<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1995
REGISTRATION NOS. 2-74561 AND 811-3299
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
PRE-Effective Amendment No. ___ [ ]
POST-EFFECTIVE AMENDMENT NO. 14 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 14 [X]
STATE BOND MONEY FUNDS, INC.
(FORMERLY STATE BOND CASH MANAGEMENT FUND, INC.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
8400 NORMANDALE LAKE BOULEVARD, SUITE 1150
MINNEAPOLIS, MINNESOTA 55473
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (612) 835-0097
COPIES TO:
KEVIN L. HOWARD, ESQ. JOEL H. GOLDBERG, ESQ.
239 S. FIFTH STREET, 12TH FLOOR SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
LOUISVILLE, KY 40202-3271 919 THIRD AVENUE
(NAME AND ADDRESS OF AGENT FOR SERVICE) NEW YORK, NEW YORK 10022
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)
[X] ON DECEMBER 1, 1995 PURSUANT TO PARAGRAPH (A)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
[ ] ON (DATE) 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
PURSUANT TO RULE 24F-2(A)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OR AMOUNT OF ITS SECURITIES UNDER
THE SECURITIES ACT OF 1933. THE RULE 24F-2 NOTICE OF THE REGISTRANT FOR THE
FISCAL YEAR ENDED JULY 31, 1995 WAS FILED ON SEPTEMBER 27, 1995.
<PAGE>
CROSS-REFERENCE SHEET PURSUANT TO RULE 481(A) UNDER THE SECURITIES ACT OF 1933
N-IA ITEM NO.
<TABLE>
<CAPTION>
PART A
<S> <C> <C>
ITEM 1. COVER PAGE............................................ COVER PAGE
ITEM 2. SYNOPSIS................................. SHAREHOLDER TRANSACTION
AND OPERATING EXPENSE TABLE
ITEM 3. CONDENSED FINANCIAL INFORMATION............. FINANCIAL HIGHLIGHTS
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT............ GENERAL INFORMATION
ABOUT STATE BOND TAX EXEMPT FUND; WHAT ARE
THE FUND'S INVESTMENT OBJECTIVES, POLICIES AND RISKS?
ITEM 5. MANAGEMENT OF THE FUND.................. HOW IS THE FUND MANAGED?
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES..... GENERAL INFORMATION ABOUT
STATE BOND CASH MANAGEMENT FUND;
HOW DOES THE FUND PAY DIVIDENDS?
WHAT IS THE FEDERAL TAX STATUS OF DIVIDENDS?
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.......... HOW CAN YOU INVEST
IN THE FUND?
WHEN DOES YOUR PURCHASE BEGIN EARNING DIVIDENDS?
HOW DOES THE FUND'S EXCHANGE PRIVILEGE WORK?
HOW DOES THE FUND PAY DISTRIBUTION EXPENSES?
ITEM 8. REDEMPTION OF REPURCHASE............. HOW CAN SHARES BE REDEEMED?
ITEM 9. LEGAL PROCEEDINGS................................. NOT APPLICABLE
</TABLE>
<TABLE>
<CAPTION>
PART B
<S> <C> <C>
ITEM 10. COVER PAGE........................................... COVER PAGE
ITEM 11. TABLE OF CONTENTS............................. TABLE OF CONTENTS
ITEM 12. GENERAL INFORMATION AND HISTORY....... GENERAL INFORMATION ABOUT
STATE BOND CASH MANAGEMENT FUND
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.......... WHAT ARE THE FUND'S
INVESTMENT OBJECTIVES
AND POLICIES?
WHAT ARE THE FUNDS INVESTMENT LIMITATIONS?
ITEM 14. MANAGEMENT OF THE REGISTRANT........................ WHO MANAGES
THE FUND?
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. WHO MANAGES
THE FUND?
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.............. WHO MANAGES
THE FUND?; THE MANAGER;
MANAGEMENT AGREEMENT AND EXPENSES;
TRANSFER AGENT; CUSTODIAN;
INDEPENDENT AUDITORS
ITEM 17. BROKERAGE ALLOCATION........ SEE "WHAT ARE THE FUND'S INVESTMENT
OBJECTIVES, POLICIES AND RISKS? -
SECURITIES TRADING" IN THE PROSPECTUS.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES..... SEE "WHAT KIND OF SHARES
DOES THE FUND OFFER?" IN THE PROSPECTUS
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES
BEING OFFERED............. SEE "HOW CAN YOU INVEST IN THE FUND?"
IN THE PROSPECTUS; REDEMPTION OF SHARES; HOW
IS NET ASSET VALUE PER SHARE DETERMINED?
ITEM 20. TAX STATUS...................................... WHAT IS THE TAX
STATUS OF THE FUND?
WILL THE FUND WITHHOLD TAXES ON DISTRIBUTIONS?
ITEM 21. UNDERWRITERS.......... DOES THE FUND BEAR DISTRIBUTION EXPENSES?
ITEM 22. CALCULATION OF PERFORMANCE DATA........... CALCULATION OF YIELD
ITEM 23. FINANCIAL STATEMENTS....................... FINANCIAL STATEMENTS
</TABLE>
PART C
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET FORTH UNDER THE
APPROPRIATE ITEM, SO NUMBERED, IN PART C TO THIS POST-EFFECTIVE AMENDMENT TO THE
REGISTRATION STATEMENT.
<PAGE>
PROSPECTUS
STATE BOND CASH MANAGEMENT FUND
8400 Normandale Lake Boulevard
Suite 1150
Minneapolis, Minnesota 55437-3807
Phone: (612) 835-0097
DECEMBER 1, 1995
STATE BOND CASH MANAGEMENT FUND (THE "FUND") IS A MUTUAL FUND WHICH SEEKS HIGH
CURRENT INCOME, PRESERVATION OF CAPITAL, AND LIQUIDITY. THE FUND IS A MONEY
MARKET MUTUAL FUND. THE FUND IS THE ONLY INVESTMENT PORTFOLIO OF STATE BOND
MONEY FUNDS, INC. IN PURSUING ITS GOALS, THE FUND INVESTS IN HIGH-QUALITY MONEY
MARKET INSTRUMENTS. TO THE EXTENT THE FUND EMPHASIZES PRESERVATION OF CAPITAL
AND LIQUIDITY, CURRENT INCOME COULD BE LESSENED. SHARES OF THE FUND ARE ISSUED
AT NET ASSET VALUE WITHOUT A SALES CHARGE OR REDEMPTION FEE.
This Prospectus concisely sets forth information about the Fund which investors
should know before investing. Please read it carefully before you invest and
keep it for future reference.
Additional information about the Fund IS contained in a Statement of Additional
Information filed with the Securities and Exchange Commission, AND is available
upon request and without charge by calling or writing the Fund at 800-328-4735,
8400 Normandale Lake Boulevard, Suite 1150, Minneapolis, MN 55437-3807. The
Statement of Additional Information is dated the same date as this Prospectus
and is incorporated herein by reference in its entirety.
An investment in the Fund is NEITHER insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER FEDERAL AGENCY. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
----
Shareholder Transaction And Operating Expense Table
FINANCIAL HIGHLIGHTS
What Are The Fund's Investment Objectives,
Policies AND RISKS?
How Is The Fund Managed?
How Can You Invest In The Fund?
When Is Your Purchase Effective?
WHEN DOES YOUR PURCHASE BEGIN EARNING DIVIDENDS?
How Can Shares Be Redeemed?
HOW DOES THE FUND'S Exchange Privilege WORK?
HOW DOES THE FUND PAY Dividends?
What Is The Federal Tax Status Of Dividends YOU RECEIVE?
HOW Does The Fund PAY Distribution Expenses?
WHO ARE THE FUND'S ACCOUNTING AGENT AND CUSTODIAN
WHAT SERVICES DOES THE FUND PROVIDE?
GENERAL INFORMATION ABOUT STATE BOND CASH MANAGEMENT FUND
YIELD
2
<PAGE>
SHAREHOLDER TRANSACTION AND OPERATING EXPENSE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on PURCHASE (as a percentage of offer price).. 0.00%
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average daily net assets)
Management Fee (After Expense Reimbursement) ............................. .08%
12b-1 Fee (After Expense Reimbursement) ................................. .04%
Other Expenses (After Expense Reimbursement) ............................. .68%
Total Fund Operating Expenses (After Expense Reimbursements) ........... .80%
A FEE WILL BE CHARGED UPON ANY REDEMPTION BY WIRE TRANSFER. SEE "HOW CAN SHARES
BE REDEEMED?"
EXAMPLE: 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
You would pay the following aggregate
expenses on a $1,000 investment, assuming:
(1) 5% annual return and (2) redemption at
the end of each time period: ............... $8 $26 $44 $99
Note: This Example is not a representation of past or future expenses and
actual expenses may be MORE or LESS than those shown above.
The purpose of the above table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly as an investor in
the Fund. The expense information in the above table is based upon expenses
incurred by the Fund during its fiscal year ended July 31, 1995. The above
operating expenses are net of EXPENSE reimbursements. Without such
reimbursements, the management fee would have been .40%, the 12b-1 fee would
have been .20%, and the other expenses would have been 3.23%. FOR MORE
INFORMATION CONCERNING FEES AND EXPENSES, SEE "How Is The Fund Managed?" and
"Does The Fund Bear Distribution Expenses?"
3
<PAGE>
FINANCIAL HIGHLIGHTS
THE INFORMATION PRESENTED BELOW FOR THE FISCAL YEAR ENDED JULY 31, 1995 HAS BEEN
AUDITED BY ERNST & YOUNG LLP, INDEPENDENT AUDITORS FOR THE FUND, AND THE
FINANCIAL STATEMENTS OF THE FUND, ALONG WITH THE REPORT OF ERNST & YOUNG LLP
THEREON, ARE SET FORTH IN THE STATEMENT OF ADDITIONAL INFORMATION. THE
INFORMATION PRESENTED BELOW FOR EACH FISCAL YEAR IN THE FOUR-YEAR PERIOD ENDED
JULY 31, 1994 HAS BEEN AUDITED BY DELOITTE & TOUCHE LLP, THE PREVIOUS AUDITORS
FOR THE FUND. FURTHER INFORMATION ABOUT THE FUND IS CONTAINED IN THE FUND'S
MOST RECENT ANNUAL REPORT TO SHAREHOLDERS WHICH MAY BE OBTAINED, WITHOUT CHARGE,
BY CALLING OR WRITING THE FUND AT THE TELEPHONE NUMBER OR ADDRESS ON THE FRONT
COVER OF THIS PROSPECTUS.
PER SHARE INVESTMENT INCOME AND CAPITAL CHANGES
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED JULY 31 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------- ------ ------ ------ --------
Net asset value, beginning of YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------- ------ ------ ------ --------
Income from investment operations
Net investment income............. .04 .03 .02 .04 .06 .08 .08 .06 .05 .06
------ ------ ------ ------ ------- ------ ------ ------ -------- --------
Total from investment
operations..................... .04 .03 .02 .04 .06 .08 .08 .06 .05 .06
Less distributions:
FROM net investment income........ (.04) (.03) (.02) (.04) (.06) (.08) (.08) (.06) (.05) (.06)
------ ------ ------ ------ ------ ------- ------ ------ ------ --------
Total distributions............ (.04) (.03) (.02) (.04) (.06) (.08) (.08) (.06) (.05) (.06)
Net asset value, end of YEAR...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN........................ 4.51% 2.54% 2.40% 3.74% 6.28% 7.82% 8.34% 6.20% 5.31% 6.53%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of YEAR
(IN THOUSANDS)................... $2,718 $2,020 $3,657 $4,770 $9,378 $11,750 $8,742 $6,971 $4,704 $4,626
Ratio of expenses to average
net assets....................... .80% .80% .80% .90% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net income
to average net assets............ 4.49% 2.55% 2.38% 3.71% 6.19% 7.52% 8.10% 6.05% 5.17% 6.32%
RATIO of expenses to average net
assets BEFORE VOLUNTARY
REIMBURSEMENTS................. 3.83% 3.38% 2.54% 1.99% 1.54% 1.52% 1.63% 1.58% 2.01% 2.35%
RATIO OF NET INCOME TO AVERAGE
NET ASSETS BEFORE VOLUNTARY
REIMBURSEMENTS................. 1.46% (.01%) .64% 2.91% 5.64% 7.00% 7.47% 5.46% 4.10% 4.97%
</TABLE>
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES, POLICIES AND RISKS?
