURITIES
Current value for the Fund's portfolio securities is determined as
follows: Short-term investments maturing in 60 days or less are valued at
amortized cost (original purchase cost as adjusted for amortization of premium
or accretion of discount which, when combined with accrued interest,
approximates market); should this valuation of a security not approximate
market, Travelers Asset Management International Corporation (TAMIC) will value
the security at a price deemed in good faith to be fair by the Board of
Trustees. Securities with remaining maturities of more than 60 days, for which
market quotations are readily available, are valued at market. The money
market securities in which the Fund invests are traded primarily in the
over-the-counter market and are valued at the mean between most recent bid and
asked prices or yield equivalent as obtained from dealers that make markets in
such securities. Investments for which market quotations are not readily
available or for which the markets establishing the most recent bid and asked
prices are closed or inactive are valued at fair value as determined pursuant
to procedures established, in good faith, by the Board of Trustees.
DISTRIBUTIONS
All net income of the Fund is determined as of the close of trading on
the New York Stock Exchange, currently 4:00 p.m., on each day that the Exchange
is open for trading, and at such other times as the Trustees may determine, and
credited immediately thereafter to each shareholder's account. Net income will
consist of (1) all accrued interest income on Fund portfolio assets, (2) plus
or minus all realized and unrealized gains or losses on
3
<PAGE> 20
Fund portfolio assets, and (3) less the Fund's estimated expenses, including
accrued expenses and fees payable to TAMIC applicable to that dividend period.
Net income is distributed as dividends as of the close of business each
calendar month either in cash or in the form of additional shares. Dividends
are reinvested in full and fractional shares at the rate of one share for each
one dollar distributed.
Since the net income of the Fund is declared as a dividend each time
net income is determined, the net asset value per share remains at $1.00 per
share immediately after each dividend declaration. The Fund expects to have
net income at the time of each dividend determination. If for any reason there
is a net loss, the Fund will first offset such amount pro rata against
dividends accrued during the month in each shareholder account. To the extent
that such a net loss would exceed such accrued dividends, the Fund will reduce
the number of its outstanding shares by having each shareholder contribute to
the Fund's capital the pro rata portion of the total number of shares required
to be canceled in order to maintain a net asset value per share of the Fund at
a constant value of $1.00. Each shareholder will be deemed to have agreed to
such a contribution under these circumstances by investment in the Fund.
As of December 31, 1995, the Fund had capital loss carryovers of
approximately $1,785 which expire in 1996-2002. The Fund intends not to
distribute realized gains until the carryover is exhausted. The Fund may not
realize gains sufficient to use the carryover before it expires with the
passage of time.
TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
Name Present Position and Principal Occupation During Last Five Years
- ---- ----------------------------------------------------------------
<S> <C>
*Heath B. McLendon Managing Director (1993-present), Smith Barney Inc. ("Smith Barney");
Chairman and Member Chairman (1993-present), Smith Barney Strategy Advisors, Inc.;
388 Greenwich Street President (1994-present), Smith Barney Mutual Funds Management Inc.;
New York, New York Chairman and Director of forty-one investment companies associated with
Age 62 Smith Barney; Chairman, Board of Trustees, Drew University; Trustee,
The East New York Savings Bank; Advisory Director, First Empire State
Corporation; Chairman, Board of Managers, seven Variable Annuity
Separate Accounts of The Travelers Insurance Company+; Chairman, Board
of Trustees, five Mutual Funds sponsored by The Travelers Insurance
Company++; prior to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers Inc.
Knight Edwards Of Counsel (1988-present), Partner (1956-1988), Edwards & Angell,
Member Attorneys; Member, Advisory Board (1973-1994), thirty-one mutual funds
2700 Hospital Trust Tower sponsored by Keystone Group, Inc.; Member, Board of Managers, seven
Providence, Rhode Island Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Age 72 Trustee, five Mutual Funds sponsored by The Travelers Insurance
Company.++
Robert E. McGill, III Retired manufacturing executive. Director (1983-1995), Executive Vice
Member President (1989-1994) and Senior Vice President, Finance and
295 Hancock Street Administration (1983-1989), The Dexter Corporation (manufacturer of
Williamstown, Massachusetts specialty chemicals and materials); Vice Chairman (1990-1992), Director
Age 64 (1983-1995), Life Technologies, Inc. (life science/biotechnology
products); Director, (1994-present), The Connecticut Surety Corporation
(insurance); Director (1995-present), Calbiochem Novachem International
(life science/biotechnology products); Director (1995-present), Chemfab
Corporation (specialty materials manufacturer); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers
</TABLE>
4
<PAGE> 21
<TABLE>
<S> <C>
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++
Lewis Mandell Dean, College of Business Administration (1995-present), Marquette
Member University; Professor of Finance (1980-1995) and Associate Dean
606 N. 13th Street (1993-1995), School of Business Administration, and Director, Center
Milwaukee, WI 53233 for Research and Development in Financial Services (1980-1995),
Age 53 University of Connecticut; Director (1992-present), GZA
Geoenvironmental Tech, Inc. (engineering services); Member, Board of
Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++
Frances M. Hawk Portfolio Manager (1992-present), HLM Management Company, Inc.
Member (investment management); Assistant Treasurer, Pensions and Benefits.
222 Berkeley Street Management (1989-1992), United Technologies Corporation (broad- based
Boston, Massachusetts designer and manufacturer of high technology products); Member, Board
Age 48 of Managers, seven Variable Annuity Separate Accounts of The Travelers
Insurance Company+; Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company.++
Ernest J. Wright Assistant Secretary (1994-present), Counsel (1987-present), The
Secretary to the Board Travelers Insurance Company; Secretary, Board of Managers, seven
One Tower Square Variable Annuity Separate Accounts of The Travelers Insurance Company+;
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 55 Travelers Insurance Company.++
Kathleen A. McGah Assistant Secretary and Counsel (1995-present), The Travelers Insurance
Assistant Secretary to the Board Company; Assistant Secretary, Board of Managers, seven Variable Annuity
One Tower Square Separate Accounts of The Travelers Insurance Company+; Assistant
Hartford, Connecticut Secretary, Board of Trustees, five Mutual Funds sponsored by The
Age 45 Travelers Insurance Company.++ Prior to January 1995, Counsel, ITT
Hartford Life Insurance Company.
Ian R. Stuart Vice President and Chief Financial Officer, The Travelers Insurance
Treasurer Company (1996-present); Vice President and Financial Office, Financial
One Tower Square Services Department (1994-1995), Second Vice President and Assistant
Hartford, Connecticut Financial Officer, Financial Services Department (1991-1993), The
Age 39 Travelers Insurance Company; Senior Manager (1986-1991), Price
Waterhouse; Treasurer, Board of Trustees, five Mutual Funds sponsored
by The Travelers Insurance Company.++
</TABLE>
+ These seven Variable Annuity Separate Accounts are: The Travelers Growth
and Income Stock Account for Variable Annuities, The Travelers Quality
Bond Account for Variable Annuities, The Travelers Money Market Account
for Variable Annuities, The Travelers Timed Growth and Income Stock
Account for Variable Annuities, The Travelers Timed Short-Term Bond
Account for Variable Annuities, The Travelers Timed Aggressive Stock
Account for Variable Annuities and The Travelers Timed Bond Account for
Variable Annuities.
++ These five Mutual Funds are: Capital Appreciation Fund, Cash Income
Trust, High Yield Bond Trust, Managed Assets Trust and The Travelers
Series Trust.
* Mr. McLendon is an "interested person" within the meaning of
the 1940 Act by virtue of his position as Managing Director of Smith Barney
Inc., an indirect wholly owned subsidiary of Travelers Group Inc. and also
5
<PAGE> 22
owns shares and options to purchase shares of Travelers Group Inc., the
indirect parent of The Travelers Insurance Company.
Members of the Board of Trustees who are also officers or employees of
Travelers Group Inc. or its subsidiaries are not entitled to any fee. Members
of the Board of Trustees who are not affiliated as employees of Travelers Group
Inc. or its subsidiaries receive an aggregate retainer of $17,000 for service
on the Boards of the five Mutual Funds sponsored by The Travelers Insurance
Company and the seven Variable Annuity Separate Accounts established by The
Travelers Insurance Company. They also receive an aggregate fee of $2,000 for
each meeting of such Boards attended.
DECLARATION OF TRUST
The Fund is organized as a Massachusetts business trust. Pursuant to
certain decisions of the Supreme Judicial Court of Massachusetts, shareholders
of such a trust may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. However, even if the Fund were held
to be a partnership, the possibility of its shareholders incurring financial
loss for that reason appears remote because the Fund's Declaration of Trust
contains an express disclaimer of shareholder liability for obligations of the
Fund and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees,
and because the Declaration of Trust provides for indemnification out of Fund
property for any shareholder held personally liable for the obligations of the
Fund.
The Declaration of Trust provides that a Trustee shall be liable only
for his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, a Trustee
shall not be liable for the neglect or wrongdoing of any such person; provided,
however, that nothing in the Declaration of Trust shall protect a Trustee
against any liability for his willful misfeasance, bad faith, gross negligence
or the reckless disregard of his duties.
Shareholders first elected Trustees at a meeting held on April 30,
1985, and most recently elected Trustees on April 23, 1993. No further
meetings of shareholders for the purpose of electing Trustees will be held,
unless required by law, and unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees.
Except as set forth above, the Trustees shall continue to hold office,
unless required by law, and may appoint successor Trustees. Trustees may
voluntarily resign from office, or a Trustee may be removed from office (1) at
any time by two-thirds vote of the Trustees; (2) by a majority vote of Trustees
where any Trustee becomes mentally or physically incapacitated; and (3) either
by declaration in writing or at a meeting called for such purpose by the
holders of not less than two-thirds of the outstanding shares or other voting
interests of the Fund. The Trustees are required to call a meeting for the
purpose of considering the removal of a person serving as trustee, if requested
in writing to do so by the holders of not less than 10% of the outstanding
shares or other voting interests of the Fund. The Fund is required to assist
in Shareholders' communications. In accordance with current laws, insurance
companies using the Fund as an underlying investment option within their
variable contract will request voting instructions from contract owners
participating in such contracts, and will vote shares of the Fund in the same
proportion as the voting instructions received.
Voting rights are not cumulative; therefore, the holders of more than
50% of the shares voting on the election of Trustees can, if they choose to do
so, elect all of the Trustees of the Fund, in which event the holders of the
remaining shares will be unable to elect any person as a Trustee.
No amendment may be made to the Declaration of Trust without a "vote
of a majority of the outstanding voting securities" of the Fund (as defined in
the 1940 Act).
6
<PAGE> 23
INVESTMENT ADVISER
Travelers Asset Management International Corporation (TAMIC), an
indirect wholly owned subsidiary of Travelers Group Inc., furnishes investment
management and advisory services to the Fund in accordance with the terms of an
Investment Advisory Agreement which was approved by shareholders on April 23,
1993.
As required by the 1940 Act, the Advisory Agreement will continue in
effect for a period more than two years from the date of its execution only so
long as its continuance is specifically approved at least annually (i) by a
vote of a majority of the Board of Trustees, or (ii) by a vote of a majority of
the outstanding voting securities of the Fund. In addition, and in either
event, the terms of the Advisory Agreement must be approved annually by a vote
of a majority of the Board of Trustees who are not parties to, or interested
persons of any party to, the Advisory Agreement, cast in person at a meeting
called for the purpose of voting on such approval and at which the Board of
Trustees is furnished such information as may be reasonably necessary to
evaluate the terms of the Advisory Agreement. The Advisory Agreement further
provides that it will terminate automatically upon assignment; may be amended
only with prior approval of a majority of the outstanding voting securities of
the Fund; may be terminated without the payment of any penalty at any time upon
sixty days' notice by the Board of Trustees or by a vote of a majority of the
outstanding voting securities of the Fund; and may not be terminated by TAMIC
without prior approval of a new investment advisory agreement by a vote of a
majority of the outstanding voting securities of the Fund.
Under the terms of the Advisory Agreement, TAMIC shall:
(1) obtain and evaluate pertinent economic, statistical and
financial data and other information relevant to the investment
policy of the Fund, affecting the economy generally and
individual companies or industries, the securities of which are
included in the Fund's portfolio or are under consideration for
inclusion therein;
(2) be authorized to purchase supplemental research and other
services from brokers at an additional cost to the Fund;
(3) regularly furnish recommendations to the Board of Trustees with
respect to an investment program for approval, modification or
rejection by the Board of Trustees;
(4) take such steps as are necessary to implement the investment
program approved by the Board of Trustees; and
(5) regularly report to the Board of Trustees with respect to
implementation of the approved investment program and any other
activities in connection with the administration of the assets
of the Fund.
ADVISORY FEES
For furnishing investment management and advisory services to the
Fund, TAMIC is paid an amount equivalent on an annual basis to 0.3233% of the
average daily net assets of the Fund. The fee is computed daily and paid
weekly. For the three years ended December 31, 1993, 1994, and 1995 the
advisory fees were $2,137, $3,325 and $4,034, respectively.
REDEMPTIONS IN KIND
If conditions arise that would make it undesirable for the Fund to pay for all
redemptions in cash, the Fund may authorize payment to be made in portfolio
securities or other property.
7
<PAGE> 24
However, the Fund has obligated itself under the 1940 Act to redeem
for cash all shares presented for redemption by any one shareholder up to
$250,000, or 1% of the Fund's net assets if that is less, in any 90-day period.
Securities delivered in payment of redemptions would be valued at the same
value assigned to them in computing the net asset value per share.
Shareholders receiving such securities would incur brokerage costs when these
securities are sold.