The Fund's investment objectives are high current income, preservation
of capital, and liquidity. There can be no assurance that the Fund's investment
objectives will be attained. The value of securities in the Fund's portfolio
generally can be expected to vary inversely to changes in prevailing interest
rates. THE FUND ATTEMPTS TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER
SHARE, ALTHOUGH THERE IS NO ASSURANCE THAT IT WILL ALWAYS BE ABLE TO DO SO.
4
<PAGE>
The Fund invests in high quality money market instruments, including
the following:
U.S. Government Obligations: Obligations issued by or guaranteed as to
principal and interest by the United States, its agencies or instrumentalities,
including Treasury bills, notes, and bonds. U.S. Treasury obligations differ
mainly in their maturities. Treasury bills have A maturity of one year or less,
Treasury notes have maturities of one to ten years, and Treasury bonds generally
have maturities greater than five years. Some obligations of U.S. Government
agencies and instrumentalities are supported by the full faith and credit of the
U.S. Treasury; others are supported by the right of THE issuer to borrow from
the Treasury. Securities of some U.S. Government instrumentalities are supported
only by the credit of the issuer, to which the U.S. Government may not be
legally obligated to provide financial support.
Bank Obligations: Obligations, or instruments secured by such
obligations, issued by U.S. domestic banks (including foreign branches), savings
institutions, and foreign banks (including U.S. branches or agencies). These
obligations include negotiable and non-negotiable certificates of deposit,
bankers' acceptances, fixed time deposits, and letters of credit. Investments
in such obligations will be limited to the obligations of (a) domestic banks and
savings institutions having total assets over one billion dollars which are
subject to regulatory supervision by the U.S. Government or state governments,
(b) domestic banks and savings institutions which are fully insured by the
Federal Deposit Insurance Corporation, but only in an aggregate amount not to
exceed 10% of the value of the Fund's total assets, and (c) the 50 largest
foreign banks, in terms of assets, having branches or agencies in the United
States. Fixed time deposits, unlike negotiable certificates of deposit,
generally do not have a market and may be subject to penalties for early
withdrawal of funds. However, it is the current policy of the Fund not to
invest in fixed time deposits subject to withdrawal penalties, other than
overnight deposits, if more than 10% of its assets would be invested in such
deposits.
Investments in foreign banks and foreign branches of United States
banks involve certain risks. While domestic banks are required to maintain
certain reserves and are subject to other regulations, those requirements and
regulations may not apply to foreign branches. Investments in foreign banks and
branches also may be subject to other risks, including future political and
economic developments, the possible imposition of withholding taxes on interest
income, the seizure or nationalization of foreign deposits, and the
establishment of exchange controls or other restrictions. Also, accounting and
reporting standards may be different for foreign banks.
Commercial Paper: Short-term unsecured promissory notes with
maturities not exceeding nine months. Investments in rated commercial paper
will be limited to THOSE rated at the time of investment within the two highest
grades by Standard & Poor's RATINGS GROUP ("S&P") or by Moody's INVESTORS
SERVICE, Inc. ("MOODY'S") or such other rating organizations as may be approved
by the Fund's Board of Directors. Investments in unrated commercial paper will
be limited to THOSE issued or guaranteed as to payment of principal and interest
by companies which have an existing debt security rated at the time of
investment within the two highest grades by S&P or Moody's or such other rating
organizations as may be approved by the Fund's Board of Directors.
Corporate Debt Securities: Corporate debt securities (other than
commercial paper). As is discussed BELOW, Rule 2a-7 imposes number of
requirements upon investments in long-term securities.
5
<PAGE>
RULE 2A-7: THE FUND IS SUBJECT TO THE INVESTMENT RESTRICTIONS OF RULE
2A-7 UNDER THE INVESTMENT COMPANY ACT OF 1940 IN ADDITION TO ITS OTHER POLICIES
AND RESTRICTIONS DISCUSSED BELOW. RULE 2A-7 REQUIRES THAT THE FUND MAINTAIN AN
AVERAGE WEIGHTED MATURITY OF NOT MORE THAN 90 DAYS AND INVEST EXCLUSIVELY IN
SECURITIES THAT MATURE WITHIN 397 DAYS. RULE 2A-7 ALSO REQUIRES THAT ALL
INVESTMENTS BY THE FUND BE LIMITED TO UNITED STATES DOLLAR-DENOMINATED
INVESTMENTS THAT: (1) PRESENT "MINIMAL CREDIT RISKS," AND (2) ARE AT THE TIME OF
ACQUISITION "ELIGIBLE SECURITIES." ELIGIBLE SECURITIES INCLUDE, AMONG OTHERS,
SECURITIES THAT ARE RATED BY TWO NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS ("NRSROS") IN ONE OF THE TWO HIGHEST CATEGORIES FOR SHORT-TERM
DEBT OBLIGATIONS, SUCH AS A-1 OR A-2 BY S&P, OR P-1 OR P-2 OR MIG-1 OR MIG-2 BY
MOODY'S. ELIGIBLE SECURITIES ALSO INCLUDE A LONG-TERM SECURITY IF ITS ISSUER
HAS RECEIVED FROM TWO NRSROS A RATING, WITH RESPECT TO A CLASS OF SHORT-TERM
DEBT OBLIGATIONS THAT CURRENTLY IS COMPARABLE IN PRIORITY AND SECURITY WITH THE
LONG-TERM SECURITY, IN ONE OF THE TWO HIGHEST RATING CATEGORIES. IT IS THE
RESPONSIBILITY OF THE MANAGER OF THE FUND (SEE "HOW IS THE FUND MANAGED?") TO
DETERMINE THAT THE FUND'S INVESTMENTS PRESENT ONLY "MINIMAL CREDIT RISKS" AND
ARE ELIGIBLE SECURITIES. THE BOARD OF DIRECTORS OF THE FUND HAS ESTABLISHED
WRITTEN GUIDELINES AND PROCEDURES FOR THE MANAGER AND OVERSEES THE MANAGER'S
DETERMINATION THAT THE FUND'S PORTFOLIO SECURITIES PRESENT ONLY "MINIMAL CREDIT
RISK" AND ARE ELIGIBLE SECURITIES.
UNDER RULE 2A-7, 95% OF THE ASSETS OF THE FUND MUST BE INVESTED IN
ELIGIBLE SECURITIES THAT ARE DEEMED FIRST TIER SECURITIES, WHICH INCLUDE, AMONG
OTHERS, SECURITIES RATED BY TWO NRSROS IN THE HIGHEST CATEGORY (SUCH AS A-1 AND
P-1). RULE 2A-7 ALSO REQUIRES THAT: (1) THE FUND MAY NOT (WITH CERTAIN
EXCEPTIONS) INVEST MORE THAN 5% OF ITS TOTAL ASSETS IN SECURITIES OF A SINGLE
ISSUER; AND (2) THE FUND'S INVESTMENT IN SECOND TIER SECURITIES OF A SINGLE
ISSUER MAY NOT EXCEED THE GREATER OF 1% OF THE FUND'S TOTAL ASSETS OR
$1,000,000. REPURCHASE AGREEMENTS CAN BE ENTERED INTO ONLY WITH REGARD TO
GOVERNMENT SECURITIES OR SECURITIES THAT ARE RATED IN THE HIGHEST RATING
CATEGORY BY TWO NRSROS.
The Fund may engage in the following investment activities:
Repurchase Agreements: The Fund may enter into repurchase agreements
WITH BROKER-DEALERS AND COMMERCIAL BANKS. A REPURCHASE AGREEMENT IS AN
AGREEMENT under which the Fund WILL ACQUIRE a money market instrument, qualified
for purchase by the Fund, subject to resale TO THE SELLER at an agreed upon
price and date. Such resale price reflects an agreed upon RETURN for the period
of time the instrument is held by the Fund and is unrelated to the COUPON
(STATED INTEREST RATE PAID BY THE ISSUER) ON THE INSTRUMENT. Repurchase
agreements usually are for one week or less, but may be for longer periods.
THE FUND will not invest more than 10% of its net assets in repurchase
agreements of more than one week's duration. REPURCHASE AGREEMENTS WILL BE
FULLY COLLATERALIZED. IF, HOWEVER, THE SELLER DEFAULTS ON ITS OBLIGATION TO
REPURCHASE THE UNDERLYING SECURITY, THE FUND MAY EXPERIENCE DELAY OR DIFFICULTY
IN EXERCISING ITS RIGHTS TO REALIZE UPON THE SECURITY AND MIGHT INCUR A LOSS IF
THE VALUE OF THE SECURITY HAS DECLINED. THE FUND MIGHT ALSO INCUR DISPOSITION
COSTS IN LIQUIDATING THE SECURITY. The Fund does not currently invest in
repurchase agreements and it has NO current intention of entering into such
agreements.
Lending of Portfolio Securities: The Fund may lend portfolio
securities to brokers, dealers, and financial INSTITUTIONS provided that cash or
equivalent COLLATERAL (fixed-income securities for which there is an established
market) equal to at least 100% of the market value of the securities loaned is
maintained by the borrower with the Fund. Lending of portfolio securities
involves certain risks. As
6
<PAGE>
with other extensions of credit, there are risks of delay in recovery of loaned
securities, or even loss of rights in collateral pledged by the borrower, should
the borrower fail financially. The Fund also may EXPERIENCE a loss if upon
the failure of a borrower to return loaned securities, the collateral is not
sufficient in value or liquidity to cover the value of the loaned securities.
During the time securities ARE on loan, the borrower will pay the Fund any
income accruing thereon and the Fund may invest the cash collateral and earn
additional income or may receive an agreed upon fee FROM the borrower who has
delivered equivalent collateral. To the extent that the Fund invests cash
collateral, the Fund may incur additional risk associated with the change in
value of the invested collateral during the term of the loan. The Fund will not
lend more than 25% of the value of its total assets, and it is not intended that
payments received on account of interest paid on securities loaned will exceed
10% of the annual gross income of the Fund without offset for realized short-
term capital losses, if any.
Securities Trading: The Fund may trade investments to take advantage
of short-term market movements. This may result in high portfolio turnover.
The Fund does not anticipate incurring significant brokerage or transaction
expenses since portfolio transactions ordinarily will be made directly with the
issuer, a money market dealer or other DEALERS or other financial institutions
on a net price basis.
Investment Restrictions: In addition to the policies and limitations
set forth above, the Fund is subject to certain other investment policies and
limitations set forth more fully in the Statement of Additional Information.
AS A MATTER OF FUNDAMENTAL POLICY, THE FUND MAY NOT: (1) BORROW money, except
for temporary purposes and in an AGGREGATE amount not in excess of 10% OF THE
VALUE of the total assets of the Fund, PROVIDED THAT BORROWINGS in excess of
5% of SUCH VALUE are permitted from banks ONLY; (2) INVEST more than 25%
of its assets in securities of issuers in any one industry (provided that the
Fund can concentrate its investments in money market instruments issued by the
U.S. GOVERNMENT or its agencies or domestic banks); (3) MORTGAGE OR PLEDGE
assets, except that up to 10% of the Fund's assets can be used to secure
BORROWINGS; (4) INVEST more than 5% of its assets in any one issuer other than
the U.S. Government or its agencies; or (5) INVEST more than 5% of its assets
in the securities of issuers in operation less than three continuous years.
EXCEPT AS SPECIFICALLY NOTED ABOVE, THE INVESTMENT POLICIES
DESCRIBED ABOVE are not fundamental and the Board of Directors may CHANGE such
policies without the vote of a majority of its outstanding voting securities.
THE Board would not change the Fund's investment objectives, NOR ANY OTHER
FUNDAMENTAL POLICY, without such a vote. Under the Investment Company Act of
1940, a "vote of a majority of the outstanding voting securities" of the Fund
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares of the Fund present at a
shareholder's meeting if more than 50% of the outstanding shares of the Fund are
represented at the meeting in person or by proxy.
HOW IS THE FUND MANAGED?
The Board of Directors provides broad supervision over the affairs of
the Fund. Pursuant to an Investment Advisory and Management Agreement approved
by the Board and the shareholders of the Fund, ARM CAPITAL ADVISORS, INC. (the
"Manager") manages the investments of the Fund and administers its business and
other affairs. The Manager's address is 200 PARK AVENUE, 20TH FLOOR, NEW YORK,
NEW YORK 10166.