BROKERAGE
Subject to the general supervision of the Board of Trustees, TAMIC
shall be responsible for the investment decisions and the placement of orders
for portfolio transactions of the Fund. The Fund's portfolio transactions
occur primarily with issuers, underwriters or major dealers in money market
instruments acting as principals. Such transactions will normally be on a net
basis which will not involve payment of brokerage commissions. The cost of
securities purchased from an underwriter usually will include a commission paid
by the issuer to the underwriter; transactions with dealers normally will
reflect the spread between the bid and asked prices.
TAMIC will seek to obtain the best net price and most favorable
execution of orders for the purchase and sale of portfolio securities.
ADDITIONAL INFORMATION
The Travelers Insurance Company acts as transfer agent and dividend
disbursing agent for the Fund. The Travelers Insurance Company is a stock
insurance company chartered in 1864 in Connecticut and continuously engaged in
the insurance business since that time. It is a wholly owned subsidiary of The
Travelers Insurance Group Inc., which is indirectly owned, through a wholly
owned subsidiary, by Travelers Group Inc., a financial services holding
company. The Company's Home Office is located at One Tower Square, Hartford,
Connecticut 06183, telephone 860-422-3985. On April 1, 1996, The Travelers
Insurance Company and an affiliate owned 100% of the Fund's outstanding shares.
Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York
11245, is custodian of all securities and cash of the Fund.
Coopers & Lybrand L.L.P., independent accountants, 100 Pearl Street,
Hartford, Connecticut, are the independent auditors for the Fund. The services
provided to the Fund include primarily the examination of the Fund's financial
statements. The financial statements have been audited by Coopers & Lybrand
L.L.P., as indicated in their report thereon, and are included beginning on
page F-1 in reliance upon the authority of said firm as experts in accounting
and auditing.
Except as otherwise stated in its prospectus or as required by law,
the Fund reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or
change fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in the Fund's
prospectus, this SAI or any supplemental sales literature issued by the Fund,
and no person is entitled to rely on any information or representation not
contained therein.
The Fund's prospectus and this SAI omit certain information contained
in the Fund's registration statement filed with the Securities and Exchange
Commission which may be obtained from the Commission's principal office in
Washington, D.C. upon payment of the fee prescribed by the Rules and
Regulations promulgated by the Commission.
8
<PAGE> 25
FINANCIAL STATEMENTS
F-1
<PAGE> 26
CASH INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $1,392,214) . . . . . . . . . $ 1,393,052
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,805
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,736
Receivable from The Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . 75,914
---------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,504,507
---------------
LIABILITIES:
Payables:
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . 64
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,501
Accrued expenses:
Reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,914
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,344
---------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,823
---------------
NET ASSETS
(Applicable to 1,416,684 shares outstanding at $1.00 per share) . . . . . . . . . $ 1,416,684
===============
</TABLE>
See Notes to Financial Statements
-42-
<PAGE> 27
CASH INCOME TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,799
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . $ 4,034
Accounting and audit fees . . . . . . . . . . . . . . . . . . . . . 53,554
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,512
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . 21,413
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . 8,380
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . 351
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,055
--------------
Total expenses before reimbursement from The Travelers . . . . . 91,299
Less: Reimbursement from The Travelers . . . . . . . . . . . . . . (75,914)
--------------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 15,385
-------------
Net investment income . . . . . . . . . . . . . . . . . . . 51,414
-------------
Net increase in net assets resulting from operations . . . . . . . $ 51,414
=============
</TABLE>
See Notes to Financial Statements
-43-
<PAGE> 28
CASH INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,414 $ 29,710
--------------- ---------------
Net increase in net assets resulting from operations . . . . . . . . . 51,414 29,710
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDER FROM NET INVESTMENT INCOME . . . . . . . . . . . (51,414) (29,710)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 3,284,741 3,009,583
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . 52,033 24,539
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . . . (3,122,783) (2,478,281)
--------------- ---------------
Net increase in net assets resulting from capital share transactions . 213,991 555,841
--------------- ---------------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . 213,991 555,841
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202,693 646,852
--------------- ---------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,416,684 $ 1,202,693
=============== ===============
</TABLE>
See Notes to Financial Statements
-44-
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Cash Income Trust ("Fund CI") is a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. Shares of Fund
CI are currently offered, without a sales charge, to separate accounts
of The Travelers Insurance Company ("The Travelers"), an indirect
wholly owned subsidiary of Travelers Group Inc., in connection with
the issuance of certain variable life insurance contracts.
The following is a summary of significant accounting policies
consistently followed by Fund CI in the preparation of its financial
statements.
SECURITY VALUATION. Short-term investments for which a quoted market
price is available are valued at market. Short-term investments for
which there is no reliable quoted market price are valued by computing
a market value based upon quotations from dealers or issuers for
securities of a similar type, quality and maturity.
REPURCHASE AGREEMENTS. When Fund CI enters into a repurchase
agreement (a purchase of securities whereby the seller agrees to
repurchase the securities at a mutually agreed-upon date and price),
the repurchase price of the securities will generally equal the amount
paid by Fund CI plus a negotiated interest amount. The seller under
the repurchase agreement will be required to provide to Fund CI
securities (collateral) whose market value, including accrued
interest, will be at least equal to 102% of the repurchase price.
Fund CI monitors the value of collateral on a daily basis. Repurchase
agreements will be limited to transactions with national banks and
reporting broker dealers believed to present minimal credit risks.
Fund CI's custodian will take actual or constructive receipt of all
securities underlying repurchase agreements until such agreements
expire.
TAXES. Fund CI has qualified, and intends to continue to qualify each
year, as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended. As a regulated investment
company, Fund CI is relieved of any federal income tax liability by
distributing all of its net taxable investment income and net taxable
capital gains, if any, to its shareholder. Fund CI further intends to
avoid excise tax liability by distributing substantially all of its
investment income. Therefore, no federal income tax provision has
been made by Fund CI in its financial statements. As of December 31,
1995, Fund CI had capital loss carryovers totaling $1,785, which may
be available to offset any future realized taxable gains, to the
extent provided by regulations. These amounts expire during the
period 1996-2002.
DIVIDENDS. Fund CI declares dividends daily, pays dividends monthly,
and automatically reinvests such dividends in additional shares at net
asset value. Dividends are declared from the total of net investment
income.
OTHER. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Security transactions are accounted for on the trade date. Interest
income is recorded on the accrual basis.
2. INVESTMENTS
Realized gains and losses from security transactions are reported on
an identified-cost basis.
3. FUND CHARGES
Investment management and advisory fees are calculated daily at an
annual rate of 0.3233% of Fund CI's average net assets. These fees
are paid to Travelers Asset Management International Corporation, an
indirect wholly owned subsidiary of Travelers Group Inc.
The Travelers has agreed to reimburse Fund CI for the amount by which
Fund CI's aggregate annualized operating expenses, excluding brokerage
commissions and any interest charges and taxes, exceed 1.25% of Fund
CI's average net assets. Trustees and officers of Fund CI who are
also officers or employees of Travelers Group Inc., or its
subsidiaries, receive no compensation directly from Fund CI.
-45-
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust authorizes the issuance of an unlimited
number of shares of beneficial interest with a par value of $0.10 per
share. Transactions in shares of Fund CI were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . 3,284,741 3,009,583
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . (3,122,783) (2,478,281)
Shares issued in reinvestment of distributions . . . . . . . . 52,033 24,539
---------- ----------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,991 555,841
========== ==========
</TABLE>
As of December 31, 1995 all outstanding shares of beneficial interest
were owned by The Travelers Fund UL for Variable Life Insurance, a
separate account of The Travelers.
5. FINANCIAL HIGHLIGHTS*
(Selected data for a share outstanding throughout each year.)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
---------------
Net asset value, beginning of year . . . . . . . . . $ 1.00 $ 1.00 $1.00 $1.00 $ 1.00
Income from operations . . . . . . . . . . . . . 0.0417 0.0278 0.0214 0.0322 0.0650
Less distributions from net investment income . . (0.0417) (0.0278) (0.0214) (0.0322) (0.0650)
-------- -------- ------- ------- --------
Net asset value, end of year (unchanged during the year) $ 1.00 $ 1.00 $1.00 $1.00 $ 1.00
======== ======== ======= ======= ========
TOTAL RETURN** 4.17% 2.78% 2.14% 3.22% 6.50%
------------
RATIOS/SUPPLEMENTAL DATA:
-------------------------
Net assets, end of year (thousands) . . . . . . . $ 1,417 $1,203 $ 647 $ 697 $ 690
Ratio of expenses to average net assets *** . . . 1.25% 1.25% 0.94% 0.38% 0.38%
</TABLE>
* The information set forth in Note 5 replaces the data presented in
prior years as supplementary information.
** Total return is determined after reflecting the reinvestment of
dividends declared during the year, by dividing net investment income
by average net assets. As described in Note 1, shares in Fund CI are
only sold to The Travelers separate accounts in connection with the
issuance of variable life insurance contracts. The total return does
not reflect the deduction of any contract charges or fees assessed by
The Travelers separate accounts. Prior year amounts have been
reclassified to conform to the current year's presentation.
*** The ratio of expenses to average net assets reflects an expense
reimbursement by The Travelers in connection with voluntary expense
limitations, including those described in Note 3. Without the expense
reimbursement, the ratios of expenses to average net assets would have
been 7.37%, 6.40%, 8.47%, 7.70%, and 11.61% for the years ended
December 31, 1995, 1994, 1993, 1992, and 1991, respectively.
-46-
<PAGE> 31
CASH INCOME TRUST
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (100%)
U.S. GOVERNMENT SECURITIES (100%)
United States of America Treasury,
4.91% due March 21, 1996 $ 250,000 $ 247,159
United States of America Treasury,
5.29% due April 4, 1996 200,000 196,895
United States of America Treasury,
5.28% due January 18, 1996 360,000 355,673
United States of America Treasury,
5.30% due February 29, 1996 200,000 198,083
United States of America Treasury,
5.32% due March 7, 1996 300,000 296,600
United States of America Treasury,
5.36% due January 11, 1996 100,000 98,642
-----------
1,393,052
-----------
TOTAL INVESTMENTS (100%)
(COST $1,392,214) (A) $ 1,393,052
===========
</TABLE>
NOTE
(A) The cost of investments for federal income tax purposes is identical.
See Notes to Financial Statements
-47-
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholder of Cash Income Trust:
We have audited the accompanying statement of assets and liabilities of Cash
Income Trust including the statement of investments as of December 31, 1995,
and the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cash
Income Trust as of December 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 7, 1996
-48-
<PAGE> 33
CASH INCOME TRUST
STATEMENT OF ADDITIONAL INFORMATION
L-11170S TIC Ed. 5-96
Printed in U.S.A.
<PAGE> 34
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant and the Report of Independent
Accountants are contained in the Statement of Additional Information.
The Registrant's financial statements include:
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the year ended December 31, 1995
Statement of Changes in Net Assets for the years ended December
31, 1995 and 1994
Statement of Investments as of December 31, 1995
Notes to Financial Statements
(b) Exhibits
1. Declaration of Trust.
2. By-Laws of Cash Income Trust.
5. Investment Advisory Agreement between the Registrant and
Travelers Asset Management International Corporation.
8. Custody Agreement dated February 1, 1995 between the Registrant
and Chase Manhattan Bank, N.A., Brooklyn, New York.
(Incorporated herein by reference to Exhibit 8 to Post-Effective
Amendment No. 22 to the Registration Statement on Form N-1A filed
on April 25, 1995.)
9. Transfer and Recordkeeping Agreement between the Registrant and
The Travelers Insurance Company.
10. An opinion and consent of counsel as to the legality of the
securities registered by the Fund. (Incorporated herein by
reference to the Registrant's most recent Form 24f-2 Notice filed
on February 29, 1996.)
11(A). Consent of Coopers & Lybrand L.L.P., Independent Accountants, to
the use of their name and opinion in Part A and Part B of this
Form N-1A and to the inclusion of their report.
11(B). Powers of Attorney authorizing Ernest J. Wright as signatory for
Heath B. McLendon, Knight Edwards, Robert E. McGill III,
Lewis Mandell, Frances M. Hawk and Ian R. Stuart.
27. Financial Data Schedule.
Item 25. Persons Controlled By or Under Common Control With the Registrant
Not Applicable.
<PAGE> 35
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of February 16, 1996
-------------- -----------------------
<S> <C>
Shares of beneficial
interest, without par value Two (2)
</TABLE>
Item 27. Indemnification
Provisions for the indemnification of the Fund's Trustees and officers are
contained in the Fund's Declaration of Trust which is being filed with this
Registration Statement as Exhibit 1.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 36
Item 28. Business and Other Connections of Investment Adviser
Officers and Directors of Travelers Asset Management International Corporation
(TAMIC), the Fund's Investment Adviser, are set forth in the following table:
<TABLE>
<CAPTION>
Name Position with TAMIC Other Business
- ---- ------------------- --------------
<S> <C> <C>
Marc P. Weill Director, Chairman and Senior Vice President **
President
David A. Tyson Director and Senior Vice Senior Vice President *
President
David Amaral Vice President Assistant Director*
John R. Calcagni Vice President Second Vice President*
Gene Collins Vice President Vice President*
Phillip A. Duncan Vice President Second Vice President*
Kathyrn D. Karlic Vice President Vice President*
David R. Miller Vice President Vice President*
Joseph Mullally Vice President Vice President*
Emil J. Molinaro Vice President Vice President*
Jordan M. Stitzer Vice President Vice President
F. Denney Voss Vice President Senior Vice President*
Eddie Sanchez Assistant Vice President Assistant Director*
William H. White Treasurer Vice President and Treasurer *
Charles B. Chamberlain Assistant Treasurer Assistant Treasurer *
George C. Quaggin, Jr. Assistant Treasurer Assistant Treasurer *
John R. Britt Secretary Assistant Secretary *
Marla A. Berman Assistant Secretary Assistant Secretary**
Patricia A. Uzzel Compliance Officer Assistant Director*
Frank J. Fazzina Controller Director *
</TABLE>
* Positions are held with The Travelers Insurance Group Inc., One Tower
Square, Hartford, Connecticut 06183.
** Positions are held with Travelers Group Inc. , 388 Greenwich Street, New
York, N.Y. 10013.
<PAGE> 37
Item 29. Principal Underwriter
Not Applicable.
Item 30. Location of Accounts and Records
(1) The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(2) Chase Manhattan Bank, N. A.
Chase MetroTech Center
Brooklyn, New York
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes to provide to each person to whom
a prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE> 38
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, Cash Income Trust, certifies that it meets
all of the requirements for effectiveness of this post-effective amendment to
this Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and that it has duly caused this amendment to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Hartford, State of Connecticut, on April 11, 1996.
CASH INCOME TRUST
-----------------
(Registrant)
By: *HEATH B. McLENDON
----------------------
Heath B. McLendon
Chairman, Board of Trustees
Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to this Registration Statement has been signed below by the following
persons in the capacities indicated on April 11, 1996.
<TABLE>
<S> <C>
*HEATH B. McLENDON Chairman of the Board
- ---------------------------------------
(Heath B. McLendon)
*KNIGHT EDWARDS Trustee
- ---------------------------------------
(Knight Edwards)
*ROBERT E. McGILL III Trustee
- ---------------------------------------
(Robert E. McGill III)
*LEWIS MANDELL Trustee
- ---------------------------------------
(Lewis Mandell)
*FRANCES M. HAWK Trustee
- ---------------------------------------
(Frances M. Hawk)
*IAN R. STUART Treasurer and Chief Accounting Officer
- ---------------------------------------
(Ian R. Stuart)
*By: /s/ Ernest J. Wright
----------------------------------
Ernest J. Wright, Attorney-in-Fact
Secretary, Board of Trustees
</TABLE>
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
1. Declaration of Trust. Electronically
2. By-Laws of Cash Income Trust. Electronically
5. Investment Advisory Agreement between the Electronically
Registrant and Travelers Asset Management
International Corporation.
8. Custody Agreement dated February 1, 1995 between
the Registrant and Chase Manhattan Bank, N.A.,
Brooklyn, New York. (Incorporated herein by reference
to Exhibit 8 to Post-Effective No. 22 to the Registration
Statement on Form N-1A filed April 25, 1995.)
9. Transfer and Recordkeeping Agreement between the Electronically
Registrant and The Travelers Insurance Company.
10. An opinion and consent of counsel as to the legality
of the securities registered by the Fund. (Incorporated
herein by reference to the Registrant's most recent
Form 24f-2 Notice filed on February 29, 1996.)
11(A). Consent of Coopers & Lybrand L.L.P., Independent Electronically
Accountants, to the use of their name and opinion in
Part A and Part B of this Form N-1A and to the
inclusion of their report.
11(B). Powers of Attorney authorizing Ernest J. Wright as Electronically
signatory for Heath B. McLendon, Knight Edwards,
Robert E. McGill III, Lewis Mandell, Frances M. Hawk
and Ian R. Stuart.
27. Financial Data Schedule. Electronically
</TABLE>
<PAGE> 1
EXHIBIT 1
CASH INCOME TRUST
FIRST SUPPLEMENTAL DECLARATION OF TRUST
Dated May 8, l987
FIRST SUPPLEMENTAL DECLARATION OF TRUST made at Boston, Massachusetts,
this 8th day of May 1987, by George S. Bissell, Everett P. Pope, Peter K.
Simonds, Knight Edwards, Donald T. Ellis, Philip B. Harley, Leroy Keith, Jr.,
David M. Richardson, Andrew J. Simons, Russel R. Taylor and Charles F. Chapin
(hereinafter with their successors referred to as the "Trustees"), as Trustees
of Cash Income Trust, a Massachusetts business trust established under a
Declaration of Trust dated October 5, 1981.
WHEREAS, Section 13.1 of Article XIII of the Declaration of Trust
provides that, if authorized by a vote of a majority or other percentage of the
Shares as there specified, a majority of the Trustees may alter or amend the
Declaration of Trust.
NOW, THEREFORE, the Declaration of Trust is amended and restated in
its entirety as follows:
ARTICLE I
Name and Definitions
Section 1. Name This Trust shall be known as the "CASH INCOME TRUST"
and the Trustees shall conduct the business of this Trust under that name or
any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided
(a) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person" and "Principal Underwriter" shall have the
meanings given them in the 1940 Act;
(b) The "Trust" refers to the Massachusetts business trust
established by the original Declaration of Trust, as amended from time
to time:
(c) "Declaration of Trust" shall mean this First Supplemental
Declaration of Trust as amended or restated from time to time;
<PAGE> 2
(d) "Majority Shareholder vote" means the vote of at least a
majority, as defined in the 1940 Act, of Shares entitled to vote on a
matter at a meeting of Shareholders entitled to vote on such matters;
(e) "Net Asset Value Per Share" means the net asset value per
share of the Trust determined in the manner provided or authorized in
Article VI, Section 5;
(f) "Shareholder" means a record owner of Shares of the Trust;
(g) "Shares", means the equal proportionate units of interest
into which the beneficial interest in the Trust shall be divided from
time to time or, if more than one series ("Series") or more than one
class ("Class") of a Series of Shares is authorized by the Trustees,
the equal proportionate units into which each such Series or Class of
Shares shall be divided from time to time, and includes where
appropriate fractions of a Share as well as a whole Share, unless the
Trustees provide that there shall be no fractions of any particular
Shares;
(h) "Trustees" refers to the Trustee or Trustees of the Trust
who become such in accordance with Article IV and where appropriate
means a majority or other portion of them acting in accordance with
this Declaration of Trust or the By-laws of the Trust; and
(i) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from time to
time.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a continuous source
of managed investments.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The beneficial interest in
the Trust shall at all times be divided into an unlimited number of
transferable Shares, $.10 par value, each of which shall represent an equal
proportionate interest in the Trust with each other Share, none having priority
or preference over another, except to the extent modified by the Trustees under
the provisions of this Section. The number of shares which may be issued is
unlimited. The Trustees may from time to time
2
<PAGE> 3
divide or combine the Shares into a greater or lesser number without thereby
changing the proportionate beneficial interests in the Trust. Contributions to
the Trust may be accepted for, and Shares shall be redeemed as, whole Shares
and/or fractions.
From time to time, as they deem appropriate, the Trustees may create
additional Series and/or Classes of Series of Shares, in addition to the Shares
initially created under this instrument ("Original Series"). References in
this Declaration of Trust to Shares of the Trust shall apply, as appropriate,
to each such Series of Shares and to each such Class of Shares.
Any additional Series of Shares created hereunder shall represent the
beneficial interest in the assets (and related liabilities) allocated by the
Trustees to such Series of Shares and acquired by the Trust only after creation
of the respective Series of Shares and only on account of such Series. If the
Trustees create any additional Series of Shares hereunder, then the Original
Series shall be deemed a separate Series of Shares. Upon creation of each
Series of Shares, the Trustees may designate it appropriately and determine the
investment policies with respect to the assets allocated to such Series of
Shares, redemption rights, dividend policies, conversion rights, liquidation
rights, voting rights, and such other rights and restrictions as the Trustees
deem appropriate, to the extent not inconsistent with the provisions of this
Declaration of Trust.
The Trustees may divide any Series (including the Original Series)
into more than one Class of Shares. Upon creation of each additional Class of
Shares the Trustees may designate it appropriately and determine its rights and
restrictions (including without limitation such redemption rights, dividend
policies, conversion rights, liquidation rights, voting rights, and other
rights and restrictions as the Trustees deem appropriate).
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer agent or similar agent. The
Trustees may make such rules as they consider appropriate for the transfer of
Shares and similar matters. The record books of the Trust as kept by the Trust
or any transfer or similar agent, as the case may be, shall be conclusive as to
who are the holders of Shares and the number of Shares held from time to time
by each.
Section 3. Investments in the Trust. The Trustees shall accept
investments in the Trust from such persons and on such terms and, subject to
any requirements of law, for such consideration as the Trustees from time to
time authorize and may cease offering Shares to the public at any time. After
such
3
<PAGE> 4
acceptance, the number of Shares of the appropriate Series to represent the
contribution may in the Trustees' discretion be considered as outstanding and
the amount receivable by the Trustees on account of the contribution may be
treated as an asset of the Trust.
Section 4. No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 5. Provisions Relating to Series of Shares. Whenever no
Shares of a Series are outstanding, then the Trustees may abolish such Series
(or any Class of Shares of a Series for which there are no outstanding Shares).
Whenever more than one Series of Shares is outstanding, then the following
provisions shall apply:
(a) Assets Belonging to Each Series. All consideration
received by the Trust for the issue or sale of Shares of a particular
Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings and proceeds thereof, and
any funds derived from any reinvestment of such proceeds, shall
irrevocably belong to that Series for all purposes, subject only to
the rights of creditors, and shall be so recorded upon the books of
the Trust. In the event there are assets, income, earnings, and
proceeds thereof which are not readily identifiable as belonging to a
particular Series, then the Trustees shall allocate such items to the
various Series then existing, in such manner and on such basis as
they, in their sole discretion, deem fair and equitable. The amount
of each such item allocated to a particular Series by the Trustees
shall then belong to that Series, and each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all
purposes.
(b) Liabilities Belonging to Each Series. The assets
belonging to each particular Series shall be charged with the
liabilities, expenses, costs and reserves of the Trust attributable to
that Series; and any general liabilities, expenses, costs and reserves
of the Trust which are not readily identifiable as attributable to a
particular Series shall be allocated by the Trustees to the various
Series then existing, in such manner and on such basis as they, in
their sole discretion, deem fair and equitable. Each such allocation
shall be conclusive and binding upon the Shareholders of all Series
for all purposes.
(c) Series Shares, Dividends and Liquidation. Each Share of
each respective Class of a Series shall have the
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same rights and pro rata beneficial interest in the assets and
liabilities of the Series as any other such Share. Any dividends paid
on the Shares of any Series shall only be payable from and to the
extent of the assets (net of liabilities) belonging to that Series. In
the event of liquidation of a Series, only the assets (less provision
for liabilities) or the Series shall be distributed to the holders of
Shares of that Series.
(d) voting By Series. Except as provided in this Section or
as limited by the rights and restrictions of any Series or Class, each
Share of the Trust may vote with and in the same manner as any other
Share on matter submitted to a vote of the Shareholders entitled to
vote thereon, without differentiation among votes from the separate
Series or Classes; provided, however, that (i) as to any matter with
respect to which a separate vote of any Series or Class is required by
the 1940 Act, or otherwise by applicable law, such requirement as to a
separate vote shall apply in lieu of the voting described above; (ii)
in the event that the separate vote requirements referred to in (i)
above apply with respect to one or more Series or Classes, then,
subject to (iii) below, the Shares of all other Series or Classes
shall vote without differentiation among their votes; and (iii) as to
any matter which does not affect the interest of a particular Series
or Classes, only the holders of Shares of the one or more affected
Series or Classes shall be entitled to vote.
Section 6. Limitation of Personal Liability. The Trustees shall have
no power to bind any Shareholder personally or to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription to
any Shares or otherwise. Every note, bond, contract or other undertaking
issued by or on behalf of the Trust or the Trustees relating to the Trust shall
include a recitation limiting the obligation represented thereby to the Trust
and its assets (but the omission of such a recitation shall not operate to bind
any Shareholder).
ARTICLE IV
The Trustees
Section 1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by action of a majority of the
Trustees.
Section 2. Election or Appointment and Term. At the Annual Meeting
in 1987, the Shareholders shall elect a Board of
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Trustees. Thereafter, subject to Section 16(a) of the 1940 Act, the Trustees
may elect themselves or their successors at such regular intervals, if any, as
they deem proper, and may appoint Trustees to fill vacancies as provided in
Section 4 hereof; provided, that Trustees shall be elected by a Majority
Shareholder vote at such time or times as the Trustees shall determine that
such action is advisable. Subject to Section 3 hereof, the Trustees shall have
the power to set and alter the terms of office of the Trustees, and they may at
any time lengthen or shorten their own terms or make their terms of unlimited
duration; provided, that the term of office of any incumbent Trustee shall
continue until terminated as provided in Section 4 hereof, or, if not so
terminated until the election of such Trustee's successor in office has become
effective in accordance with this Section 2.
Section 3. Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees, and such resignation shall
be effective upon such delivery or at any later date according to the terms of
the instrument. Any Trustee may be removed by the action of two-thirds of the
remaining Trustees. Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the purpose of conveying to the
Trust or the remaining Trustees any Trust property held in his name. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence. However, the execution and delivery of
such documents by a former Trustee or his legal representative shall not be
requisite to the vesting of title to the Trust property in the remaining
Trustees.
Section 4. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of such Trustee's death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform
the duties of the office of Trustee. No such vacancy shall operate to annul
this Declaration or to revoke any existing agency created pursuant to the terms
of this Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to
applicable law, the remaining Trustees, or, if only one Trustee shall then
remain in office, the sole remaining Trustee, shall appoint such individual to
fill such vacancy as they or he, in their or his discretion, shall see fit. An
appointment of a Trustee may be made in anticipation of a vacancy to occur at a
later date by reason of retirement or resignation of a Trustee or an increase
in the number of
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Trustees; provided, that such appointment shall not become effective prior to
such retirement or resignation or such increase in the number of Trustees.
Whenever a vacancy in the number of Trustees shall occur, until such vacancy is
filled as provided in this Section 4, the Trustees in office, regardless of
their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration in the
manner provided by this Declaration. A written instrument certifying the
existence of such vacancy signed by a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy.