7
<PAGE>
THE MANAGER IS A WHOLLY-OWNED SUBSIDIARY OF ARM FINANCIAL GROUP,
INC. ("ARM"), A DELAWARE CORPORATION. ARM IS A FINANCIAL SERVICES COMPANY
PROVIDING RETAIL AND INSTITUTIONAL PRODUCTS AND SERVICES TO THE LONG-TERM
SAVINGS AND RETIREMENT MARKET. THE MORGAN STANLEY LEVERAGED EQUITY FUND II,
L.P., MORGAN STANLEY CAPITAL PARTNERS III, L.P., MORGAN STANLEY CAPITAL
INVESTORS, L.P. AND MSCP III 892 INVESTORS, L.P., INVESTMENT FUNDS SPONSORED BY
MORGAN STANLEY GROUP, INC. ("MORGAN STANLEY"), OWN APPROXIMATELY 91% OF THE
OUTSTANDING SHARES OF VOTING STOCK OF ARM. THE MANAGER CURRENTLY PROVIDES
INVESTMENT MANAGEMENT SERVICES TO INSTITUTIONAL AND INDIVIDUAL CLIENTS,
INCLUDING ARM AND ITS SUBSIDIARIES, WITH COMBINED ASSETS IN EXCESS OF $4.0
BILLION.
THE MANAGER COMMENCED INVESTMENT ADVISORY OPERATIONS ON JANUARY 5,
1995, ON WHICH DATE IT ACQUIRED THE DOMESTIC FIXED INCOME UNIT OF KLEINWORT
BENSON INVESTMENT MANAGEMENT AMERICAS INC. THE MANAGER HAS MANAGED THE FUND
SINCE JUNE 14, 1995 AND SINCE THAT DATE HAS ALSO MANAGED THE OTHER MUTUAL FUNDS
IN the State Bond Group OF MUTUAL FUNDS: STATE BOND MINNESOTA TAX-FREE INCOME
FUND, State Bond Common Stock Fund, State Bond Diversified Fund, State Bond Tax
Exempt Fund, AND State Bond U.S. Government and Agency Securities Fund.
KEITH O. MARTENS, EXECUTIVE VICE PRESIDENT-INVESTMENTS OF THE MANAGER
AND VICE PRESIDENT OF THE FUND, IS RESPONSIBLE FOR SELECTION OF INVESTMENTS AND
MANAGEMENT OF THE FUND. MR. MARTENS IS ALSO THE PRINCIPAL MANAGER OF THE State
Bond Minnesota Tax-Free Income Fund, STATE BOND COMMON STOCK FUND, STATE BOND
DIVERSIFIED FUND, STATE BOND TAX EXEMPT FUND AND STATE BOND U.S. GOVERNMENT AND
AGENCY SECURITIES FUND.
The Fund pays the MANAGER a management fee for its services,
calculated daily and payable monthly, equal to .6 of 1% of the AVERAGE daily net
assets of the Fund UP TO AND INCLUDING $550 MILLION, .55 OF 1% OF THE NEXT $250
MILLION, .5 OF 1% OF THE NEXT $250 MILLION AND .45 OF 1% OF SUCH assets in
excess of $1 BILLION. A PORTION OF THIS FEE IS PAID TO SBM FINANCIAL SERVICES,
INC. (THE "DISTRIBUTOR") IN CONNECTION WITH THE FUND'S PLAN OF DISTRIBUTION (THE
"PLAN")(SEE "WHAT ABOUT THE FUND'S PLAN OF DISTRIBUTION"). The Fund pays all
its expenses other than those assumed by the Manager. For its fiscal year ended
July 31, 1995, total expenses of the Fund, after expense reimbursements,
amounted to .80% of its average daily net assets.
HOW CAN YOU INVEST IN THE FUND?
SBM Financial Services, Inc. (the "Distributor"), a subsidiary of
ARM, acts as distributor of the Fund's shares, which are offered on a
continuous basis. Its address is 100 North Minnesota Street, P.O. Box 69, New
Ulm, Minnesota 56073-0069.
THE MINIMUM INITIAL INVESTMENT IN THE FUND IS $1,000 AND SUBSEQUENT
INVESTMENTS MUST BE IN AN AMOUNT OF AT LEAST $100 UNLESS THE SUBSEQUENT
INVESTMENT IS MADE BY MEANS OF THE AUTOMATIC INVESTMENT PLAN, IN WHICH CASE THE
SUBSEQUENT MINIMUM IS $50. THE MINIMUMS FOR IRA, KEOGH, AND OTHER TAX-DEFERRED
PENSION PLANS ARE $250 FOR INITIAL INVESTMENT AND $50 FOR SUBSEQUENT
INVESTMENTS.
THE PURCHASE PRICE FOR SHARES OF THE FUND IS THEIR NET ASSET VALUE
NEXT DETERMINED AFTER THE RECEIPT OF A PURCHASE ORDER IN PROPER FORM.
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THE NET ASSET VALUE PER SHARE OF THE FUND IS DETERMINED AS OF 3:00
P.M. CENTRAL TIME ON DAYS IN WHICH THE FUND IS OPEN FOR BUSINESS. NET ASSET
VALUE IS COMPUTED BY DIVIDING THE VALUE OF THE TOTAL ASSETS OF THE FUND, LESS
LIABILITIES, BY THE NUMBER OF SHARES OUTSTANDING. THE FUND'S ASSETS ARE VALUED
ON THE BASIS OF AMORTIZED COST, WHICH INVOLVES INITIALLY VALUING A PORTFOLIO
INSTRUMENT AT ITS COST AND THEREAFTER ASSUMING A CONSTANT AMORTIZATION TO
MATURITY OF ANY DISCOUNT OR PREMIUM REGARDLESS OF THE IMPACT OF FLUCTUATING
INTEREST RATES ON THE MARKET VALUE OF THE INSTRUMENT. THE FUND FOLLOWS CERTAIN
INVESTMENT POLICIES IN ORDER TO SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF
$1.00 PER SHARE, ALTHOUGH THERE IS NO ASSURANCE THAT THOSE POLICIES WILL ALWAYS
ACHIEVE SUCH A RESULT. SEE "WHAT ARE THE FUND'S INVESTMENT OBJECTIVES, POLICIES
AND RISKS?"
THE FUND RESERVES THE RIGHT TO REJECT ANY ORDER FOR THE PURCHASE OF
ITS SHARES. IN ADDITION, THE OFFERING OF FUND SHARES MAY BE SUSPENDED BY THE
FUND AT ANY TIME AND RESUMED AT ANY TIME THEREAFTER.
INVESTMENTS IN THE FUND MAY BE MADE IN ANY OF THE FOLLOWING WAYS:
BY MAIL: CHECKS OR NEGOTIABLE BANK DRAFTS PAYABLE TO STATE BOND CASH
MANAGEMENT FUND SHOULD BE MAILED WITH THE ACCOUNT APPLICATION TO SBM FINANCIAL
SERVICES, INC., 100 NORTH MINNESOTA STREET, P.O. BOX 69, NEW ULM, MINNESOTA
56073-0069.
By Wire Transfer: Call the Fund's SHAREHOLDER SERVICING AGENT
at (800) 328-4735 to advise of your investments and, for your initial
investment, to obtain an account number. If you do not have an account number
prior to the wire transfer, you wire will be returned to your bank. YOU SHOULD
THEN INSTRUCT a commercial bank to wire your money to "Credit account of State
Bank & Trust Company of New Ulm at the Federal Reserve Bank of Minneapolis -
Account #091901202, for further credit to Account #780, for benefit of Account
Number (your Fund account #) of (your name)." Be sure to include your Fund
account number and your name. If the wire transfer is for an initial
investment, promptly send a completed ACCOUNT APPLICATION TO SBM FINANCIAL
SERVICES, INC., 100 North Minnesota Street, P.O. Box 69, New Ulm, Minnesota
56073-0069.
Through SBM Financial Services, Inc. or YOUR BROKER: You may
invest in the Fund by purchasing shares through a representative of SBM
Financial Services, Inc., the Fund's Distributor, or from certain registered
securities broker-dealers. Broker-dealers who process orders on behalf of their
customers may charge a fee for their services. THE BROKER IS RESPONSIBLE FOR
TRANSMITTING THE PURCHASE ORDER TO THE DISTRIBUTOR. Investments made directly
or through the Distributor, without the assistance of a broker-dealer, are
without charge.
Automatic Investment Plan: THE FUND OFFERS AN AUTOMATIC INVESTMENT
PLAN FOR EXISTING SHAREHOLDERS. ONCE YOU HAVE ESTABLISHED YOUR ACCOUNT you may
automatically make additional investments ($50 minimum) by authorizing monthly
withdrawals directly from your personal bank checking account. You pay no
charge TO THE FUND for this service, which you may terminate at any time by
calling the Fund's SHAREHOLDER SERVICING Agent at (800) 328-4735. For more
information about the Automatic Investment Plan, request the appropriate forms
from the Fund by calling (800) 328-4735 or a representative of the Distributor.
DO SHARES OF THE FUND COUNT TOWARD THE RIGHT OF ACCUMULATION FOR
PURCHASES OF SHARES OF THE OTHER STATE BOND FUNDS? BECAUSE SHARES OF THE FUND
ARE OFFERED TO INVESTORS WITH NO SALES CHARGE,
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ONLY THOSE SHARES OF THE FUND OBTAINED AS A RESULT OF AN EXCHANGE FROM ANOTHER
MUTUAL FUND IN THE STATE BOND GROUP IN WHICH SALES CHARGES ARE PAID WILL BE
INCLUDED FOR PURPOSES OF DETERMINING ELIGIBILITY FOR RIGHTS OF ACCUMULATION. TO
RECEIVE ANY REDUCED SALES CHARGE UNDER THE RIGHT OF ACCUMULATION, THE
SHAREHOLDER OR HIS OR HER DEALER MUST NOTIFY THE DISTRIBUTOR AT THE TIME OF
INVESTMENT OF THE SHAREHOLDER'S ELIGIBILITY FOR THE REDUCED SALES CHARGE.
WHEN DOES YOUR PURCHASE BEGIN EARNING DIVIDENDS?
YOUR PURCHASE OF FUND SHARES WILL BEGIN TO EARN DIVIDENDS ON THE DAY
THAT YOUR ORDER IS CONSIDERED EFFECTIVE. Many of the types of instruments in
which the Fund invests must be paid for in immediately available money, called
"federal funds." Therefore, YOUR payments for the purchase of shares must be
converted into federal funds before your purchase is considered effective.
Payments transmitted by check or draft DRAWN ON A MEMBER BANK OF THE
FEDERAL RESERVE SYSTEM WILL NORMALLY BE EFFECTIVE, AND SHARES WILL BE CREDITED
TO YOUR ACCOUNT, within two business days after receipt by THE SHAREHOLDER
SERVICING AGENT. Checks drawn on banks which are not members of the Federal
Reserve System may take longer to be converted. All checks are accepted subject
to collection at full face value in United States funds and must be drawn in
U.S. dollars on a domestic bank.
Payments transmitted by wire and received and reported to the Fund
BY THE SHAREHOLDER SERVICING AGENT prior to 3:00 p.m. Central TIME on any day
which is a business day of the Fund are normally effective on the same day
as received. Wire payments received or reported by THE SHAREHOLDER SERVICING
AGENT to the Fund after that time, or on a day which is not a business day of
the Fund, will be effective depending upon the time and method payments are
transmitted to the Fund and available in federal funds.
HOW CAN SHARES BE REDEEMED?
You may convert all or any part of your investment into cash at any
time by redeeming shares. ALL REDEMPTIONS WILL BE MADE AT THE NET ASSET VALUE
PER SHARE NEXT DETERMINED AFTER RECEIPT OF A REDEMPTION REQUEST IN PROPER FORM
(OR AS NEXT DETERMINED ON THE NEXT BUSINESS DAY OF THE FUND IF THE REQUEST IS
MADE BY TELEPHONE AND RECEIVED AFTER 3:00 P.M. CENTRAL TIME), INCLUDING ALL
STOCK CERTIFICATES, SIGNATURE GUARANTEES AND OTHER DOCUMENTATION THAT MAY BE
REQUIRED BY THE SHAREHOLDER SERVICING AGENT. SHARES purchased by uncertified
check may not be redeemed for up to 15 days of receipt of the check in order to
allow time for THE CHECK TO CLEAR. YOU WILL NOT RECEIVE DIVIDENDS ON SHARES
WHICH ARE REDEEMED FROM YOUR ACCOUNT FOR THE DAY THAT THE REDEMPTION IS
EFFECTED.
YOUR ACCOUNT WILL REMAIN OPEN, EVEN AFTER ALL SHARES ARE REDEEMED, FOR
THE REMAINDER OF THE YEAR IN WHICH THE REDEMPTION IS MADE AND FOR THE FOLLOWING
YEAR. THIS PERMITS YOU TO RESUME INVESTMENTS IN THE FUND, CONVENIENTLY AND AT
ANY TIME, DURING THAT PERIOD, PROVIDED THAT THE INFORMATION ON YOUR ORIGINAL
ACCOUNT APPLICATION REMAINS ACCURATE.
BECAUSE OF THE RELATIVELY HIGH COST OF HANDLING SMALL ACCOUNTS, THE
FUND RESERVES THE RIGHT TO REDEEM, UPON NOT LESS THAN 30 DAYS' WRITTEN NOTICE,
THE SHARES IN AN ACCOUNT WHICH HAS A VALUE OF LESS THAN $500. YOU WILL BE
ALLOWED TO MAKE ADDITIONAL INVESTMENTS PRIOR TO THE DATE FIXED FOR SUCH A
REDEMPTION TO AVOID LIQUIDATION OF YOUR ACCOUNT.
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YOU MAY USE ANY of the following methods to redeem shares:
Regular Redemption by Mail: You may REDEEM YOUR SHARES WITHOUT
CHARGE AT ANY TIME by sending a letter, signed by all of the registered owners
of the account and identifying your account number, to the SHAREHOLDER
SERVICING AGENT AT 100 North Minnesota Street, P.O. Box 69, New Ulm, Minnesota
56073-0069. FOR SHARE REDEMPTIONS valued at $20,000 or more, or when the
proceeds of the redemption are to be paid to someone other than you, your
signature must be guaranteed by a national securities exchange, a member firm of
a principal stock exchange, a registered securities association, a clearing
agency, a savings association, a credit union, a broker, a dealer, a municipal
broker or dealer, a government securities broker or dealer, or a representative
of the Distributor. THE DISTRIBUTOR may request further documentation from
corporations, executors, partnerships, administrators, trustees or custodians.
A check for the proceeds of regular redemptions ORDINARILY will be
mailed within seven calendar days AFTER A REDEMPTION REQUEST IS RECEIVED IN
PROPER FORM. HOWEVER, WHERE SHARES PURCHASED BY MEANS OF AN UNCERTIFIED CHECK
ARE REDEEMED BEFORE THE FIFTEENTH DAY AFTER PURCHASE, PROCEEDS WILL NOT BE
MAILED UNTIL FIFTEEN DAYS AFTER PURCHASE IN ORDER TO ALLOW THE UNCERTIFIED CHECK
TO CLEAR. PROCEEDS WILL BE SENT to your address of record or, in accordance
with your request, to some other person (if the request is in writing with your
signature guaranteed).
Quick Redemption by Wire Transfer: IF YOU HAVE ELECTED THE QUICK
REDEMPTION SERVICE, YOU MAY REQUEST THAT THE PROCEEDS OF A REDEMPTION OF SHARES
HAVING A VALUE OF $5,000 OR MORE BE wired to your account at a commercial bank
in the United States WHICH IS A MEMBER OF THE FEDERAL RESERVE SYSTEM. THIS
SERVICE IS AVAILABLE ONLY if you have designated such a bank in your Investment
Application and no certificates have been issued for the shares to be
redeemed. REDEMPTION PROCEEDS OF LESS THAN $5,000 WILL NOT BE WIRED, BUT
INSTEAD WILL BE MAILED TO THE SHAREHOLDER'S ADDRESS OF RECORD. A request for
Quick Redemption may be made to THE SHAREHOLDER SERVICING AGENT by mail at 100
North Minnesota Street, P.O. Box 69, New Ulm, Minnesota 56073-0069 OR BY
TELEPHONE at (800) 328-4735. EACH request must include your name and account
number. THERE IS CURRENTLY A $10.00 CHARGE FOR EACH WIRE TRANSFER, WHICH IS
DEDUCTED FROM THE REDEMPTION PROCEEDS. THE FEE IS WAIVED FOR BANKS FOR THEIR
FIDUCIARY ACCOUNTS. THE FUND RESERVES THE RIGHT TO MODIFY THE QUICK REDEMPTION
SERVICE AT ANY TIME.
QUICK REDEMPTION REQUESTS RECEIVED BEFORE 3:00 P.M. CENTRAL TIME ON A
BUSINESS DAY OF THE FUND WILL BE EFFECTED AT THE NET ASSET VALUE DETERMINED ON
THAT DAY. QUICK REDEMPTION REQUESTS RECEIVED AFTER THE CLOSE OF THE NEW YORK
STOCK EXCHANGE WILL BE EFFECTED AT THE NET ASSET VALUE DETERMINED ON THE NEXT
BUSINESS DAY OF THE FUND. PROCEEDS SENT BY WIRE WILL BE TRANSMITTED ON THE NEXT
BUSINESS DAY AFTER THE DAY THAT THE REDEMPTION IS EFFECTED. PROCEEDS SENT BY
MAIL WILL BE TRANSMITTED WITHIN SEVEN DAYS OF RECEIPT OF YOUR REQUEST.
IF YOUR BANK IS NOT A MEMBER OF THE FEDERAL RESERVE SYSTEM, QUICK
REDEMPTION PROCEEDS MAY BE WIRED TO A MEMBER BANK WHICH HAS A CORRESPONDENT
RELATIONSHIP WITH YOUR BANK, PROVIDED YOU DESIGNATE SUCH A CORRESPONDENT BANK IN
THE INVESTMENT APPLICATION AND NOTE THAT YOUR BANK SHOULD BE IMMEDIATELY ADVISED
OF THE WIRE TRANSFER. THE FAILURE OF A CORRESPONDENT BANK TO NOTIFY YOUR BANK
OF THE WIRE TRANSFER IMMEDIATELY COULD DELAY THE CREDITING OF REDEMPTION
PROCEEDS TO YOUR BANK.
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The Fund is not liable for any loss arising from telephone redemptions
that the Fund reasonably believes to be genuine. The Fund will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if it does not, it may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures used by the Fund will include requesting
several items of personal identification information prior to acting upon
telephone instructions and sending a written confirmation ON all such
transactions.
If you are already a Fund shareholder, YOU MAY elect the Quick
Redemption service or change a designation of a bank account for the Quick
Redemption service BY WRITING TO THE SHAREHOLDER SERVICING AGENT at 100 North
Minnesota Street, P.O. Box 69, New Ulm, Minnesota 56073-0069. THE DESIGNATION
MUST BE SIGNED BY ALL OF THE REGISTERED OWNERS OF THE FUND ACCOUNT, WITH
SIGNATURE(S) GUARANTEED BY A NATIONAL SECURITIES EXCHANGE, A MEMBER FIRM OF A
PRINCIPAL STOCK EXCHANGE, A REGISTERED SECURITIES ASSOCIATION, A CLEARING
AGENCY, A BANK OR TRUST COMPANY, A SAVINGS ASSOCIATION, A CREDIT UNION, A
BROKER, A DEALER, A MUNICIPAL SECURITIES BROKER OR DEALER, A GOVERNMENT
SECURITIES BROKER OR DEALER, OR A REPRESENTATIVE OF THE DISTRIBUTOR.
CHECK REDEMPTIONS: YOU MAY ELECT TO PARTICIPATE IN THE FUND'S FREE
CHECK REDEMPTION SERVICE, WHICH PERMITS YOU TO WRITE checks payable to any
person in amounts of $100 or more. YOU MAY ELECT THIS SERVICE ON THE ACCOUNT
APPLICATION OR BY LATER WRITTEN REQUEST TO THE SHAREHOLDER SERVICING AGENT AT
100 NORTH MINNESOTA STREET, P.O. BOX 69, NEW ULM, MINNESOTA 56073-0069. THE
SHAREHOLDER SERVICING AGENT WILL SUPPLY YOU WITH BLANK CHECKS WHICH CAN BE DRAWN
ON YOUR ACCOUNT WITH THE FUND. THE CHECKS WILL BE PAID FROM THE REDEMPTION OF
SHARES IN YOUR ACCOUNT. When honoring a check presented for payment, THE
SHAREHOLDER SERVICING AGENT will cause the Fund to redeem exactly enough full
and fractional shares in YOUR account to cover the amount of the check.
Shares for which certificates have been issued may not be redeemed by check.
Check redemption is subject to BANK rules and regulations governing checking
accounts. CHECKS FOR LESS THAN $100 WILL BE RETURNED AND A FEE MAY BE CHARGED.
If there are insufficient shares in your account to cover a check written under
this service, the check will be returned marked "insufficient funds" and a
return fee MAY be charged. Checks should not be used to close a Fund account
because when the check is written you will not know the exact total value of the
account on the day the check clears. FUND DIVIDENDS AND DISTRIBUTIONS
CONTINUE TO BE EARNED UNTIL A CHECK CLEARS FOR PAYMENT. THE FUND RESERVES the
right to terminate or modify the CHECK REDEMPTION service at any time UPON
WRITTEN NOTICE TO THE FUND'S SHAREHOLDERS. CHECK REDEMPTION IS SUBJECT TO STATE
BANK & TRUST COMPANY OF NEW ULM'S RULES AND REGULATIONS GOVERNING CHECKING
ACCOUNTS.
HOW DOES THE FUND'S EXCHANGE PRIVILEGE WORK?
SHARES OF THE FUND PURCHASED DIRECTLY (I.E., NOT THROUGH AN EXCHANGE
FROM ANOTHER MUTUAL FUND IN THE STATE BOND GROUP) MAY BE EXCHANGED for shares
in any other mutual FUND in the State Bond Group at THE NEXT DETERMINED PUBLIC
OFFERING PRICE (I.E., NET ASSET VALUE PLUS THE APPLICABLE SALES CHARGE) FOR
THAT FUND.
If you have been a shareholder of one of the other funds in the State
Bond Group for seven days or more, you may exchange any or all of your shares
in THAT mutual fund for shares of the Fund. The value of the shares being
exchanged must equal the minimum investment amounts provided for direct
purchases of the Fund's shares. Shares of the Fund which you acquire through
such an exchange which have been held in your account for seven calendar days
or more may LATER be exchanged for shares of
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any of the other mutual funds in the State Bond Group AT THE FUND'S NEXT
DETERMINED NET ASSET VALUE; HOWEVER, IF SUCH EXCHANGE IS FOR SHARES OF ANY FUND
IN THE STATE BOND GROUP WHICH HAS A HIGHER SALES CHARGE THAN THE FUND YOU
ORIGINALLY PURCHASED AND YOU HELD THE SHARES OF THE ORIGINAL FUND for less than
six months, YOU MUST PAY the difference in the sales CHARGE APPLICABLE TO THE
PURCHASE OF SHARES OF THE ORIGINAL FUND AND THE HIGHER SALES CHARGE APPLICABLE
TO THE PURCHASE OF SHARES OF THE NEW FUND. IF you desire to exchange a portion
of your shares of the Fund THAT ARE ATTRIBUTABLE TO EXCHANGES FROM DIFFERENT
FUNDS, THOSE SHARES OF THE FUND that may be exchanged FOR SHARES OF THE NEW FUND
AT NET ASSET VALUE without a sales charge will be exchanged first.
EXCHANGES OF SHARES ARE SALES AND MAY RESULT IN A GAIN OR LOSS FOR
FEDERAL INCOME TAX PURPOSES. BEFORE MAKING AN EXCHANGE, YOU SHOULD OBTAIN AND
READ THE PROSPECTUS FOR THE FUND YOU ARE CONSIDERING. The Fund reserves the
right to terminate or modify the terms of this exchange privilege UPON 60 DAYS'
NOTICE TO SHAREHOLDERS. The exchange privilege is only available in states in
which the shares OF THE FUND to be acquired ARE AVAILABLE FOR PURCHASE.
Exchange requests may be made in writing, signed by all registered
owners, to the SHAREHOLDER SERVICING AGENT at 100 North Minnesota Street, P.O.