Section 5. Management of the Trust. Subject to the provisions of
this Declaration of Trust, the business and affairs of the Trust shall be
managed by the Trustees, and they shall have all powers necessary and desirable
to carry out that responsibility. Action by the Trustees may be taken by
majority vote of the Trustees at a meeting at which a quorum (which shall be a
majority of the Trustees then in office) shall be present, or by a writing
signed by a majority of the Trustees in office.
Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that they do
not reserve that right to the Shareholders; they may elect and remove such
officers and appoint and terminate such agents as they consider appropriate;
they may appoint from their own number and terminate any one or more
committees; they may employ one or more custodians of the assets of the Trust
and may authorize such custodians to employ subcustodians and to deposit all or
any part of such assets in a system or systems for the central handling of
securities, retain a transfer agent or a Shareholder servicing agent, or both,
provide for the distribution of Shares by the Trust, through one or more
principal underwriters or otherwise, set, or otherwise provide for the setting
of, record dates, and in general delegate such authority to do any or all
things which the Trustees may do in the operation of the business of the Trust
as they consider desirable to any officers of the Trust and committees of the
Trustees and to any such agent or employee, custodian or underwriter. Any
action relating to the operation of the Trust provided for herein to be taken
by the Trustees may be taken by any other person under authority granted by the
Trustees whether or not specifically as stated, and unless specifically so
stated to the contrary. A specific statement indicating that the Trustees may
delegate any authority shall not give rise to any contrary implication with
respect to any provision of the Declaration.
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Without limiting the foregoing, the Trustees in addition to all powers
granted by law shall have power and authority:
(a) to invest and reinvest cash, and to hold cash uninvested, without
in any wise being bound or limited by any present or future law or
custom in regard to investments by trustees.
(b) To sell, exchange, lend, pledge, mortgage, hypothecate or lease
any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form; or in
its own name or in the name of a custodian or subcustodian or a
nominee or nominees or otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or concern,
and to pay calls or subscriptions with respect to any security held in
the Trust;
(g) To join with other security holders in acting through a
committee, depository, voting Trustee or otherwise, and in that
connection to deposit any security with, or transfer any security to,
any such committee, depository or Trustee, and to delegate to them
such power and authority with relation to any security (whether or not
so deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depository or Trustee as the Trustees
shall deem proper;
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(h) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust for any matter in controversy, including but not
limited to claims for taxes; and
(i) To borrow funds.
The Trustees shall not be required to obtain any court order to deal
with any assets of the Trust or take any other action hereunder.
Section 7. Ownership of Assets of the Trust. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or by any successor
Trustees. All of the assets of the Trust shall at all times be considered as
vested in the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of partition or
possession thereof, but each Shareholder shall have a proportionate undivided
beneficial interest in the assets of the Series of Shares of which he is a
holder, subject to any rights or restrictions applicable to any Class or any
Series of Shares of which he is a holder.
Section 8. Payment of Expenses. The Trustees shall pay or cause to
be paid out of the principal or income of the Trust, or partly out of principal
and partly out of income, as they deem fair, all expenses, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including but not limited to the Trustees'
compensation and such expenses and charges for the services of the Trust's
investment adviser or manager, auditor, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or
proper to incur.
Section 9. Investment Management and Other Services. Without
limiting the generality if the powers of the Trustees, subject to applicable
law, the Trustees may enter into a contract with any person or persons,
including any firm, corporation, trust or association in which any Trustee,
Shareholder or officer of the Trust may be interested, to act as investment
advisers and/or managers of the Trust and to provide such investment advice
and/or management as the Trustees may from time to time consider appropriate
(the "Adviser"). Any such contract may authorize the Adviser to determine from
time to time what securities shall be acquired, held or disposed of by the
Trust and what portion of assets of the Trust shall be held uninvested and to
take, on behalf of the Trust, actions which the Adviser deems necessary to
implement the investment policies of the
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Trust, including the placement of all orders for the purchase, sale or loan of
portfolio securities for the Trust's account with brokers or dealers or others
selected by the Adviser and the giving of instructions to the custodian or the
Trust's assets as to deliveries of securities and payments of cash for the
account of the Trust.
Without limiting the generality of the powers of the Trustees, subject
to applicable law, the Adviser may enter into an agreement to retain at its own
expense any person or persons, including any firm, corporation, trust or
association in which any Trustee, Shareholder or officer of the Trust may be
interested, to provide the Trust investment advice and/or management and any
person or persons so retained may be granted all authority which has been
granted to the Adviser under the contract which the Adviser entered into
pursuant to the preceding paragraph.
Without limiting the generality of the powers of the Trustees, the
Trustees may enter into a contract with any person or persons including any
firm, corporation, trust or association in which any Trustee, Shareholder or
officer of the Trust be interested, to act as principal underwriter for the
Shares.
Section 10. Affiliations of Trustees or Officers, Etc. The fact that
(i) any of the Shareholders, Trustees or officers of the Trust is a
Shareholder, Director, officer, partner, Trustee, employee, manager, adviser or
distributor of or for any partnership, corporation, trust, association or other
organization or for any parent or affiliate of any organization, with which any
contract including, without limitation, contracts for services as manager,
investment adviser, distributor, principal underwriter, custodian, transfer
agent or disbursing agent or for related services may have been or may
hereafter be made, or that any such organization, or any parent or affiliate
thereof, is a shareholder of or has an interest in the Trust, or that (ii) any
partnership, corporation, trust, association or other organization with which a
contract referred to in (i) above, may have been or may hereafter be made also
has any one or more of such contracts with one or more other partnerships,
corporations, trusts, associations or other organizations, or has other
business or interests, shall not affect the validity of any such contract or
disqualify any shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the Trust or
its Shareholders.
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ARTICLE V
Shareholder's Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have power to vote
(i) for the election of Trustees as provided in Section 2 of Article IV hereof
and the removal of Trustees to the extent provided in Section l6(c) of the 1940
Act, (ii) with respect to approval or termination in accordance with the 1940
Act of any investment advisory or management agreement described in Article IV
hereof, (iii) with respect to any amendment of this Declaration of Trust as
provided in Section 7 of Article IX hereof, (iv) with respect to any merger,
consolidation or sale of assets as provided in Section 4 of Article IX hereof,
(v) with respect to incorporation of the Trust to the extent and as provided in
Section 9 of Article IX hereof, (vi) to the same extent as the stockholders of
a Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, and (vii) with
respect to such additional matters relating to the Trust as may be required by
this Declaration, the By-laws or any undertaking filed by the Trust with the
Securities and Exchange Commission (or any successor agency) or with any state,
or as to which the Trustees in their discretion shall determine such
Shareholder vote to be required by law or otherwise to be necessary,
appropriate or advisable.
Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them.
A proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or any By-Laws of the Trust to be
taken by Shareholders.
Section 2. Meetings. Meetings of Shareholders shall be held at such
times at the principal office of the Trust or such other place as the Trustees
may designate. Meetings of the Shareholders may be called by the Trustees or
such other person or persons as may be specified in the By-laws and shall be
called by the Trustees upon the written request of Shareholders owning
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at least 25% of the outstanding Shares entitled to vote. Shareholders shall be
entitled to at least seven days notice of any meeting.
Section 3. Quorum and Required vote. Except as otherwise provided by
law, to constitute a quorum for the transaction of business at a Shareholders'
meeting, there must be present in person or by proxy, holders of a majority of
the total number of Shares of the Trust then outstanding and entitled to vote
at the meeting, but any lesser number shall be sufficient for adjournment, and
any adjourned session or sessions may be held within 90 days after the date set
for the original meeting without the necessity of further notice. Subject to
any applicable requirements of law, a majority of the Shares present and
entitled to vote on a question or election shall decide such question or
election, except when a larger vote is required by any provision of this
Declaration of Trust, the By-Laws of the Trust or any applicable provision of
law.
Section 4. Action by Written Consent. Any action required or
permitted to be taken at any meeting may be taken without a meeting if a
consent in writing setting forth such action is signed by all the Shareholders
entitled to vote on the subject matter thereof holding a majority of the Shares
entitled to vote thereon.
Section 5. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees may, but need not, each year
distribute to the Shareholders of each Series or Class such income and gains as
the Trustees may determine, after providing for actual and accrued expenses and
liabilities (including such reserves as the Trustees may establish) determined
in accordance with generally accepted accounting practices. The Trustees shall
have full discretion to determine which items shall be treated as income and
which items as capital and their determination shall be binding upon the
Shareholders. Distributions of each year's income of each Series or Class, if
any be made, may be made in one or more payments, which shall be in Shares, in
cash or otherwise and on a date or dates and as of a record date or dates
determined by or under the authority of the Trustees. At any time and from
time to time in their discretion the Trustees may distribute to the
Shareholders of any one or more Series' or Classes as of a record date or dates
determined by or under the authority of the Trustees, in Shares,
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in cash or otherwise, all or part of any gain realized on the sale or
disposition of property of the Trust or otherwise, or all or part of any other
principal of the Trust. Each distribution pursuant to this Section 1 shall be
made ratably according to the number of Shares of the Series or Class held by
the several Shareholders on the applicable record date thereof, provided that
no distribution need be made on Shares purchased pursuant to orders received or
for which payment is made after such time or times as may be determined by or
under the authority of the Trustees. Any such distribution paid in Shares will
be paid at the net asset value thereof as determined in accordance with Section
5 hereof.
Section 2. Determination of Net Income. The "Net Income" of each
Series or Class shall include all accrued and actual (but not Previously
accrued) interest income on portfolio assets of that Series or Class as well as
realized and unrealized capital gains and losses, less all actual and accrued
expenses and liabilities chargeable (in accordance with Section 5 of this
Article VI) against the income of that Series or Class determined in accordance
with generally accepted accounting practices. Such Net Income shall be
determined as of such time as the Trustees may determine on each business day.
All the Net Income of each Series or Class which is a positive amount since the
last determination of Net Income of that Series or Class, minus any direct
charges to Shareholders approved by the Trustees and of which the Shareholders
are notified, so determined at any time is a negative amount, the pro rata
share of each Shareholder of that Series or Class of such negative amount shall
constitute a liability of such Shareholder to the Trust which shall be paid at
such times and in such manner as the Trustees may determine out of the accrued
dividend account of such Shareholder by reducing the number of Shares of such
Series or Class in the account of such Shareholder or otherwise.
As of any time other than the time determined by the Trustees pursuant
to the preceding paragraph, the Trustees may cause the Net Income since the
last determination to be determined in a similar manner and the Trustees may
fix the time when such redetermined or adjusted Net Income shall become
effective.
Section 3. Redemptions. Upon offer by any Shareholder of all or part
of the Shares held by the Shareholder for redemption hereunder, in accordance
with such methods, upon such terms and subject to such conditions as from time
to time may be determined, by, or under the authority of the Trustees the Trust
shall redeem the Shares so offered by distributing to the Shareholder the Net
Asset Value per Share thereof determined as of a time fixed by or under the
authority of the Trustees. The
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Trust shall have the right at its option and at any time to redeem the Shares
of any Shareholder for their Net Asset Value per Share if the Shareholder owns
Shares of a Series having an aggregate net asset value of less than such
minimum amount as may from time to time be prescribed, by, or under the
authority of the Trustees or if ownership of such Shares by the Shareholder
could create adverse tax consequences for the Trust or any Series or Class
thereof. With respect to all Shares or any Series or Class of Shares, the
right to redemption or the date for payment may, however, be delayed or
suspended by the Trustees if there is an extraordinary closing or restriction
of trading on the New York Stock Exchange as determined under rules and
regulations of the Commission, or an emergency exists as a result of which is
not reasonably practicable for the Trust to dispose of securities or fairly to
determine the value of its net assets, or as the Commission may permit. The
completion of such distribution on redemption of Shares shall constitute a full
discharge of the Trust and Trustees with respect to such Shares, and the
Trustees may require that any certificate or certificates issued by the Trust
to evidence the ownership of the Shares shall be surrendered to the Trustees
for cancellation or notation. Shares so redeemed shall be cancelled or held by
the Trust for reissue, as the Trustees may from time to time determine.
Section 4. Payment in Kind. Subject to any generally applicable
limitation imposed by the Trustees, any distribution on redemption may, if
authorized by the Trustees, be made wholly or partly in kind, instead of in
cash. Such distribution in kind shall be made by distributing investments
constituting, in the opinion of the Trustees, a fair representation of the
various types of securities then held by the Series or Class of Shares being
redeemed (but not necessarily including a portion of each particular
investment) and in each case having an aggregate value equal to the amount of
cash instead of which such distribution in kind is made.
Section 5. Determination of Net Asset Value per Share. The Net Asset
Value per Share shall be computed as of the close of trading on the New York
Stock Exchange on each day on which such Exchange is open by determining the
value of all the Trust's investments, adding any other assets of the Trust,
subtracting all liabilities of the Trust and dividing the result by the number
of Shares outstanding.
Current value for portfolio securities shall be determined as follows:
Securities that are traded on an established exchange shall be valued
on the basis of the last sales price on the exchange where primarily traded
prior to the time of the valuation.
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Securities traded in the over-the-counter market and for which complete
quotations are readily available shall be valued at the mean of the bid and
asked prices at the time of the valuation. Subject to instructions of the Board
of Trustees, the Trust shall value the following at prices deemed in good faith
to be fair: (1) securities (including restricted securities) for which complete
quotations are not readily available, (2) listed securities if in the Trustees'
opinion the last sales price does not reflect a current market value or if no
sale occurred, and (3) other assets. The fair value for listed securities will
normally be the mean between the closing bid and asked prices on the exchange
or primary market, where available.
Money market or short-term tax free securities for which market
quotations are readily available shall be valued at prices which, in the
opinion of the person making the determination, most nearly represents the
market value of such securities which may, but need not, be the most recent bid
price obtained from one or more of the market makers for such securities.