Box 69, New Ulm, Minnesota 56073-0069. SHARES MAY ALSO BE EXCHANGED BY
TELEPHONE BY CALLING (800) 328-4735, PROVIDED YOU HAVE ON FILE an Agreement for
Exchange of Shares by Telephone (INCLUDED ON THE ACCOUNT APPLICATION OR
AVAILABLE FROM THE SHAREHOLDER SERVICING AGENT). SHARES HELD BY TRUSTEES OF
RETIREMENT PLANS may not be exchanged by telephone. During times of drastic
economic or market changes the telephone exchange privilege may be difficult to
implement. In order to implement an exchange, you will need to provide the name
in which YOUR account is registered, your account number, such other personal
identification information as the Fund may request, the dollar amount or share
amount you wish to exchange, the name of the fund into which you wish to
exchange and, if you already have an account with the fund into which you wish
to exchange, the account registration and account number of such account.
THE FUND IS NOT LIABLE FOR ANY LOSS ARISING FROM TELEPHONE EXCHANGES
THAT THE FUND REASONABLY BELIEVES TO BE GENUINE. THE FUND WILL EMPLOY REASONABLE
PROCEDURES TO CONFIRM THAT INSTRUCTIONS COMMUNICATED BY TELEPHONE ARE GENUINE;
IF IT DOES NOT, IT MAY BE LIABLE FOR ANY LOSSES DUE TO UNAUTHORIZED OR
FRAUDULENT INSTRUCTIONS. THE PROCEDURES USED BY THE FUND WILL INCLUDE REQUESTING
SEVERAL ITEMS OF PERSONAL IDENTIFICATION INFORMATION PRIOR TO ACTING UPON
TELEPHONE INSTRUCTIONS AND SENDING A WRITTEN CONFIRMATION ON ALL SUCH
TRANSACTIONS.
HOW DOES THE FUND PAY DIVIDENDS?
The Fund declares DAILY DIVIDENDS ON ALL OUTSTANDING SHARES (DIVIDENDS
ARE DECLARED ON THE DAY A PURCHASE IS EFFECTIVE BUT ARE NOT DECLARED ON REDEEMED
SHARES FOR THE DAY OF REDEMPTION). DIVIDENDS ARE PAID MONTHLY. A SHAREHOLDER WHO
REDEEMS ALL OF HIS OR HER FUND SHARES RECEIVES WITH THE REDEMPTION PROCEEDS
(OTHER THAN REDEMPTIONS BY CHECK) THE AMOUNT OF ALL DIVIDENDS DECLARED FOR THE
MONTH UP TO AND INCLUDING THE DATE OF REDEMPTION OF SHARES. DIVIDENDS IN RESPECT
OF ALL OTHER REDEMPTIONS ARE PAID ON THE REGULAR DIVIDEND PAYMENT DATE.
DIVIDENDS ARE invested in additional shares OF THE FUND at net asset
value, or, at the shareholder's election, paid in cash. SHARES received from the
investment of dividends are credited to the shareholder's account.
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Distribution from taxable net REALIZED INVESTMENT GAINS, if any, will
GENERALLY be declared at least once each year, IN SHARES OF THE FUND, OR IN
CASH IF SO ELECTED BY THE SHAREHOLDER.
WHAT IS THE FEDERAL TAX STATUS OF DIVIDENDS YOU RECEIVE?
Dividends paid from net investment income and any distributions from
net REALIZED short-term investment gain, if any, are taxed to shareholders as
ordinary income, whether received in cash or REINVESTED in additional shares.
Any distributions of net REALIZED long-term capital gains will be taxed as such,
regardless of how long you have held your shares.
Shareholders are sent a QUARTERLY STATEMENT OF ACCOUNT reflecting all
transactions DURING THE PERIOD, including dividends and gain distributions.
Also, AT YEAR-END, all shareholders are sent a STATEMENT OF ACCOUNT AND
information on the aggregate amount and tax status of dividends and gain
distributions paid during the calendar year.
HOW DOES THE FUND PAY DISTRIBUTION EXPENSES?
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to
Rule 12b-1 under the ACT. Under the terms of the Plan and the Investment
Advisory and Management Agreement (THE "Agreement"), a portion of the management
fee paid to THE MANAGER IS PAID TO THE DISTRIBUTOR. Under the Plan and THE
Agreement, the Fund pays the Distributor, indirectly through the Manager, a
monthly fee equivalent on an annual basis to .2 of 1% of the average daily net
assets of the Fund. The fee may be used by the Distributor to (i) provide
initial and ongoing sales compensation to its investment executives and to other
broker-dealers in connection with the sale of Fund shares and to pay for other
advertising and promotional expenses in connection with the sale of Fund shares
("distribution expenses"), and (ii) to provide compensation TO ENTITIES
("SERVICE ENTITIES") in connection with the provision of certain personal and
account maintenance services to Fund shareholders including, but not limited to,
responding to shareholder inquiries and providing information on their
investments ("shareholder servicing expenses").
In the future SERVICE ENTITIES may include banks and other depository
institutions which, under the Glass Steagall Act and other applicable laws and
regulations, are prohibited from engaging in the business of underwriting,
selling or distributing certain types of securities. Such institutions will only
be allowed to provide such assistance if the scope of the assistance is such
that, in the opinion of the Manager, it does not fall within the aforementioned
prohibition.
WHO ARE THE FUND'S FUND ACCOUNTING AGENT AND ITS CUSTODIAN?
INVESTORS FIDUCIARY TRUST COMPANY SERVES AS THE FUND'S FUND ACCOUNTING
AGENT, AND IN THAT CAPACITY, MAINTAINS CERTAIN BOOKS AND RECORDS PURSUANT TO AN
AGREEMENT WITH THE FUND. ITS ADDRESS IS 127 WEST 10TH STREET, KANSAS CITY,
MISSOURI 64105.
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FIRST BANK NATIONAL ASSOCIATION, MINNEAPOLIS, MINNESOTA 55440, SERVES
AS CUSTODIAN FOR THE FUND'S PORTFOLIO SECURITIES AND CASH, AND IN THAT CAPACITY,
MAINTAINS CERTAIN FINANCIAL AND ACCOUNTING BOOKS AND RECORDS PURSUANT TO AN
AGREEMENT WITH THE FUND.
WHAT SERVICES DOES THE FUND PROVIDE?
INFORMATION ABOUT VARIOUS SHAREHOLDER SERVICES IS INCLUDED ABOVE UNDER "HOW CAN
SHARES BE REDEEMED?" IN ADDITION, THE FUND ALSO PROVIDES THE FOLLOWING SERVICES:
What About Shareholder Information?
For GENERAL information about the Fund, call or write SBM Financial
Services, INC., 100 NORTH MINNESOTA STREET, P.O. BOX 69, NEW ULM, MINNESOTA
56073-0069. ITS TELEPHONE NUMBER IS (800) 328-4735. FOR INFORMATION ABOUT YOUR
ACCOUNT, CALL OR WRITE THE SHAREHOLDER SERVICING AGENT AT 100 NORTH MINNESOTA
STREET, P.O. BOX 69, NEW ULM, MINNESOTA 56073-0069, TELEPHONE NUMBER 800-328-
4735.
WHAT REPORTS WILL YOU RECEIVE FROM THE FUND?
AS A SHAREHOLDER, YOU WILL RECEIVE THE FUND'S ANNUAL AND semi-annual
reports. You WILL ALSO RECEIVE STATEMENTS CONFIRMING EACH TRANSACTION IN YOUR
ACCOUNT AS WELL AS QUARTERLY STATEMENTS CONFIRMING DIVIDENDS PAID BY THE FUND,
ALL TRANSACTIONS IN YOUR ACCOUNT FOR THE QUARTER and the current balance of
shares you own.
ARE CERTIFICATES ISSUED FOR SHARES?
ALL SHARES WILL BE ISSUED AS BOOK CREDITS BY THE SHAREHOLDER SERVICING
AGENT. CERTIFICATES WILL NOT BE ISSUED.
OTHER SERVICES
THE Automatic Investment Plan enables you to authorize withdrawals
FROM YOU BANK checking account at regular intervals for fixed amounts to
purchase SHARES. SEE "HOW CAN YOU INVEST IN THE FUND?"
PAYMENTS AT REGULAR INTERVALS can be made to you FROM YOUR FUND
account under the Automatic Cash Withdrawal Plan if you OWN or purchase shares
HELD AS BOOK CREDITS worth $5,000 or more.
Further information on these services AND OTHERS is available by
contacting THE DISTRIBUTOR.
What About Tax-Deferred Retirement Plans?
Shares of the Fund may be purchased by all types of tax-deferred
retirement plans. By contacting your investment dealer or the Distributor, you
may obtain plans, plan forms, and custody agreements for: Individual Retirement
Accounts (IRAs) for persons who are employed and wish to make limited tax-
deductible contributions to a tax-deferred account for retirement; 403(b)(7)
Custodial accounts;
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Simplified Employee Pension Plans (SEPs); Keogh Plans for self-employed
individuals; AND Corporate Pension and Profit Sharing Plans.
GENERAL INFORMATION ABOUT STATE BOND CASH MANAGEMENT FUND
STATE BOND CASH MANAGEMENT FUND IS AN INVESTMENT PORTFOLIO OF STATE
BOND MONEY FUNDS, INC., A DIVERSIFIED, OPEN-END INVESTMENT COMPANY, OR MUTUAL
FUND, INCORPORATED IN MARYLAND ON OCTOBER 26, 1981. THE FUND HAS ONE CLASS OF
CAPITAL STOCK, $.00001 PAR VALUE. EACH OUTSTANDING SHARE HAS ONE VOTE AN EQUAL
RIGHT TO DIVIDENDS AND DISTRIBUTIONS OF ITS PORTFOLIO. ALL SHARES HAVE NON-
CUMULATIVE VOTING RIGHTS FOR THE ELECTION OF DIRECTORS. EACH SHARE IS FULLY
PAID AND NON-ASSESSABLE, AND EACH IS FREELY TRANSFERABLE.
SHARES OF THE FUND OFFER INDIVIDUALS, FIDUCIARIES, CORPORATIONS, AND
INSTITUTIONS A LIQUID INVESTMENT IN PROFESSIONALLY-MANAGED PORTFOLIOS INVESTED
IN MONEY MARKET INSTRUMENTS. BY COMBINING THE ASSETS OF SHAREHOLDERS, THE FUND
SEEKS THE HIGHER YIELDS OFFERED BY MONEY MARKET INSTRUMENTS OF LARGER
DENOMINATIONS WHICH ARE NOT AVAILABLE TO SMALLER INVESTORS. MOREOVER,
SHAREHOLDERS OF THE FUND ARE RELIEVED OF THE DETAILED BOOKKEEPING AND OPERATING
PROCEDURES NORMALLY ASSOCIATED WITH INVESTMENTS IN MONEY MARKET INSTRUMENTS,
SUCH AS SCHEDULING MATURITIES, SURVEYING MARKETS TO OBTAIN FAVORABLE YIELDS,
EVALUATING CREDIT RISKS AND SAFEGUARDING THE RECEIPT, CUSTODY, AND DELIVERY OF
SECURITIES.
YIELD
THE FUND'S YIELD IS COMPUTED BY DETERMINING THE NET CHANGE EXCLUSIVE
OF CAPITAL CHANGES IN THE VALUE OF A HYPOTHETICAL PRE-EXISTING ACCOUNT HAVING A
BALANCE OF ONE SHARE AT THE BEGINNING OF A SEVEN-DAY CALENDAR PERIOD, DIVIDING
THE NET CHANGE IN ACCOUNT VALUE BY THE VALUE OF THE ACCOUNT AT THE BEGINNING OF
THE PERIOD, AND MULTIPLYING THE RETURN OVER THE SEVEN-DAY PERIOD BY 365/7.
EFFECTIVE YIELD IS COMPUTED BY ANNUALIZING THE SEVEN-DAY RETURN WITH ALL
DIVIDENDS REINVESTED IN ADDITIONAL FUND SHARES. THE STATEMENT OF ADDITIONAL
INFORMATION DESCRIBES THE METHODS USED TO CALCULATE THE FUND'S CURRENT AND
EFFECTIVE YIELDS IN MORE DETAIL.
YIELDS MAY FLUCTUATE DAILY AND DO NOT PROVIDE A BASIS FOR DETERMINING
FUTURE YIELDS. BECAUSE YIELDS FLUCTUATE, THEY CANNOT BE USED TO COMPARE THE
YIELDS ON AN INVESTMENT IN FUND SHARES WITH YIELDS ON SAVINGS ACCOUNTS OR OTHER
INVESTMENT ALTERNATIVES WHICH PROVIDE AN AGREED TO OR GUARANTEED FIXED YIELD FOR
A STATED PERIOD OF TIME. HOWEVER, YIELD INFORMATION MAY BE USEFUL TO AN
INVESTOR CONSIDERING TEMPORARY INVESTMENTS IN MONEY MARKET INSTRUMENTS. IN
COMPARING THE YIELD OF ONE MONEY MARKET FUND TO ANOTHER, CONSIDERATION SHOULD BE
GIVEN TO EACH FUND'S INVESTMENT POLICIES, INCLUDING THE VOTES AND QUALITY OF
INVESTMENTS OWNED, LENGTHS OF MATURITIES OF THE PORTFOLIOS, AND WHETHER THERE
ARE ANY SPECIAL CHARGES WHICH MAY REDUCE THE YIELD.
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS (AND/OR IN THE STATEMENT OF ADDITIONAL INFORMATION REFERRED
TO ON THE COVER PAGE OF THIS PROSPECTUS), AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND, THE MANAGER OR SBM FINANCIAL SERVICES, INC. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN A STATE OR JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON
16
<PAGE>
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME SHALL NOT IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE FUND SINCE THE DATE HEREOF.
17
<PAGE>
THE STATE BOND GROUP OF MUTUAL FUNDS
GENERAL AUTHORIZATION FORM
TO OPEN A NEW ACCOUNT BY MAIL:
1. Complete the General Authorization Form. Be sure to indicate the Fund in
which your Account should be opened. Also indicate the services you will
want to use. Special attention should be given to Section 11 of the Form.
Be sure to sign the certification in Section 11.
2. Send the completed Form and your check, payable to SBM Financial Services,
Inc. to: SBM Financial Services, Inc. - 100 N. Minnesota St. - P.O. Box 69
New Ulm, MN 56073-0069 - (800) 328-4735
TO OPEN A NEW ACCOUNT BY BANK WIRE:
1. Call the fund at 800-328-4735 to obtain an Account Number in advance.
2. Instruct your bank to wire monies to:
The account of State Bank & Trust Company of New Ulm at the Federal Reserve
Bank of Minneapolis, Account #091901202
For further credit to Account #780
(Name of Fund)________________________________________________________
(Your name as your account is registered)____________________________________
(Your new Account Number)______________________________________________
3. Complete the Investment Application, indicating the services you will want
to use. Special attention should be given to Section 3B of the Form, where
you should indicate appropriate wire information. Mail the completed Form
to:
SBM Financial Services, Inc. - 100 N. Minnesota Street - P.O. Box 69 - New Ulm,
MN 56073-0069
PLEASE CHECK:
___ STATE BOND TAX EXEMPT FUND DATE_______________________
___ STATE BOND U.S. GOVERNMENT AND AGENCY SECURITIES FUND
___ STATE BOND CASH MANAGEMENT FUND
___ STATE BOND MINNESOTA TAX-FREE INCOME FUND
THIS FORM MAY NOT BE USED TO ESTABLISH OR REVISE AN ACCOUNT OR SERVICE IN
STATE BOND COMMON STOCK FUND OR STATE BOND DIVERSIFIED FUND. FORMS FOR THOSE
FUNDS ARE INCLUDED IN THEIR PROSPECTUSES, COPIES OF WHICH MAY BE OBTAINED FROM
SBM FINANCIAL SERVICES, INC., 100 N. MINNESOTA ST., P.O. BOX 69, NEW ULM, MN
56073-0069.
________________________________________________________________________________
I WISH TO ESTABLISH ___ OR REVISE ___ AN ACCOUNT (NO. _______________) ___ CHECK
ENCLOSED FOR $___________ IN THE MUTUAL FUND CHECKED ABOVE IN ACCORDANCE WITH
THESE INSTRUCTIONS, THE TERMS AND CONDITIONS OF THIS FORM AND THE CURRENT
PROSPECTUS OF THE FUND, A COPY OF WHICH I HAVE RECEIVED.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------
1. REGISTRATION: AGE
- -------------------------------------------------------------------------------
PLEASE PRINT AGE
--------------------------------------------------
NAME(S) IN
WHICH SHARES --------------------------------------------------
ARE TO BE STREET OR P.O. BOX
REGISTERED --------------------------------------------------
WITH TRUST CITY STATE ZIP CODE
NAME IF --------------------------------------------------
APPLICABLE HOME PHONE BUSINESS PHONE
--------------------------------------------------
MAILING BIRTH DATE
ADDRESS:
- -------------------------------------------------------------------------------
</TABLE>
2. LEGAL FORM OF OWNERSHIP (CHECK ONE)
1. ___ INDIVIDUAL OWNERSHIP
2. ___ JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
3. ___ TENANTS IN COMMON
4. ___ CORPORATE OWNERSHIP
5. ___ PARTNERSHIP OWNERSHIP
6. ___ UNIFORM GIFTS/TRANSFERS TO MINORS ACT OF STATE OF_________________
7. ___ IRA/*/
8. ___ TAX-QUALIFIED RETIREMENT PLAN/*/
9. ___ TRUST (DATE TRUST ESTABLISHED_____________________________________)
/*/ ADDITIONAL DOCUMENTATION MAY BE REQUIRED.
OBJECTIVE SUITABILITY INFORMATION
_______ CONSERVATION OF CAPITAL APPROX. INCOME $______________
_______ INCOME APPROX. NET WORTH (EXCLUSIVE OF
_______ LONG TERM GROWTH PROPERTY, HOME FURNISHINGS AND
AUTOMOBILES) $________________
_______ SPECULATIVE CAPITAL GAINS APPROX. TAX BRACKET__________%
_______ DEFERRAL OF TAXES
EMPLOYER_______________________________________________________________________
BUSINESS ADDRESS_______________________________________________________________
_______________________________________________________________
OCCUPATION_____________________________________________________________________
IS CLIENT OF LEGAL AGE? ___ YES ___ NO
IS CLIENT EMPLOYED BY OR REGISTERED WITH ANOTHER SECURITIES FIRM? ___ NO
___ YES WITH___________________________________________________________________
PRIOR INVESTMENT EXPERIENCE ___________ YEARS
NOTE: IF CLIENT REFUSES TO PROVIDE INFORMATION HAVE CLIENT INITIAL HERE________
(i)
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
- ----------------------------------------------------------------------------------
3. INITIAL A. IF PURCHASE IS BY CHECK: ATTACH IT TO APPLICATION
INVESTMENT AND MAIL TO THE FUND.
ENCLOSED IS MY CHECK PAYABLE TO SBM FINANCIAL SERVICES,
INC. FOR $____________________.
----------------------------------------------------------
B. IF PURCHASE IS BY WIRE, INSTRUCT YOUR BANK TO FOLLOW
THE WIRE INSTRUCTIONS.
WIRE SENT IN THE AMOUNT OF $____________________
THROUGH________________________________________________
NAME OF BANK
----------------------- ---------------- ------------
FUND ACCOUNT NUMBER DATE OF WIRE BRANCH
- ----------------------------------------------------------------------------------
4. DIVIDENDS I ELECT TO RECEIVE:
AND GAIN ___ 1. DIVIDENDS IN SHARES, GAIN DISTRIBUTIONS IN SHARES.
DISTRIBUTIONS ___ 2. DIVIDENDS IN CASH, GAIN DISTRIBUTIONS IN SHARES.
___ 3. DIVIDENDS IN CASH, GAIN DISTRIBUTIONS IN CASH.
NOTE: IF NO ELECTION IS MADE, OPTION NO. 1
AUTOMATICALLY WILL BE PUT INTO EFFECT.
DIVIDENDS AND GAIN DISTRIBUTIONS WILL BE INVESTED AT
NET ASSET VALUE. THESE OPTIONS DO NOT APPLY FOR
AUTOMATIC CASH WITHDRAWAL SERVICE.
- ----------------------------------------------------------------------------------
5. PRE-AUTHORIZED ___ PLEASE ARRANGE WITH MY BANK TO DRAW PRE-AUTHORIZED
PAYMENTS PAYMENTS AND INVEST $_______ IN MY ACCOUNT
___ MONTHLY ___ TWICE A MONTH ___ EVERY OTHER
MONTH ___ QUARTERLY
ON THE: ___ 1ST OF MONTH ___ 16TH OF MONTH
I HAVE COMPLETED THE ATTACHED "BANK AUTHORIZATION TO
HONOR PRE-AUTHORIZED PAYMENTS."
(ALSO COMPLETE SECTION 4 ABOVE)
- ----------------------------------------------------------------------------------
6. AUTOMATIC ___ PLEASE SEND A CHECK FOR $____ BEGINNING ON THE 15TH
CASH DAY OF ________ 19__, AND THEREAFTER ON THE 15TH DAY OF
WITHDRAWAL EVERY:
___ MONTH ___3RD MONTH ___ 6TH MONTH ___ 12TH MONTH
MAKE PAYMENTS TO:
NAME ________________________________________________
ADDRESS _____________________________________________
CITY _________________ STATE ______________ ZIP ______
SHARES HAVING A CURRENT VALUE AT OFFERING PRICE OF
$5,000 OR MORE MUST BE HELD IN THE ACCOUNT AT
INITIATION OF SERVICE, AND ALL SHARES MUST BE IN "BOOK
CREDIT" FORM.
- ----------------------------------------------------------------------------------
7. LETTER I INTEND TO PURCHASE, ALTHOUGH I AM NOT OBLIGATED TO DO
OF INTENT SO, SHARES OF THE ABOVE-DESIGNATED FUND, AND ONE OR
MORE OF THE OTHER MUTUAL FUNDS IN THE STATE BOND GROUP
WHICH BEAR A SALES CHARGE AS WRITTEN IN BELOW, WITHIN
A 13-MONTH PERIOD WHICH, TOGETHER WITH THE PRESENT NET
TOTAL ASSET VALUE OF SHARES NOW OWNED, BY ME, WILL
AGGREGATE AT LEAST:
___ $50,000 ___ $100,000 ___ $250,000
___ $500,000 ___ $1,000,000 ___ $2,000,000
I AGREE TO THE ESCROW PROVISIONS CONTAINED IN THIS
APPLICATION.
___ THIS LETTER OF INTENT MAY BE BACKDATED UP TO 90
DAYS TO INCLUDE SHARES PREVIOUSLY PURCHASED. BACKDATE
TO ___________________________________________________
- ----------------------------------------------------------------------------------
8. DIVIDEND IF YOU WISH TO HAVE YOUR DIVIDEND PAYMENTS MADE TO
DIRECTION ANOTHER PARTY PLEASE COMPLETE THE FOLLOWING:
OPTION I HEREBY AUTHORIZE AND REQUEST THAT MY DIVIDEND PAYMENTS
BE MADE TO:
NAME ________________________________________________
ADDRESS _____________________________________________
CITY _________________ STATE ______________ ZIP ______
SIGNATURE INVESTOR _____________________________________
SIGNATURE CO-INVESTOR __________________________________
- ----------------------------------------------------------------------------------
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------
9. CHECK ALL REGISTERED OWNERS OF YOUR FUND ACCOUNT (AS LISTED IN
REDEMPTION SECTION 1) MUST SIGN BELOW. I (WE) UNDERSTAND IF THIS
SERVICE CHECK REDEMPTION SERVICE IS ELECTED, THAT NO
CERTIFICATES FOR SHARES WILL BE ISSUED. BY SIGNING THIS
SECTION, I (WE) AGREE TO ALL OF THE TERMS AND CONDITIONS
SET FORTH IN THE PROSPECTUS AND APPLICATION.
1. _______________________ 2. _________________________
3. _______________________ 4. _________________________
___ CHECK HERE IF ONLY ONE SIGNATURE IS REQUIRED ON
CHECKS
___ CHECK HERE IF A COMBINATION IS REQUIRED AND SPECIFY
NUMBER
ACCOUNTS IN THE NAMES OF CORPORATIONS, TRUSTS,
PARTNERSHIPS, ETC. MUST INDICATE THE LEGAL TITLES OF
ALL AUTHORIZED SIGNATORIES. SHAREHOLDERS ELECTING THIS
SERVICE ARE SUBJECT TO THE CONDITIONS CONTAINED IN THIS
APPLICATION.
- ---------------------------------------------------------------------------------
10. QUICK NO REDEMPTION OF SHARES PURCHASED BY CHECK WILL BE
REDEMPTION PERMITTED WITHIN 15 DAYS OF THE CREDIT OF THOSE SHARES
SERVICE TO YOUR ACCOUNT.