Other securities and assets shall be valued at fair value as determined by or
pursuant to the direction of the Trustees, which in the case of short-term debt
obligations, commercial paper and repurchase agreements may, but need not be,
on the basis of quoted yields for securities of comparable maturity, quality
and type, or on the basis of amortized cost.
Expenses and liabilities of the Trust shall be accrued each day. The
manner of determining the Net Asset Value per Share may from time to time be
altered if necessary or desirable in the Trustees' judgment to conform to any
other method prescribed or permitted by any applicable law or regulation.
The Net Asset Value per Share may be computed as of such other times
as the Trustees may determine and in such event the Net Asset Value per share
may, but need not, be determined by adjusting the Net Asset Value per Share
last determined pursuant to the preceding paragraph in such manner (based upon
changes in selected security prices determined by the Trustees to be relevant
to the portfolio or in averages or in other standard and readily ascertainable
market data since such close) as is deemed adequate to reflect a fair
approximate estimate of the probable change in Net Asset Value paid per Share
which has occurred since such last determination.
In determination of Net Asset Value per Share, liabilities may include
such reserves for taxes, estimated accrued expenses and contingencies as the
Trustees or their designates may in their sole discretion deem fair and
reasonable under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the Trustees
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shall otherwise determine. Dividends payable by the Trust shall be deducted as
at the time of but immediately prior to the determination of Net Asset Value
per Share on the record date therefor or as the Trustees shall otherwise
determine.
Determination of Net Asset Value per Share so made in good faith and
pursuant to the provisions of the 1940 Act shall be binding on all parties
concerned.
Section 6. Constant Net Asset Value; Reduction of Outstanding Shares.
The Trustees shall have the power to determine the Net Income of each Series or
Class of the Trust, which is commonly known as a money market or short term tax
free Series or Class, once on each business day and at each such determination
declare such Net Income as dividends of each Series or Class with the result
that Net Asset Value per Share of each Series or Class of the Trust shall
remain at a constant dollar value. The determination of Net Income and the
resultant declaration and payment of dividends shall be set forth in the
Prospectus of the Trust currently effective under the Securities Act of 1933,
as amended. Fluctuations in value will be the number of outstanding shares in
each Shareholder's account. If there is a net loss in a Series or Class, the
Trust will first offset such amount against dividends of such Series or Class
accrued during the month in each Shareholder account. To the extent that such a
net loss would exceed such accrued dividends, the Trust will reduce the number
of its outstanding Shares of such Series or Class in an amount equal to the
amount by which the net loss exceeds accrued dividends by having each
Shareholder of such Series or Class contribute to the Trust's capital his pro
rata portion of the total number of Shares of such Series or Class required to
be cancelled in order to permit the Net Asset Value per Share of such Series or
Class of the Trust to be maintained at a constant dollar value. Each
Shareholder of such Series or Class will be deemed to have agreed to such
contribution in these circumstances by his investment in the Trust. The
purpose of the foregoing procedure is to permit the Net Asset Value per Share
of each series or Class of the Trust to be maintained at a constant dollar
value per Share.
The Trustees, by resolution, may discontinue or amend the practice of
maintaining the Net Asset Value per Share of each Series or Class at a constant
dollar amount at any time and such modification shall be evidenced by
appropriate changes in the Prospectus.
Section 7. Automatic Redemption from Small Accounts. The Trustees
shall have the power to redeem shares at a redemption price determined in
accordance with Section 5 of this article if at any time the total investment
in such account does not have a
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value of at least $1,000. Before redeeming such Shares, Shareholders will be
notified that the value of each of their accounts is less than $1,000 and be
allowed 60 days to make an additional investment to bring the total value of
such account to $1,000 or more.
Section 8. Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article VI, the Trustees may prescribe,
in their absolute discretion, such other bases and times for the declaration
and payment of dividends and distributions as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act,
including any rule or regulation adopted by the Commission or any securities
association registered under the Securities and Exchange Act of 1934, or any
order of exemption issued by the Commission, all as in effect now or as
hereafter amended or modified.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees shall be entitled to
reasonable compensation from the Trust; they may fix the amount of their
compensation.
Section 2. Limitation of Liability. Provided they have exercised
reasonable care in their selection, the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any officer, agent,
employee or Adviser of the Trust nor shall any Trustee be responsible for the
act or commission of any other Trustee, but nothing herein contained shall
protect any Trustee against any liability to which e would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Every note, bond, contract, instrument, certificate, share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee shall not be
personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. Trustees, Officers, etc. The Trust shall indemnify each
of its Trustees and officers, may indemnify any of its employees or agents, and
shall indemnify any persons who serve at the Trust's request as Directors,
officers or Trustees of another organization, and may indemnify persons who
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serve at the Trust's request as employees or agents of another organization, in
which the Trust has any interest as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person") against all liabilities and
expenses, including but not limited to, amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees reasonably
incurred by any such person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, except with respect to any matter as to
which such Covered Person shall have been finally adjudicated in any such
action, suit or other proceeding not to have acted in good faith in the
reasonable belief that such Covered Person's action was in the best interests
of the Trust and except that no person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered Person shall
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
office. Expenses, including counsel fees so incurred by any Covered Person (but
excluding amounts paid in satisfaction of judgments, in compromise or as fines
or penalties), may be paid from time to time by the Trust in advance of the
final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person, secured by an appropriate
deposit or a surety bond approved by independent legal counsel for the Trust,
to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article.
Except as otherwise provided by law, the Trust shall have power to
purchase and maintain insurance on behalf of a Covered Person against any
liability asserted against him and incurred by him in his capacity as a Covered
Person, or arising out of his status as such, whether or not the Trust would
have the power to indemnify him against the liability under the provisions of
this Section.
Section 2. Compromise Payment. As to any matter disposed of by a
compromise payment by any Covered Person referred to in Section 1 above,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such compromise
shall be approved as in the best interests of the Trust, after notice that it
involved such indemnification, (a) by a disinterested majority
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of the Trustees then in office; or (b) by a majority of the disinterested
Trustees then in office; or (c) by any disinterested person or persons to whom
the question may be referred by the Trustees, provided that in the case of
approval pursuant to clause (b) or (c) there has been obtained an opinion in
writing of independent legal counsel to the effect that such Covered Person
appears to have acted in good faith in the reasonable belief that his action
was in the best interests of the Trust and that such indemnification would not
protect such person against any liability to the Trust to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
office; or (d) by vote of Shareholders holding a majority of the Shares
entitled to vote thereon, exclusive of any Shares beneficially owned by any
interested Covered Person. Approval by the Trustees pursuant to clause (a) or
(b) or any disinterested person or persons pursuant to clause (c) of this
Section shall not prevent the recovery from any Covered Person of any amount
paid to such person in accordance with either of such clauses as
indemnification if such person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that such person's action was in the best interests of the Trust or to have
been liable to the Trust or its Shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of office; or (d) by vote of Shareholders holding a majority of the
Shares entitled to vote thereon, exclusive of any Shares beneficially owned by
any interested Covered Person. Approval by the Trustee pursuant to clause (a)
of (b) or any disinterested person or persons pursuant to clause (c) of the
Section shall not prevent the recovery from any Covered Person of any amount
paid to such person in accordance with either of such clauses as
indemnification if such person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that such persons action was in the best interests of the Trust or to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of office.
Section 3. Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive or affect any other
rights to which any such Covered Person may be entitled. As used in this
Article VIII, the term "Covered Person" shall include such person's heirs,
executors and administrators, an "Interested Covered Person" is one against
whom the action, suit or other proceeding in question or another action, suit
or other proceeding on the same or similar grounds is then or has been pending,
and a "disinterested person" is a person against
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whom none of such actions, suits or other proceedings same or similar grounds
is then or has been pending. Nothing contained in this Article shall affect any
rights to indemnification to which personnel of the Trust other than Trustees
and officers or other persons may be entitled by contract or otherwise under
law.
Section 4. Shareholders. In case any Shareholder or former
Shareholder shall be held to be personally liable solely by reason of his being
or having been a Shareholder and not because of his acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets of the Trust to be held harmless from and
indemnified against all loss and expense arising from such liability.
ARTICLE IX
Miscellaneous
Section 1. Trust Not a Partnership. It is hereby expressly declared
that a trust and not a partnership is created hereby. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind personally either the Trust's Trustees or officers or any
Shareholders. All persons extending credit to, contracting with or having any
claim against the Trust shall look only to the assets of the Trust for payment
under such credit, contract or claim, and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing,
shall be binding upon everyone interested. Subject to the provisions of
Section l of this Article IX, a Trustee shall be liable for his own willful
defaults, and for nothing else, and shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and subject to the provisions of said Section 1 shall be under no liability for
any act or omission in accordance with such advice or for failing to follow
such advice. The Trustees shall not be
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required to give any bond as such, nor any surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees pursuant
hereto or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Section 4. Duration; Termination of Trust; Amendments; Mergers, etc.
(a) This Trust shall continue without limitation of time but subject
to the provisions of paragraphs (b), (c) and (d) of this Section 4.
(b) The Trust (as used in this section 4 the term "Trust"
specifically also means Series or Class) may be terminated by action of the
Trustees. Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all of the powers of the Trustees under this Declaration shall continue
until the affairs of the Trust shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Trust property to one or more persons at public or private sale
for consideration which may consist in whole or part of cash, securities or
other property of any kind, discharge or pay its liabilities, and to do all
other acts appropriate to liquidate its business.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust property, in cash or in kind or partly each,
among the Shareholders according to their respective rights and interests.
(c) After termination of the Trust and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust an instrument in writing setting forth the
fact of such termination, and the Trustees shall be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease.
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(d) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in paragraphs (b) and (c), the Trust shall
terminate and the Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and interest of all
parties shall be canceled and discharged.
Section 5. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each Declaration of Trust supplemental hereto or
Amendment hereof shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each such
Supplemental Declaration of Trust or Amendment shall be filed by the Trust with
the Massachusetts Secretary of State and the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any Supplemental Declarations of Trust or Amendments
have been made, and as to any matters in connection with the trust hereunder;
and, with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this instrument or of any
such Supplemental Declaration of Trust or Amendment. In this instrument or in
any such Amendment or Supplemental Declaration of Trust, references to this
instrument, and all expressions such as "herein," "hereof," and "hereunder,"
shall be deemed to refer to this instrument as amended or affected by any such
Supplemental Declaration of Trust or Amendment. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
instrument, rather than the headings, shall control. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 6. Applicable Law. The trust set forth in this instrument is
made in the Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a Trust.
Section 7. Amendments. (a)) This Declaration of Trust may be amended
by a vote or written consent of the Trustees, subject, however, if such
amendment adversely affects the rights of any Shares of any Series or any Class
thereof with respect to matters to which such amendment is applicable, to
approval of such amendments by holders of a majority of the shares of such
Series or Class. An amendment or other action which provides for an
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<PAGE> 23
additional Series of Shares (and/or Class thereof), which Series may vote
together with Shares of other Series (and/or Classes thereof) and makes other
provisions with respect to such Series (and/or Class thereof) and its relations
to existing Series (and/ or Classes hereof), shall not be deemed to adversely
affect the rights of any other Series of Shares or Class thereof. The Trustees
may also amend this Declaration without any Shareholder approval to change the
name of the Trust, to supply any omission, to cure, correct or supplement any
ambiguous, defective or inconsistent provision hereof, or, if they deem it
necessary, to conform this Declaration to the requirements of applicable
federal laws or regulations or the requirements of the Internal Revenue Code,
or to eliminate or reduce any federal state or local taxes which are or may be
payable by the Trust or the Shareholders, but the Trustees shall not be liable
for failing to do so.
(b) Nothing contained in this Declaration shall permit the amendment
of the Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by the
Secretary or any Assistant Secretary of the Trust, setting forth an amendment
by reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, and executed by a majority
of the Trustees or certified by the Secretary or any Assistant Secretary of the
Trust, shall be conclusive evidence of such amendment when lodged among the
records of the Trust.
Section 8. Merger, Consolidation and Sale of Assets. The Trust may
merge into or consolidate with any other corporation, association, trust or
other organization or may sell, lease or exchange all or substantially all of
the Trust property, including its good will, upon such terms and conditions and
for such consideration when and as authorized by the Trustees.
Section 9. Incorporation. The Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all the Trust property or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell, convey and
transfer the Trust property to any such corporation, trust, partnership,
association or organization in exchange for the shares or securities thereof or
otherwise, and to lend money to, subscribe for the shares or securities of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization in which the Trust holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any corporation,
trust, partnership,
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association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring the
Trust property to such organization or entities.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston, Massachusetts, for themselves and their assigns,
as of the day and year first above written.
/s/George S. Bissell
--------------------------
George S. Bissell
/s/ Peter K. Simonds
--------------------------
Peter K. Simonds
/s/Knight Edwards
--------------------------
Knight Edwards
/s/Donald T. Ellis
--------------------------
Donald T. Ellis
/s/Leroy Keith, Jr.
--------------------------
Leroy Keith, Jr.
/s/David M. Richardson
--------------------------
David M. Richardson
/s/Andrew J. Simons
--------------------------
Andrew J. Simons
/s/Charles F. Chapin
--------------------------
Charles F. Chapin
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COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. May 8, 1987
Then personally appeared the above-named George S. Bissell, Peter K.
Simonds, Knight Edwards, Donald T. Ellis, Leroy Keith, Jr., David M.
Richardson, Andrew J. Simons and Charles F. Chapin and acknowledged the
foregoing instrument to be their free act and deed, before me,
/s/Jean S. Longberg
----------------------------------
Notary Public
My Commission Expires:
(Notary's Seal)
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<PAGE> 1
EXHIBIT 2
CASH INCOME TRUST
(formerly Keystone Money Trust)
BY-LAWS
These By-Laws are made and adopted pursuant to Section 9.7 of the
Declaration of Trust establishing KEYSTONE MONEY TRUST, dated October , 1981,
from time to time amended, restated or modified (the "Declaration"). All words
and terms capitalized in these By-Laws shall have the meaning or meanings set
forth for such words or terms in the Declaration. If any term or provision of
these By-Laws shall be in conflict with any term or provision of the
Declaration, the terms and provisions of the Declaration shall be controlling.
ARTICLE I
Shareholders' Meetings and Record Dates
Section 1.1 General. All meetings of the Shareholders shall be held,
pursuant to written notice, within or without the Commonwealth of Massachusetts
and on such day and at such time as the Trustees shall designate. Notice shall
be given by mail not less than ten (10) nor more than sixty (60) days prior to
the day named for the meeting, and shall be deemed to have been properly given
to a Shareholder when deposited in the United States mail with first class
postage prepaid or in a telegraph office with charges prepaid, directed to his
address as given to a transfer agent or such other officer or agent of the
Trust as shall keep the register for entry thereon. A certificate or affidavit
by the Secretary or an Assistant Secretary or a transfer agent shall be prima
facie evidence of the giving of any notice required by the Declaration.
Section 1.2 Notice of Adjournments. Upon adjournment of any meeting
of Shareholders, it shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted thereat, other than by announcement
at the meetings at which such adjournment is taken. At any adjourned meeting
at which a quorum shall be present or represented, only such business may be
transacted which might have been transacted at the meeting originally called.
If after the adjournment, the Trustees fix a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Shareholder
of record on the new record date entitled by law to receive such, notice.
<PAGE> 2
Section 1.3 Chairman. The Chairman shall act as chairman at all meetings of
the Shareholders; in his absence, the President shall act as chairman; and in
the absence of the Chairman and President, the Trustee or Trustees present at
each meeting may elect a temporary chairman for the meeting, who may be one of
themselves.
Section 1.4 Proxies; Voting. Shareholders may vote at any meeting, or by
consent in writing without a meeting pursuant to Section 8.8 of the
Declaration, either in person or by proxy. Every proxy shall be executed in
writing by the Shareholder, or by his duly authorized attorney-in-fact, with
each full share represented at the meeting being entitled to one vote and
fractional shares to fractional votes. A proxy unless coupled with an
interest, shall be revocable at will, notwithstanding any other agreement or
any provision in the proxy to the contrary, but the revocation of a proxy shall
not be effective until notice thereof has been given to the Secretary, or such
other officer or agent of the Trust as the Secretary may direct. No proxy
shall be valid after eleven (11) months from the date of its execution, unless
a longer time is expressly stated in such proxy, but in no event shall a proxy,
unless coupled with an interest, be voted on after three (3) years from the
date of its execution. A proxy shall not be revoked by the death or incapacity
of the matter unless, before the vote is counted or the authority is exercised,
written notice of such death or incapacity is given to the Secretary or to such
other officer or agent of the Trust as the Secretary may direct.
Section 1.5 Closing of Transfer Books and Fixing Record Dates. For
the purpose of determining the Shareholders who are entitled to notice of or to
vote or act at any meeting, including any adjournment thereof, or who are
entitled to participate in any dividend or distribution, or for any other
proper purpose, the Trustees may from time to time close the transfer books or
fix a record date, which shall be not more than seventy-five (75) days before
the date of any meeting of Shareholders or the date for the payment of any
dividend or of any other distribution. If the Trustees do not prior to any
meeting of Shareholders so fix a record date or close the transfer books, then
the record date shall be the close of business on the day next preceding the
date of mailing of notice of the meeting or, in the case of a dividend or other
distribution, the close of business on the day upon which the dividend or
distribution resolution is adopted, or on such later day as the Trustees may
determine.
Section 1.6 Inspectors of Election. In advance or any meeting of
Shareholders, the Trustees may appoint Inspectors of Election, who may but need
not be Shareholders, to act at such
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meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any such meeting may, and upon the request of any
Shareholder or his proxy shall, make such appointment at the meeting. The
number of Inspectors shall be either one (1) or three (3). If appointed at the
meeting on the request of one or more Shareholders or proxies, a majority of
Shares present shall determine whether one or more Inspectors are to be
appointed but failure to allow such determination by the Shareholders or
proxies shall not affect the validity of the appointment of Inspectors of
Election. In case any person appointed as Inspector fails to appear or fails
or refuses to act, the vacancy may be filled by appointment made by the
Trustees in advance of the convening of the meeting, or at the meeting by the
person acting as chairman. The Inspectors of Election shall determine the
number of Shares outstanding, the Shares represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies; shall
receive votes, ballots or consents; shall hear and determine all challenges and
questions in any way arising in connection with the right to vote; shall count
and tabulate all votes or consents, determine the results, and do such other
acts as may be proper to conduct the election or vote with impartiality and
fairness to all Shareholders. If there are three Inspectors of Election, the
decision, act or certificate of a majority shall be effective in all respects
as the decision, act or certificate of all. On request of the chairman of the
meeting, or of any Shareholder or his proxy, the Inspectors of Election shall
make a written report of any challenge or question or matter determined by them
and execute a certificate of any fact found by them.
ARTICLE I
Trustees
Section 2.1 Annual Meetings. The Trustees shall hold an annual
meeting for the election of officers and the transaction of other business
which may come before such meeting as soon as practicable after the annual
meeting of Shareholders, at the place where the Shareholders' meeting was held
or at such other place as may be fixed by resolution or the consent in writing
of all the Trustees.
Section 2.2 Regular Meetings. Regular meetings of the Trustees may
be held at such time and place as the Trustees may by resolution from time to
time determine without call or notice. If any day fixed for a regular meeting
shall be a legal holiday in the Commonwealth of Massachusetts or the place
designated for regular meetings, then the meeting shall be held at the same
hour and place on the next succeeding business day.
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<PAGE> 4
Section 2.3 Special Meetings. Special Meetings of the Trustees shall
be held upon the call of the Chairman, the President, or the Secretary, or any
two Trustees, at such time, on such day, and at such place, as shall be
designated in the notice of the meeting.
Section 2.4 Notice of Special Meetings. Notice of any special
meeting, specifying the place, day and hour of the meeting, shall be given to a
Trustee either personally or by sending a copy thereof through the mail, with
first class postage prepaid, or by telegram, charges prepaid, to his address
appearing on the books of the Trust or supplied by h m to the Trust for the
purpose of notice, at least forty-eight (48) hours, prior to the time named for
such meeting. If the notice is sent by mail or by telegraph, it shall be deemed
to have been given to the person entitled thereto when deposited in the United
States mail, postage prepaid, or with a telegraph office, charges prepaid, for
transmission to such person. Notice by telephone shall constitute personal
delivery very for these purposes. Neither the business to be transacted at,
nor the purpose of, any meeting of the Board of Trustees need be stated in the
notice or waiver of notice or such meeting, and no notice need be given of
action proposed to be taken by unanimous consent.
Section 2.5 Waiver of Notice. Whenever any notice is required by the
Declaration or these By-Laws to be given to a Trustee, a waiver thereof in
writing, whether signed by him before or after the meeting, shall be deemed
equivalent to the giving of due notice. Attendance of any Trustee at any
meeting shall constitute a waiver of notice of such meeting except where such
Trustee attends the meeting for the express purpose of objecting to the
transaction of any business because the meeting was not lawfully called or
convened.
Section 2.6 Adjournment. Adjournment or adjournments of any meeting
may be taken, and it shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted thereat other than by announcement
at the meeting at which such adjournment is taken. At any adjourned meeting at
which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting originally called
Section 2.7 Executive Committee. Subject to the provisions of
Section 3.4 hereof, the Trustees may, by resolution adopted by a majority
thereof, designate one or more of their number to constitute an Executive
Committee, and may designate one or more of their number as alternate members
of the Executive Committee, who may replace any absent or
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<PAGE> 5
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in such resolution and the Declaration, shall have and
exercise the authority of the Trustees in the management of the business and
affairs of the Trust and the management and disposition of Trust Property.
Vacancies in the membership of the committee shall be filled by the Trustees.
In the absence or disqualification of any member of such committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
Trustee to act at the meeting in the place of any such absent or disqualified
member. The Executive Committee shall keep regular minutes of its proceedings
and report the same to the Trustees.
Section 2.8 Chairman; Records. The Chairman shall act as chairman at
all meetings of the Trustees; in his absence the President shall act as
chairman; in the absence of the Chairman and President, the Trustees present
may elect one of their number to act as temporary chairman. The results of all
actions taken at a meeting of the Trustees, or by written consents of the
Trustees without a meeting, shall be recorded by the Secretary.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
Section 3.1 Officers of the Trust. The officers of the Trust shall
be a Chairman and a President, chosen from among the Trustees, and a Secretary
and a Treasurer, or persons who shall act as such, chosen from among the
Trustees or otherwise, regardless of the name or title by which they may be
designated, elected or appointed. A Vice-Chairman, Executive Vice-President,
one or more Vice-Presidents, Comptroller, one or more Assistant Secretaries and
Assistant Treasurers, and such other officers or agents as the Trustees shall
deem necessary or appropriate to carry out the business of the Trust also may
be elected or appointed. Any two or more offices may be held by the same
person, except those of President and Secretary and provided that no officer
shall execute, acknowledge or verify any instrument in more than one capacity
if such instrument is required to be executed, acknowledged or verified by two
or more officers. In addition to the powers and duties prescribed by the
Declaration and these By-Laws, the officers and assistant officers shall have
such authority and shall perform such duties as from time to time shall be
prescribed by the Trustees. The officers and assistant officers of the Trust
shall hold office until their successors are chosen and have qualified, unless
their term of office is sooner terminated, by death, resignation or removal.
The Trustees may amend the
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title of any officer or assistant officer or create a new office, by utilizing
a word or words descriptive of his powers or the general character of his
duties. If the office of any officer or assistant officer becomes vacant for
any reason, the vacancy may be filled by the Trustees at any time.
Section 3.2 Removal of Officers, Agents or Employees. Any officer,
assistant officer, agent or employee may be removed or his authority revoked at
any time, with or without cause, by a majority of the Trustees, whenever in
their judgment the best interests of the Trust will be served thereby, but such
removal or revocation shall be without prejudice to the rights, if any, of the
person so removed to receive compensation or other benefits in accordance with
the terms of existing contracts. Any agent or employee likewise may be removed
by the President or Chairman or, subject to the supervision of the President or
Chairman, by the person having authority with respect to the appointment of
such agent or employee. Any officer may resign at any time by written notice
signed by such officer and delivered or mailed to the Chairman, President, or
Secretary, and such resignation shall take effect upon receipt by the Chairman,
President, or Secretary, or at a later date according to the terms of such
notice.
Section 3.3 Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such amount
and with such sureties as the Trustees may determine.
Section 3.4 Chairman and President; Powers and Duties. The Chairman
shall, if present, preside at all meetings of the Shareholders and of the
Trustees. He shall be the chief executive officer of the Trust and shall
exercise and perform such other powers and duties as may from time to time be
assigned to him by the Trustees. Subject to such supervisory powers, if any,
as may be given by the Trustees to the Chairman, the President shall be the
chief operating officer of the Trust and, subject to the control of the
Trustees and the Chairman, shall have general supervision, direction and
control of the business of the Trust and of its employees and shall exercise
such general powers of management as are usually vested in the office of
president of a Massachusetts business corporation. In the absence of the
Chairman, the President shall preside at all meetings of the Shareholders and
of the Trustees. Subject to direction of the Trustees, the Chairman and the
President shall each have power in the name and on behalf of the Trust to
execute any and all loan documents, contracts, agreements, deeds, mortgages,
and other instruments in writing, and to employ and discharge employees and
agents of
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the Trust. Unless otherwise directed by the Trustees, the Chairman and the
President shall each have full authority and power, on behalf of all of the
Trustees, to attend and to act and to vote, on behalf of the Trust at any
meetings of business organizations in which the Trust holds an interest, or to
confer such powers upon any other persons, by executing any proxies duly
authorizing such persons. The Chairman and the President shall have such
further authorities and duties as the Trustees shall from time to time
determine and shall be, ex officio, members of the Executive Committee and of
all standing committees (if any) appointed by the Trustees.
Section 3.5 Executive Vice-President; Vice-President; Powers and
Duties. The Executive Vice-President, if any, shall, in the absence or
disability of the President, perform all the duties of the President, and when
so acting shall have a11 the powers and be subject to all of the restrictions
upon the President. In the absence or disability of the Executive
Vice-President, the Vice-President shall perform all of the duties of the
Executive Vice-President, and when so acting shall have all the powers of and
be subject to all of the restrictions upon he Executive Vice-President. If
there be more than one Vice-President, their seniority in performing such
duties and exercising such powers shall be in order of their rank as fixed by
the Trustees, or, if more than one and not ranked, then by determination of the
Trustees, or, in the absence of such determination, by the order in which they
were first elected. Subject to the direction of the Trustees, and of the
Chairman and the President, each Vice-President shall have the power in the
name and on behalf of the Trust to execute any and all loan documents,
contracts, agreements, deeds, mortgages and other instruments in writing, and,
in addition, shall have such other duties and powers as shall be designated
from time to time by the Trustees or the President and as by general usage
appertain to the office.