I HEREBY AUTHORIZE THE FUND TO HONOR TELEPHONE OR
WRITTEN INSTRUCTIONS RECEIVED FROM ME FOR THE REDEMPTION
OF FUND SHARES WITHOUT A SIGNATURE AND BELIEVED BY THE
FUND TO BE GENUINE. TO PROVIDE ME WITH THE PROCEEDS OF
THE REDEMPTION QUICKLY, PROCEEDS IN THE MINIMUM AMOUNT
INDICATED IN THE FUND'S CURRENT PROSPECTUS WILL BE SENT
ONLY TO THE COMMERCIAL BANK LISTED BELOW FOR CREDIT TO
MY ACCOUNT. I UNDERSTAND THAT RECORDS OF SUCH
INSTRUCTIONS WILL BE BINDING.
PLEASE WIRE PROCEEDS TO ______________________________
NAME OF COMMERCIAL BANK (SAVINGS BANK MAY NOT BE USED)
------------------------------------------------------
ACCOUNT NAME ACCOUNT NUMBER
------------------------------------------------------
ADDRESS OF BANK CITY STATE ZIP CODE
-------------------------------
DATE
SIGN HERE: SIGNATURE(S) OF INVESTOR(S)
(X) (X)
------------------------------------------------------
- ---------------------------------------------------------------------------------
11. SIGNATURE UNDER PENALTIES OF PERJURY I CERTIFY THAT THE NUMBER
AND SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION
CERTIFICATION NUMBER/SOCIAL SECURITY NUMBER AND THAT I AM NOT SUBJECT
TO BACKUP WITHHOLDING EITHER BECAUSE I HAVE NOT BEEN
NOTIFIED THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A
RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS,
OR THE INTERNAL REVENUE SERVICE HAS NOTIFIED ME THAT I
AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. I (WE)
CERTIFY THAT I (WE) ARE OF LEGAL AGE AND THAT I (WE)
HAVE LEGAL CAPACITY TO PURCHASE OR REDEEM SHARES OF THE
FUND FOR MY (OUR) OWN ACCOUNT, OR FOR THE ACCOUNT OF THE
ORGANIZATION NAMED BELOW. I (WE) HAVE RECEIVED A
CURRENT PROSPECTUS OF THE FUND AND APPOINT SBM FINANCIAL
SERVICES, INC. AS MY (OUR) AGENT TO ACT IN ACCORDANCE
WITH MY (OUR) INSTRUCTIONS HEREIN.
SIGNATURE (X) SIGNATURE (X)
--------------- ------------------
SOC. SEC. NO. OR TAXPAYER SOC. SEC. NO. OR TAXPAYER
IDENTIFICATION NO. _______ IDENTIFICATION NO. _______
- ---------------------------------------------------------------------------------
12. DEALER PLEASE ESTABLISH THE ACCOUNT SPECIFIED BY THE INVESTOR
INFORMATION AND PURCHASE THROUGH SBM FINANCIAL SERVICES, INC.,
ONLY GENERAL DISTRIBUTOR, AT THE PUBLIC OFFERING PRICE,
SHARES WHICH YOU ARE AUTHORIZED TO PURCHASE FROM US FOR
THE INVESTOR. THE INVESTOR IS AUTHORIZED TO SEND ANY
FUTURE PAYMENTS DIRECTLY TO YOU FOR INVESTMENT. CONFIRM
EACH TRANSACTION TO THE INVESTOR AND TO US. WE
GUARANTEE THE GENUINENESS OF THE INVESTOR'S SIGNATURE.
WE ARE A DULY REGISTERED AND LICENSED DEALER AND HAVE A
SALES AGREEMENT WITH SBM FINANCIAL SERVICES, INC.
--------------------------- ------------------------------
DEALER NAME REPRESENTATIVE'S NAME NUMBER
--------------------------- ------------------------------
ADDRESS ADDRESS
--------------------------- ------------------------------
CITY STATE ZIP CODE CITY STATE ZIP CODE
X
--------------------------- --------------------------
AUTHORIZED SIGNATURE OF BROKER/DEALER DATE
-------------------------------------------------------
REPRESENTATIVE'S PHONE NUMBER (______)_________________
- ------------------------------------------------------------------------------------
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR INTERNAL USE ONLY ACCEPTED BY:
- ------------------------------------------------------------
NET ASSET VALUE VALUE AS OF SBM FINANCIAL SERVICES, INC.
# OF SHARES OWNED AS OF DATE
DATE OF LOI OF LOI
- ------------------------------------------------------------
BY
________________________________________
AUTHORIZED SIGNATURE
- ------------------------------------------------------------
ACCOUNTS ELIGIBLE FOR THE RIGHTS OF ACCUMULATION OR TO BE USED TOWARD
COMPLETION OF A LETTER OF INTENT.
NAME _____________________ FUND ____________________ ACCOUNT NO. _____________
NAME _____________________ FUND ____________________ ACCOUNT NO. _____________
NAME _____________________ FUND ____________________ ACCOUNT NO. _____________
NAME _____________________ FUND ____________________ ACCOUNT NO. _____________
NAME _____________________ FUND ____________________ ACCOUNT NO. _____________
TO: SBM FINANCIAL SERVICES, INC. THE STATE BOND GROUP OF MUTUAL FUNDS
100 NORTH MINNESOTA STREET REQUEST AND AUTHORIZATION FOR PRE-AUTHORIZED PAYMENTS
P.O. BOX 69
NEW ULM, MN 58073-0069
</TABLE>
TO START YOUR PRE-AUTHORIZED PAYMENT SERVICE, FILL OUT SECTION A AND THE
"BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED PAYMENTS" BELOW, AND FORWARD IT WITH
AN UNSIGNED BLANK CHECK FROM YOUR REGULAR CHECKING ACCOUNT (MARKED "VOID").
- --------------------------------------------------------------------------------
A. PRE-AUTHORIZED PAYMENTS
[_] PLEASE ARRANGE WITH MY BANK TO DRAW PRE-AUTHORIZED PAYMENTS AND INVEST
$________________ IN MY ACCOUNT:
[_] MONTHLY [_] TWICE A MONTH [_] EVERY OTHER MONTH
[_] QUARTERLY
ON THE [_] 1ST OF MONTH [_] 16TH OF MONTH I HAVE COMPLETED THE "BANK
AUTHORIZATION TO HONOR PRE-AUTHORIZED PAYMENTS" BELOW.
IF NOT COMPLETED, THE 1ST WILL BE ASSUMED.
STARTING MONTH
SIGNATURE(S) OF INVESTOR(S)
- --------------------------------------------------------------------------------
BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED PAYMENTS
AUTHORIZATION TO HONOR DEBITS (INCLUDING CHECKS, DRAFTS, AND OTHER ORDERS
WHETHER BY ELECTRONIC OR PAPER MEANS) BY SBM FINANCIAL SERVICES, INC..
DEPOSITOR'S NAME:
--------------------------------------------------------------
(PRINT NAME(S) EXACTLY AS SHOWN ON MY BANK, OR
OTHER FINANCIAL INSTITUTION, ACCOUNT)
DEPOSITORY NAME:
--------------------------------------------------------------
(PRINT NAME OF BANK OR FINANCIAL INSTITUTION
AND BRANCH, IF ANY)
- --------------------------------------------------------------------------------
(PRINT ADDRESS OF BANK, FINANCIAL INSTITUTION OR BRANCH WHERE ACCOUNT IS
MAINTAINED)
I HEREBY AUTHORIZE SBM FINANCIAL SERVICES, INC. TO INITIATE DEBT ENTRIES TO MY
ACCOUNT AS LISTED BELOW AND THE DEPOSITORY NAMED ABOVE TO DEBIT THE SAME TO SUCH
ACCOUNT. THIS AUTHORIZATION WILL REMAIN IN FULL FORCE AND EFFECT UNTIL SBM
FINANCIAL SERVICES, INC. AND DEPOSITORY RECEIVE WRITTEN NOTIFICATION FROM EITHER
OF THEM TO THE OTHER AND IN SUCH TIME AND IN SUCH MANNER SO AS TO AFFORD SBM
FINANCIAL SERVICES, INC. AND DEPOSITORY A REASONABLE OPPORTUNITY TO ACT ON IT.
SIGNATURE OF DEPOSITOR X
-------------------------------------------------------
IF REQUIRED BY THE FINANCIAL INSTITUTION,
SIGNATURE OF JOINT DEPOSITOR X
-----------------------------------------------
MY ACCOUNT NUMBER AT SAID FINANCIAL INSTITUTION IS DATE
--------------- -------
(iv)
<PAGE>
SBM FINANCIAL SERVICES, INC.
100 NORTH MINNESOTA STREET
P.O. BOX 69
NEW ULM, MINNESOTA 56073-0069
TERMS AND CONDITIONS
Open Account
Investments will be made in as many shares of the Fund, including fractions to
the third decimal place, as can be purchased at the public offering price at the
close of business on the day the order is accepted. Shareholders will receive
dividends from investment income and any distributions from long-term gain
realized on investments in shares or in cash according to the option elected.
Dividend and gain options may be changed at any time by notifying the Fund in
writing. Stock certificates will not be issued.
Pre-Authorized Payment Service
The Pre-Authorized Payment Service is available to all shareholders. Your
application is subject to acceptance by your bank and the Fund. Payments in the
amount specified will be drawn automatically on your bank on the day of each
month in which an investment is scheduled and invested at the public offering
price at the close of business on the same date. If a payment is not honored by
your bank, the Service will be suspended. It will be reinstated upon written
request indicating that the cause of interruption has been corrected. This
Service may be terminated by you or the Fund at any time by written notice. You
agree to hold the Fund and its agents free from all liability which may result
from acts done in good faith and pursuant to these terms. Instructions for
establishing Pre-Authorized Payment Service are given on the following page.
Automatic Cash Withdrawal Service
All income and gain distributions on shares held in your account subject to
this withdrawal service will be reinvested in additional shares. A sufficient
number of full and fractional shares will be redeemed to provide the amount
requested. You may change the amount of scheduled payments or you may suspend
payments for not more than one year by written notice to the Fund at least ten
days prior to the effective date of such a change or suspension. Your service
may be terminated by you or the Fund at any time by written notice. It will be
terminated upon proper notification of the death or legal incapacity of the
shareholder. The Service may be considered terminated in the event a withdrawal
of shares, other than to make scheduled withdrawal payments, reduces the value
of shares remaining on deposit to less than $5,000. Redeeming shares to make
these payments represents a return of capital and will result in tax
consequences. Withdrawals, concurrently with purchases of shares of this or any
other investment company will be disadvantageous to you because of the payment
of duplicative sales charges. For this reason, additional purchases of Fund
shares when the Withdrawal Service is in effect are discouraged.
Letter Of Intent
SBM Financial Services, Inc. will hold in escrow shares equal to 5% of the
minimum purchase amount specified. Dividends and distributions on the escrowed
shares will be paid to you or credited to your Account. Upon completion of the
specified minimum purchase within the thirteen-month period, all shares held in
escrow will be deposited in your account or delivered to you. You may include
the
(v)
<PAGE>
total asset value of shares of the State Bond Funds (except State Bond Cash
Management Fund shares) owned as of the date of a Letter of Intent toward the
completion of the Letter. If the total amount invested within the thirteen-
month period does not equal or exceed the specified minimum purchase, you will
be requested to pay the difference between the amount of the sales charge paid
and the amount of the sales charge applicable to the total purchase made. If,
within 20 days following the mailing of a written request, you have not paid
this additional sales charge to SBM Financial Services, Inc., sufficient
escrowed shares will be redeemed for payment of the additional sales charge.
Shares remaining in escrow after this payment will be released to your Account.
The Letter of Intent may be backdated by as much as 90 days to change the
purchase price for previous purchases. The thirteen-month period begins on the
date to which you have backdated.
Shares of the State Bond Cash Management Fund, which have been acquired by an
exchange may be taken into account in completing a Letter of Intent or for
Rights of Accumulation. However, shares of that Fund which have been purchased
directly may not be used for purposes of determining reduced sales charges on
additional purchases of the other Mutual Funds in the State Bond Group.
Check Redemption Service
1. REDEMPTION AUTHORIZATION: The signatory(ies) whose signature(s) appear
on the general authorization form, intending to be legally bound, hereby agree
each with the other and with State Bank & Trust Company of New Ulm, Minnesota
("Bank") that the Bank is appointed agent for such person(s) and, as such agent,
is directed to request the Transfer Agent of the "Fund" to redeem shares of the
Fund, registered in the name of such Signatory(ies) upon receipt of, and in the
amount of checks drawn upon his (their) Fund account. The Fund or its Transfer
Agent shall deposit the proceeds of such redemptions in said account or
otherwise arrange for application of such proceeds to payments of said checks.