Section 3.6 Secretary; Powers and Duties. The Secretary shall keep
the minutes of all meetings of, and record all votes of, Shareholders, Trustees
and the executive or other committees, if any. He shall give, or cause to be
given, as required by the Declaration or these By-Laws, notice of meetings of
the Shareholders and of the Trustees, and shall perform such other duties as
may be prescribed by the Trustees, the Chairman, or the President. He shall
keep in safe custody the seal of the Trust and may affix the same, or, if
permitted, a facsimile thereof, to any instrument executed by the Trust and
attest the seal and the signature or signatures of the officer or officers
executing such instrument on behalf of the Trust. The Secretary shall also
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<PAGE> 8
perform any other duties commonly incident to such office in a Massachusetts
business corporation, and shall have such other authorities and duties as the
Trustees, the Chairman, or the President shall from time to time determine.
Section 3.7 Treasurer; Powers and Duties. Except as otherwise
directed by the Trustees, the Treasurer shall have the general supervision of
the monies, funds, securities, notes receivable and other valuable papers and
documents of the Trust, and shall have and exercise under the supervision of
the Trustees and of the Chairman and President all powers and duties normally
incident to his office. He may endorse for deposit or collection all notes,
checks and other instruments payable to the Trust or to its order. He shall
deposit all funds of the Trust in such depositories as the Trustees shall
designate. He shall be responsible for such disbursement of the funds of the
Trust as may be ordered by the Trustees, or the Chairman or the President. He
shall keep accurate account of the books of the Trust's transactions which
shall be the property of the Trust, and which, together with all other property
of the Trust in his possession, shall be subject at all times to the inspection
and control of the Trustees. Unless the Trustees shall otherwise determine,
the Treasurer shall be the principal financial and accounting officer of the
Trust. He shall have such other duties and authorities as the Trustees, the
Chairman or the President shall from time to time determine. Notwithstanding
anything to the contrary herein contained, the Trustees may authorize the
Investment Adviser, the Custodian, or the Transfer Agent to maintain bank
accounts and deposit and disburse funds of the Trust on behalf of the Trust.
Section 3.8 Delegation of Officers' Duties. The Trustees may elect,
or authorize the Chairman to appoint or elect, such other officers and
assistant officers as they shall from time to time determine to be necessary or
desirable in order to conduct the business of the Trust. Assistant officers
shall act generally in the absence of the officer whom they assist, shall
assist that officer in the duties of his office and shall have such other
duties and authority as may be conferred upon them by the Trustees or delegated
to them by the Chairman or President. In case of the absence or disability of
any officer or assistant officer of the Trust or for any other reason that the
Trustees may deem sufficient, the Trustees may delegate or authorize the
delegation of his powers or duties, for the time being, to any person.
ARTICLE IV
Shares
Section 4.1 Share Certificate. Every Shareholder shall, upon written
request to the Secretary of the Trust, be
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entitled to receive a certificate in such form as the Trustees shall from time
to time approve, specifying the number of full Shares held by such Shareholder;
provided, however, that no certificate shall be issued for a fractional Share.
Every certificate shall bear the signature of the Chairman or President and of
the Secretary or Treasurer, and shall be sealed with the seal of the Trust.
Whenever a certificate is countersigned by a transfer agent, one or both of the
officers' signatures and the seal may be in facsimile, engraved or printed. In
case any officer or transfer agent who has signed or whose facsimile signature
appears on any share certificate shall have ceased to be such because of death,
resignation or otherwise, before the certificate is issued, it may be issued by
the Trust with the same effect as if he had not ceased to be such prior to or
on the date of its issue. There shall be filed with each transfer agent a copy
of the form of certificate so approved by the Trustees, certified by the
Chairman or the Secretary, and such form shall continue to be used unless and
until the Trustees approve some other form.
Section 4.2 Legend. In furtherance of the provisions of Section 6.7
of the Declaration, each certificate evidencing Shares shall contain a legend
imprinted thereon to the following effect, or such other legend as the Trustees
may from time to time adopt.
"Provisions Relating to Redemption and Prohibition of Transfer of
shares
"If necessary to effect compliance by the Trust with certain
requirements of the Internal Revenue Code, the Shares represented by
this certificate are subject to redemption by the Trustees of the
Trust and the transfer thereof may be prohibited under the terms and
conditions set forth in the Declaration. The Shares represented by
this certificate are also subject to redemption by the Trustees
pursuant to the provisions set forth in the Declaration for the
reduction of outstanding Shares in order to maintain a constant net
asset value per Share. The Trust will furnish a copy of such terms,
conditions and provisions to the registered holder of this certificate
upon request and without charge."
ARTICLE V
Miscellaneous
Section 5.1 Depositories. The funds and the Trust shall be deposited
in such depositories as the Trustees shall designate in accordance with the
provisions or the Declaration,
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<PAGE> 10
and shall be drawn out on checks, drafts or other orders signed by such
officer, officers, agent or agents (including the Adviser), as the Trustees may
from time to time authorize.
Section 5.2 Signatures. All contracts and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents, as
provided in the Declaration or these By-Laws or as the Trustees may from time
to time by resolution provide.
Section 5.3 The seal of the Trust shall have inscribed thereon. the
words "Keystone Money Trust, a Massachusetts Voluntary Association, Common
Seal, 1981." Such seal may be used by causing it or a facsimile thereof, to be
impressed or affixed or in any manner reproduced and attested as if it had been
impressed and attested manually.
ARTICLE VI
Amendment of By-Laws
Section 6.1 Amendment and Repeal of By-Laws. In accordance with
Section 9.7 of the Declaration, the Trustees have the power to alter, amend or
repeal the By-Laws or adopt new By-Laws at any time. Action by the Trustees
with respect to the By-Laws shall be taken by an affirmative vote of a majority
of the Trustees. The Trustees shall in no event adopt By-Laws which are in
conflict with the Declaration, and any apparent inconsistency shall be
construed in favor of the related provisions in the Declaration.
* * * * * *
The Declaration of Trust establishing Keystone Money Trust, dated
October , 1981, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of the Commonwealth
of Massachusetts, provides that the name "Keystone Money Trust" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of
Keystone Money Trust shall be held to any personal liability, nor shall resort
be had to their private property for the satisfaction of any obligation or
claim or otherwise in connection with the affairs of said Keystone Money Trust
but the Trust Property only shall be liable.
As amended January 25, 1991
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<PAGE> 1
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of this 30th day of December,
1992, between Travelers Asset Management International Corporation, a New York
general business corporation (hereinafter "TAMIC") and Cash Income Trust
(hereinafter the "Trust"), a Massachusetts business trust established in
Massachusetts by a Declaration of Trust dated October 1, 1981, as amended
and/or restated from time to time (the "Declaration of Trust").
WITNESSETH:
WHEREAS, the Trust and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for the Trust.
NOW, THEREFORE, in consideration of the promise and the mutual
agreements herein contained, the parties hereto agree as follows:
1. The Trust hereby employs TAMIC to manage the investment and reinvestment
of the assets of the Trust and to perform the other services herein set
forth, subject to the supervision of the Board of Trustees of the Trust
(hereinafter the "Board") for the period and on the terms herein set
forth. TAMIC hereby accepts such employment and agrees during such
period, at its own expense, to render the services and to assume the
obligations herein set forth for the compensation herein provided.
2. In carrying out these obligations to manage the investment and
reinvestment of the assets of the Trust, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
the Trust, affecting the economy generally and individual
companies or industries, the securities of which are included in
the Trust's portfolio or are under consideration for inclusion
therein;
b. be authorized to purchase supplemental research and other
services from brokers at additional cost to the Trust;
c. regularly furnish to the Board recommendations with respect to
any investment program for approval, modification or rejection by
the Board;
d. take such steps as are necessary to implement the investment
program approved by the Board; and
e. regularly report to the Board with respect to implementation of
the approved investment program and any other activities in
connection with the administration of the assets of the Trust.
3. Any investment program undertaken by TAMIC pursuant to this Agreement
and any other activities undertaken by TAMIC on behalf of the Trust
shall at all times be subject to any directives of the Board or any duly
constituted committee thereof acting pursuant to like authority.
<PAGE> 2
4. For the services rendered hereunder, TAMIC will receive an amount
equivalent on an annual basis to 0.3233% of the average daily net assets
of the Trust, such fees to be deducted on each valuation date.
5. The services of TAMIC to the Trust hereunder are not to be deemed
exclusive and TAMIC shall be free to render similar services to others
so long as its services hereunder are not impaired or interfered with
thereby.
6. If approved by a vote of a majority of the outstanding voting securities
of the Trust (as defined in the Investment Company Act of 1940), this
Investment Advisory Agreement:
a. may not be terminated by TAMIC, without the prior approval of a
new Investment Advisory Agreement by a vote of a majority of the
outstanding voting securities of the Trust, and shall be subject
to termination, without the payment of any penalty, upon sixty
days' written notice to the investment adviser, by the Board or
by a vote of a majority of the outstanding voting securities of
the Trust;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of the Trust;
c. shall automatically terminate upon assignment by either party; and
d. shall continue in effect for a period of more than two years from
the date of its execution, only so long as such continuance is
specifically approved (i) at least annually by a vote of a
majority of the Board who are not parties to, or interested
persons of any party to, such agreement, cast in person at a
meeting called for the purpose of voting on such approval and at
which the Board has been furnished such information as may be
reasonably necessary to evaluate the terms of said agreement, or
(ii) by a vote of a majority of the outstanding voting securities
of the Trust.
7. This Agreement is made on behalf of the Trust by an officer or Trustee
of the Trust, not individually, but solely as an officer or Trustee
under the Declaration of Trust, and the obligations under this Agreement
are not binding upon, nor shall resort be had to the private property
of, any of the Trustees, shareholders, officers, employees or agents of
the Trust personally, but shall bind only the Trust's property.
8. TAMIC agrees that it shall furnish to the California Commissioner of
Insurance any information or reports concerning the Trust as the
Commissioner, in the performance of his or her duties, may request.
9. TAMIC hereby acknowledges that all books and records relating to the
services provided to the Trust hereunder are the property of the Trust
and subject to its control; provided, however, that during the term of
the Agreement, the Trust shall not exercise such control so as to
interfere with the performance of TAMIC's duties hereunder.
<PAGE> 3
10. This Investment Advisory Agreement is subject to the provisions of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Advisory Agreement to be signed by their respective officials thereunto duly
authorized and seals to be affixed, in the case of TAMIC, as of the day and
year first above written.
CASH INCOME TRUST
By:/S/Robert W. Crispin
Chairman, Board of Trustees
WITNESS:
/s/Thomas A. Klee
Secretary, Board of Trustees
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL CORPORATION
By: /s/Eliot P. Williams
President
ATTEST: (Seal)
/s/Harry E. Meyer
Corporate Secretary
<PAGE> 1
EXHIBIT 9
TRANSFER AND RECORDKEEPING AGREEMENT
AGREEMENT made as of the 1st day of July, 1991 by and between Cash
Income Trust, a business trust organized and existing under the laws of
Massachusetts, (hereinafter called the "Trust") and The Travelers Insurance
Company, a Connecticut stock insurance company, (hereinafter called "The
Travelers") both parties having their principal place of business at One Tower
Square, Hartford, Connecticut 01683.
WITNESSETH THAT
WHEREAS, the Trust desires The Travelers to perform certain services
for the Trust and The Travelers is willing to perform such services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, each party, for itself and not jointly, agrees as follows:
1. SERVICES - The Travelers shall perform for the Trust the services set
forth in Exhibit A which is attached hereto and made a part hereof. Such
services shall be performed at no charge to the Trust. The Travelers shall
perform such other services in addition to those set forth in Exhibit A hereto
as the Trust shall request in writing. Any of the services to be performed
hereunder, and the manner in which such services are to be performed, shall be
changed only pursuant to a written agreement sinned by the parties hereto.
The Travelers will undertake no activity which, in its judgment, will
adversely affect the performance of its obligations to the Trust under this
Agreement.
2. EFFECTIVE DATE - This Agreement shall become effective as of the date
set forth above.
3. TERM - This Agreement shall be in effect until terminated in
accordance with Section 14 hereof.
4. STANDARD OF CARE - The Travelers shall at all times use its best
efforts and act in good faith and without negligence in performing all services
pursuant to this Agreement. The Travelers shall indemnify and hold harmless
the Trust against any losses, claims, damages, judgments, liabilities or
expenses (including reasonable counsel fees and expenses) resulting from any
action taken by The Travelers that does not meet the standard of care described
in this Section 4.
5. UNCONTROLLABLE EVENTS - The Travelers shall not be liable for damage,
loss of data, delays or errors occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or military authority,
national emergencies, fire, flood or catastrophe, acts of God, insurrection,
war, riots, or failure of transportation, communication or power supply.
<PAGE> 2
However, The Travelers shall keep in a separate and safe place additional
copies of all records required to be maintained pursuant to this Agreement or
additional tapes or discs necessary to reproduce all such records. The
Travelers shall use reasonable care to minimize the likelihood of all damage,
loss of data, delays and errors resulting from an uncontrollable event, and
should such damage, loss of data, delays or errors occur, The Travelers shall
use its best efforts to mitigate the effects of such occurrence.
Representatives of the Trust shall be entitled to inspect The Travelers
premises and operating capabilities within reasonable business hours and upon
reasonable notice to The Travelers.
6. INDEMNIFICATION - The Trust shall indemnify and hold The Travelers,
its employees and agents harmless against any losses, claims, damages,
judgments, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from (1) transactions which occurred prior to the date The
Travelers began serving as Transfer Agent to the Trust; (2) action taken or
permitted by The Travelers in good faith with due care and without negligence
in reliance upon instructions received from the Trust in accordance with
Section 7 hereof or with respect to the Trust upon the opinion of counsel for
the Trust, as to anything arising in connection with its performance under this
Agreement; or (3) any act done or suffered by The Travelers with respect to the
Trust in good faith with due care and without negligence in connection with its
performance under this Agreement in reliance upon any instruction, order, stock
certificate or other instrument reasonably believed by it to be genuine and to
bear the genuine signature of any person or persons authorized to sign,
countersign, or execute same, and which complies with any governing documents
provided to The Travelers by the Trust and with all applicable requirements of
the Trust's current prospectus and statement of additional information, this
Agreement and instructions (it being specifically agreed that for the purpose
of this indemnification if any instruction received by The Travelers in
accordance with Section 7 hereof differs from the requirements set forth in the
current prospectus or statement of additional information then, with regard to
that difference, The Travelers need only comply with such instruction and not
the current prospectus or statement of additional information).
7. INSTRUCTIONS - The Travelers shall comply with all instructions issued
by the Trust in the form prescribed below which are permitted or required under
Exhibit A attached hereto. Whenever The Travelers takes action hereunder
pursuant to instructions of the Trust, The Travelers shall be entitled to rely
upon such instructions only when such instructions are signed by the President
or Treasurer of the Trust or by an individual designated in writing by the
President or Treasurer as a person authorized to give instructions hereunder.
The Trust may waive the requirement that all instructions be in writing, if
such waiver defines the occurrences not requiring written instruction,
indicates the persons authorized to give such non-written instructions, and is
signed by one of the persons pursuant to the immediately preceding sentence of
this Section 7. In the event The Travelers obtains the Trust's written waiver,
it may rely on non-written instructions received pursuant thereto.
8. CONFIDENTIALITY - The Travelers agrees to treat all records and other
information relative to the Trust and the Trust's shareholders confidentially,
and The Travelers on behalf of itself and its employees agrees to keep
confidential all such information, except, after prior notification to and
approval by the Trust, which approval shall not be unreasonably withheld and
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<PAGE> 3
may not be withheld where The Travelers may be exposed to civil or criminal
contempt proceedings, when requested to divulge such information by duly
constituted authorities or when so requested by a shareholder of the Trust
seeking information about his own or an appropriately related account.
9. REPORTS - The Travelers will furnish to the Trust and to properly
authorized auditors, examiners, investment companies, dealers, salesmen,
insurance companies, transfer agents, registrars, investors and others
designated by the Trust in writing, such reports at such times as are
prescribed for each service in Exhibit A attached hereto.
In addition, The Travelers will furnish to the California Commissioner
of Insurance any information or reports in connection with the services
provided by The Travelers to the Trust which the Commissioner, in the
performance of his or her duties, may reasonably request.
10. RIGHT OF OWNERSHIP - The Travelers agrees that all records and other
data received, computed, developed, used and/or stored pursuant to this
Agreement are the exclusive property of the Trust and that all such records and
other data will be furnished without additional charge to the Trust in
available machine readable data form immediately upon termination of this
Agreement with respect to such Trust for any reason whatsoever. Furthermore,
upon the Trust's request at any time or times while this Agreement is in
effect, The Travelers shall deliver to such Trust at the Trust's expense, any
or all of the data and records held by The Travelers pursuant to this
Agreement, in the form as requested by the Trust. On the effective date of
termination of this Agreement with respect to the Trust or, if later, on the
date the Trust ceases to use The Travelers services, The Travelers will
promptly return to the Trust any and all records and other data belonging to
the Trust, free of any claim or retention of rights by The Travelers.
11. REDEMPTION OF SHARES - The parties hereto agree that The Travelers
shall process liquidations, redemptions or repurchases of shares of the Trust,
as the agent for the Trust, in the manner as described in the then current
prospectus and statement of additional information for the Trust.
Notwithstanding the foregoing, The Travelers shall be liable for any losses,
damages, claims or expenses resulting from The Traveler's failure to obtain the
appropriate signature guarantee with regard to any redemption or transfer
processed by The Travelers even if the current prospectus or statement of
additional information authorizes The Travelers to waive the requirement of a
signature guarantee unless The Travelers is authorized in writing by an
appropriate party to waive such a requirement.
12. SUBCONTRACTING - The Travelers may, with the prior written consent of
the Trust, subcontract with one or more of its affiliates or other persons to
perform all or part of its obligations hereunder, provided, however, that,
notwithstanding any such subcontract, The Travelers shall be fully responsible
to the Trust hereunder.
13. ASSIGNMENT - This Agreement and the rights and duties hereunder shall
not be assignable by The Travelers or the Trust hereto except by the specific
written consent of the other party.
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<PAGE> 4
14. TERMINATION - This Agreement may be terminated on such date of which
The Travelers has given the Trust not less than 180 days prior written notice
or of which the Trust has given The Travelers not less than 90 days prior
written notice. Upon such termination, The Travelers will use its best efforts
to cooperate and assist in accomplishing a timely, efficient and accurate
conversion to the person or firm which will provide the services described
hereunder. This Agreement may be terminated by any Trust without the payment
of any penalty, forfeiture, compulsory buyout amount or performance of any
other obligation which could deter termination.
This Agreement may be terminated after written notice to The Travelers
by the Trust if there is material breach or violation of this Agreement of if
The Travelers fails to perform any of its obligations under this Agreement and
the failure continues for more than thirty (30) days after the Trust gives
notice of the failure to The Travelers or bankruptcy or insolvency proceedings
of any nature are instituted by or against The Travelers.
15. NOTICE - Any notice shall by sufficiently given when sent by
registered or certified mail to any party at the address of such party set
forth above or at such other address as such party may from time to time
specify in writing to the other party.
16. SECTION HEADINGS - Section headings are included for convenience only
and are not to be used to construe or interpret this Agreement.
17. INTERPRETIVE PROVISIONS - In connection with the operation of this
Agreement, The Travelers and the Trust may agree from time to time on such
provisions interpretive of or in addition to the provisions of this Agreement
as may in their combined opinion be consistent with the general tenor of this
Agreement, Furthermore, The Travelers and the Trust may agree to add to, delete
from or change the services set forth with respect to the Trust in Exhibit A of
the Agreement. Each such interpretive or additional provision, and each
addition, deletion or change is to be signed by all parties affected and
annexed hereto, and no such provision, addition, deletion or change shall
contravene any applicable federal or state law or regulation and no such
provision, addition, deletion or change shall be deemed to be an amendment of
any provision of this Agreement with the exception of Exhibit A hereto.
19. GOVERNING LAW - The Agreement shall be governed by and its provisions
shall be construed in accordance with the laws of the State of Connecticut.
20. MASSACHUSETTS BUSINESS TRUST - The Trust is a Massachusetts business
trust established under a Declaration of Trust. The obligations of the Trust
are not personally binding upon, nor shall recourse by had against the private
property of, any of the Trustees, shareholders, officers, employees or agents
of the Trusts, but only the property of the Trust shall be bound.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE TRAVELERS INSURANCE COMPANY
By: /s/Robert E. Evans
ATTEST: (Seal)
/s/George Caspar
Corporate Secretary
CAPITAL APPRECIATION FUND
By /s/ Richard J. Shima
WITNESS:
/s/Thomas A. Klee
Secretary, Board of Trustees
5
<PAGE> 6
EXHIBIT A - SERVICES
The offices of The Travelers shall be open to perform the services
pursuant to this Agreement on all days when the Trust is open to transact
business.
The services under this Agreement will include, by way of illustration
but not limitation:
1. Establishing, maintaining, safeguarding and reporting on
shareholder account information and account histories, (including
registration, name and address recorded in generally accepted
form, dealer, representative, branch, and territory information,
mailing address, distribution address, various codes and specific
information.)
2. Recording and controlling shares outstanding in certificate
("issued") and non certificate ("issued") form.
3. Maintaining a record for each certificate issued to include
certificate number, account number, issued date, number of
shares, cancelled date, or stop date, where appropriate.
4. Reconciling the number of outstanding shares of each Trust, on a
daily basis with the Trust and the Trust's custodian, promptly
correcting any differences noted.
5. Establishing and maintaining a trade file on behalf of each Trust
based on trade information furnished to the transfer agent by the
Trust or its distributors.
6. Passing upon the adequacy of documents properly endorsed and
guaranteed submitted by or on behalf of a shareholder to transfer
ownership or redeem shares.
7. Transferring ownership of shares upon the books of the Trust.
8. Redeeming shares.
9. Preparing and promptly mailing account statements to the
shareholder or such other authorized address.
10. Checking surrendered certificates for stop transfer instructions.
11. Cancelling certificates surrendered.
12. Balancing outstanding shares of record with the custodian prior
to each distribution and calculating and paying or reinvesting
distributions to shareholders of record and to open trade
receivable and free stock.
6
<PAGE> 7
13. Processing exchanges of shares of one Trust for another.
14. Reporting to the Trust and its custodian daily the capital stock
activities and dollar amount of transactions.
15. Promptly answering inquiries from shareholders, dealers, Trust
personnel, and others as requested in accordance with the terms
of this Agreement as to account matters, referring policy or
investment matters to the Trust.
16. Maintaining tax information for each account, deducting amounts
where required and furnishing to the Trust, its shareholders,
dealers and, when appropriate, regulatory bodies, the necessary
tax information all in compliance with the various applicable
laws.
17. Calculating and processing Trust mergers or stock dividends, as
directed by the Trust.
18. Maintaining all Trust records as outlined in the record and tape
retention schedule delivered by the Trust.
19. Reconciling all investment, distribution and redemption accounts
20. Making available to the Trust and its distributors at their
locations, CRTs which will provide immediate electronic access to
computerized records maintained for the Trust.
21. Providing space and such technical expertise as may be required
to enable the Trust and its properly authorized auditors,
examiners and others designated by the Trust in writing to
properly understand and examine all books, records, computer
files, microfilm and other items maintained pursuant to this
Agreement, and to assist as required in such examination.
22. Assigning a single account number to each shareholder regardless
of the number of Trusts or Portfolios owned for which the Trust
or one of its affiliates is the trustee, investment adviser or
manager (except as instructed otherwise.)
7
<PAGE> 8
The Transfer Agent will produce reports as required by the Trust
including but not limited to the following:
Shareholder Account Confirmation As required
Transaction journals Daily
Record date position control Daily
Daily and (monthly) cash proof Daily
Daily (monthly) share proof Daily
Daily master control Daily
Account information reports When requested
(Monthly) Cumulative transaction Monthly
Shareholder master list When requested
Dividend account check reconciliation As required
8
<PAGE> 1
EXHIBIT 11(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 23 of this
Registration Statement on Form N-1A of our report dated February 7, 1996, on
our audits of the financial statements and financial highlights of Cash Income
Trust. We also consent to the reference to our Firm as experts in accounting
and auditing under the caption "Additional Information" in the Statement of
Additional Information.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 11, 1996
<PAGE> 1
EXHIBIT 11(B)
CASH INCOME TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Heath B. McLendon of Summit, New Jersey, Chairman of
the Board of Trustees of Cash Income Trust, do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH,
Assistant Secretary of said Trust, either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements of said Trust on Form N-1A or other applicable form
under the Securities Act of 1933 for the registration of shares of Beneficial
Interest of Cash Income Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/Heath B. McLendon
Chairman of the Board of Trustees
Cash Income Trust
<PAGE> 2
CASH INCOME TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Knight Edwards of Providence, Rhode Island, a member
of the Board of Trustees of Cash Income Trust, do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH,
Assistant Secretary of said Trust, either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements of said Trust on Form N-1A or other applicable form
under the Securities Act of 1933 for the registration of shares of Beneficial
Interest of Cash Income Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/Knight Edwards
Member of the Board of Trustees
Cash Income Trust
<PAGE> 3
CASH INCOME TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert E. McGill, III of Williamstown, Massachusetts,
a member of the Board of Trustees of Cash Income Trust, do hereby make,
constitute and appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN
A. McGAH, Assistant Secreary of said Trust, either one of them acting alone, my
true and lawful attorney-in-fact, for me, and in my name, place and stead, to
sign registration statements of said Trust on Form N-1A or other applicable
form under the Securities Act of 1933 for the registration of shares of
Beneficial Interest of Cash Income Trust and to sign any and all amendments,
including post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/Robert E. McGill
Member of the Board of Trustees
Cash Income Trust
<PAGE> 4
CASH INCOME TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Lewis Mandell of Shorewood, Wisconsin, a member of the
Board of Trustees of Cash Income Trust, do hereby make, constitute and appoint
ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH, Assistant
Secretary of said Trust, either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements of said Trust on Form N-1A or other applicable form under the
Securities Act of 1933 for the registration of shares of Beneficial Interest of
Cash Income Trust and to sign any and all amendments, including post-effective
amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/Lewis Mandell
Member of the Board of Trustees
Cash Income Trust
<PAGE> 5
CASH INCOME TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Frances M. Hawk of Sherborn, Massachusetts, a member
of the Board of Trustees of Cash Income Trust, do hereby make, constitute and
appoint ERNEST J. WRIGHT, Secretary of said Trust, and KATHLEEN A. McGAH,
Assistant Secretary of said Trust, either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements of said Trust on Form N-1A or other applicable form
under the Securities Act of 1933 for the regis-tration of shares of Beneficial
Interest of Cash Income Trust and to sign any and all amendments, including
post-effective amendments thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/Frances M. Hawk
Member of the Board of Trustees
Cash Income Trust
<PAGE> 6
CASH INCOME TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Ian R. Stuart of East Hampton, Connecticut, Treasurer
of Cash Income Trust, do hereby make, constitute and appoint ERNEST J. WRIGHT,
Secretary of said Trust, and KATHLEEN A. McGAH, Assistant Secretary of said
Trust, either one of them acting alone, my true and lawful attorney-in-fact,
for me, and in my name, place and stead, to sign registration statements of
said Trust on Form N-1A or other applicable form under the Securities Act of
1933 for the registration of shares of Beneficial Interest of Cash Income Trust
and to sign any and all amendments, including post-effective amendments
thereto, that may be filed.
IN WITNESS WHEREOF I have hereunto set my hand this 28th day
of July, 1995.
/s/Ian R. Stuart
Treasurer, Cash Income Trust
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