The Bank is expressly authorized to commingle such proceeds in this account with
the proceeds of the redemption of the shares of other stockholders of the Fund.
The Bank is expressly authorized to honor checks as redemption
instructions hereunder without requiring signature guarantees, and neither the
Fund's Transfer Agent nor the Bank shall be liable for any loss or liability
resulting from the absence of any such guarantee.
2. CHECK PAYMENT. The Signatory(ies) authorizes and directs the Bank to
pay each check presented hereunder, subject to all laws and Bank rules and
regulations pertaining to checking accounts. In addition, the Signatory(ies)
agree(s) that:
(A) No check shall be issued or honored, or any redemption effected,
in an amount less than the minimum amount indicated in the Fund's current
Prospectus.
(B) No check shall be issued or honored, or redemption effected, for
any amounts represented by shares for which certificates have been issued.
(C) No check shall be issued or honored, or redemption effected, for
any amounts represented by shares unless payment for such shares has been made
in full and any checks given in such payment have been collected through normal
banking channels.
(vi)
<PAGE>
(D) No check shall be honored unless the Fund has provided the Bank,
from the proceeds of redemption or otherwise, collected funds for the payment of
such check.
(E) Checks issued hereunder cannot be cashed over the counter at
State Bank & Trust Company of New Ulm, Minnesota.
(F) Check redemption of fund shares purchased within 15 days prior to
the redemption may be limited as further described in the prospectus; and
(G) Checks shall be subject to any further limitations set forth in
the prospectus issued by the Fund including without limitation any additions,
amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered
owner of the shares of the Fund, as by joint ownership, ownership in common, or
tenants by the entireties, then (a) each registered owner must sign this form,
(b) all checks will require all signatures unless a lesser number is indicated
on the face of this form and (c) each signatory guarantees to the Bank the
genuineness and accuracy of the signature of the other Signatory(ies).
4. CHARGES: Bank is authorized to redeem sufficient Fund shares each
month, or from time to time, to cover the prevailing applicable charges on this
account. You will be notified in advance of any changes in charges for this
service.
5. TERMINATION: The Bank or the Fund may at any time terminate this
account, related share redemption service and Bank's agency for the
Signatory(ies) hereto without prior notice by Bank to any of the Signatory(ies).
6. HEIRS AND ASSIGNS: These terms and conditions shall bind the
respective heirs, executors, administrators and assigns of the Signatory(ies).
(vii)
<PAGE>
------------------------------------
PROSPECTUS
DECEMBER 1, 1995
------------------------------------
STATE BOND
CASH MANAGEMENT STATE BOND
FUND CASH MANAGEMENT
==================================== FUND
8400 Normandale Lake Boulevard
Suite 1150
Minneapolis, Minnesota 55437-3807
INVESTMENT MANAGER:
ARM CAPITAL ADVISORS, INC.
200 PARK AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10166
DISTRIBUTOR:
SBM Financial Services, Inc. [LOGO]
100 NORTH Minnesota STREET
P.O. BOX 69
NEW ULM, MINNESOTA 56073-0069
TRANSFER, REDEMPTION, AND
OTHER SHAREHOLDER
ACCOUNT SERVICES:
SBM FINANCIAL SERVICES, INC.
100 North Minnesota Street
P.O. Box 69 A NO-LOAD MONEY MARKET
New Ulm, Minnesota 56073-0069 MUTUAL FUND
CUSTODIAN:
First Bank National Association
Minneapolis, Minnesota 55440
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1995
STATE BOND CASH MANAGEMENT FUND
8400 Normandale Lake Boulevard
Suite 1150
Minneapolis, Minnesota 55437-3807
TELEPHONE NO. (612) 835-0097
This Statement of Additional Information supplements the information
contained in the current Prospectus of State Bond Cash Management Fund (the
"Fund") dated DECEMBER 1, 1995. THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT A PROSPECTUS, BUT should be read in conjunction with the FUND'S Prospectus,
which may be obtained by CONTACTING THE FUND AT THE ADDRESS OR TELEPHONE NUMBER
NOTED ABOVE.
TABLE OF CONTENTS
Page
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES AND POLICIES?
(SEE "WHAT ARE THE FUND'S INVESTMENT OBJECTIVES,
POLICIES AND RISKS?" IN THE PROSPECTUS)
CALCULATION OF YIELD
WHAT Are The Fund's Investment LIMITATIONS?
WHO MANAGES THE FUND?
(SEE "HOW IS THE FUND MANAGED?" IN THE PROSPECTUS)
THE MANAGER
MANAGEMENT AGREEMENT AND EXPENSES
(SEE "HOW IS THE FUND MANAGED?" IN THE PROSPECTUS)
TRANSFER AGENT
CUSTODIAN
INDEPENDENT AUDITORS
REDEMPTION OF SHARES
(SEE "HOW CAN SHARES BE REDEEMED?" IN THE PROSPECTUS)
What Is The Tax Status of The Fund?
Will The Fund Withhold Taxes On DISTRIBUTIONS
How Is Net Asset Value Per Share DETERMINED?
Does The Fund Bear Distribution EXPENSES?
GENERAL INFORMATION ABOUT THE STATE BOND CASH MANAGEMENT FUND
APPENDIX A
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS STATEMENT OF ADDITIONAL
INFORMATION OR THE PROSPECTUS DATED DECEMBER 1, 1995, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT
CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE DELIVERY OF THIS STATEMENT OF
ADDITIONAL INFORMATION AT ANY TIME SHALL NOT
<PAGE>
IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE FUND SINCE THE DATE
HEREOF.
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES AND POLICIES?
THE Fund's objectives are high current income, preservation of capital,
and liquidity.
The Fund invests in high-quality money market instruments, including
securities issued or guaranteed by the U. S. Government or its agencies and
instrumentalities, obligations of domestic and foreign commercial banks,
commercial paper, and high-grade short-term debt securities (such as bonds and
notes). The Fund may enter into repurchase agreements with respect to U.S.
Government or Government agency securities. A more complete description of the
investments and ratings of investments the Fund may make is contained in the
Appendix.
IN ADDITION TO ITS OTHER POLICIES AND RESTRICTIONS, THE Fund is subject
to the investment restrictions of Rule 2a-7 under the Investment Company Act of
1940. Rule 2a-7 requires that the Fund maintain an average weighted maturity
of not more than 90 days and invest exclusively in securities that mature within
397 days. Rule 2a-7 also requires that all investments by the Fund be limited
to United States dollar-denominated investments that: (1) present "minimal
credit risks," and (2) are at the time of acquisition "Eligible Securities."
Eligible Securities include, among others, securities that are rated by two
Nationally Recognized Rating Organizations ("NRSRO's") in one of the two highest
categories for short-term debt obligations, such as A-1 or A-2 by Standard and
Poor's RATINGS GROUP ("S&P") or P-1 or P-2, or MIG-1 or MIG-2 by Moody's
Investors Service, Inc. ("Moody's"). It is the responsibility of the Manager to
determine that the Fund's investments present only "minimal credit risks" and
are Eligible Securities. The Board of Directors of the Fund has established
written guidelines and procedures for the Manager and oversees the Manager's
determination that the Funds' portfolio securities present only "minimal credit
risk" and are Eligible Securities.
Under Rule 2a-7, 95% of the assets of the Fund must be invested in Eligible
Securities that are deemed First Tier Securities, which include, among others,
securities rated by two NRSROs in the highest category (such as A-1 and P-1).
Rule 2a-7 also requires that with regard to funds such as the Fund: (1) a fund
may not (with certain exceptions) invest more than 5% of its total assets in
securities of a single issuer; AND (2) a fund's investment in Second Tier
Securities of a single issuer may not exceed the greater of 1% of the fund's
total assets or $1,000,000.
Lending of Portfolio Securities
- -------------------------------
As stated in the Prospectus, the Fund may lend portfolio securities to
certain institutional borrowers of securities and may invest the cash collateral
and obtain additional income or receive an agreed upon amount of interest from
the borrower. Loans are subject to termination at the option of the Fund or the
borrower. The Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the interest earned
on the cash or equivalent collateral to the borrower or placing broker. The
Fund has not loaned any portfolio securities to date.
CALCULATION OF YIELD
The current and effective yields of the Fund may be quoted in reports,
sales literature, and advertisements published by the Fund. Current yield is
computed by determining the net change exclusive of capital changes in the value
of a hypothetical pre-existing account having a balance of 1 share at the
beginning of a seven-day calendar period, dividing the net change in account
value by the value of the account at the beginning of the period, and
multiplying the return over the seven-day period by 365/7.
2
<PAGE>
For purposes of the calculation, net change in account value reflects the value
of additional shares purchased with dividends from the original share and
dividends declared on both the original share and any such additional shares,
but does not reflect realized gains or losses or unrealized appreciation or
depreciation. Effective yield is computed by annualizing the seven-day return
with all dividends reinvested in additional Fund shares.
The following is an example of the yield calculation for the seven-day
period ended July 31, 1995:
Total dividends per share from net
investment income (seven days ended
July 31, 1995) $.0009234
Annualized (365 day basis) .048149
Average net asset value per share 1.000
Annualized historical net yield per
share for seven calendar days ended
July 31, 1995 4.93%*
Effective yield (seven days ended
July 31, 1995) 4.82%**
Weighted average life to maturity of
investments was 14.5 days.
*This represents the average of annualized net investment income per share
for the seven days ended July 31, 1995.
**Average of annualized net investment income for the same period with
dividends reinvested.
WHAT ARE THE FUND'S INVESTMENT LIMITATIONS?
Under the Fund's fundamental policies, which cannot be changed except by a
vote of a majority of its outstanding voting securities, the Fund may not:
1. Borrow money, except for temporary purposes in an aggregate amount not
to exceed 10% of the value of the total assets of the Fund; provided,
that borrowings in excess of 5% of such value will be only from banks,
and the Fund will not purchase additional portfolio securities while
its borrowings exceed 5%;
2. Underwrite the securities of other issuers;
3. Invest more than 25% of the market value of its total assets in
securities of issuers in any one industry, except that the Fund
reserves the right to concentrate investments in money market
instruments issued by the U. S. Government or its agencies or
instrumentalities or by domestic banks;
4. Buy or hold any real estate, except that the Fund may buy and hold
marketable securities of companies which invest in real estate or
interests therein;
3
<PAGE>
5. Buy or hold any commodity or commodity futures contracts, or any oil,
gas or mineral exploration or development program;
6. Make loans, except loans of portfolio securities and except to the
extent that the purchase of notes, bonds or debt obligations, or the
entry into repurchase agreements or deposits may be considered loans;
7. Mortgage or pledge any of its assets, except to the extent, up to a
maximum of 10% of the value of its total assets, necessary to secure
borrowings permitted by paragraph 1;
8. Buy securities on "margin" or make "short" sales of securities;
9. Write or purchase put or call options;
10. Invest more than 5% of its total assets (taken at market value) in the
securities of any one issuer, other than the U. S. Government, its
agencies or instrumentalities;
11. Buy more than 10% of the securities of any one issuer, other than the
U. S. Government, its agencies or instrumentalities;
12. Invest more than 5% of its total assets (taken at market value) in the
securities of issuers which (including predecessors) have been in
operation fewer than three continuous years, but this restriction will
not apply to such securities which are guaranteed by a company which
(including predecessors) has been in operation at least three
continuous years;
13. Buy securities which have legal or contractual restrictions on resale,
except in connection with repurchase agreements;
14. Buy or hold the securities of any issuer if, to its knowledge,
directors or officers of the Fund or of its investment adviser
individually owning beneficially more than 1/2 of 1% of the securities
of that issuer, own in the aggregate more than 5% of such securities;
or
15. Buy securities of any issuer for the purpose of exercising control or
management; or buy securities issued by any other investment company,
except in connection with a merger, consolidation, acquisition or
reorganization.
Under the Investment Company Act of 1940, a "vote of a majority of the
outstanding voting securities" of the Fund means the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of the Fund or (2) 67% or
more of the shares of the Fund present at a shareholders' meeting if more than
50% of the outstanding shares of the Fund are represented at the meeting in
person or by proxy.
During the past twelve months the Fund has not borrowed any money and has
no current intention of doing so in the foreseeable future.
WHO MANAGES THE FUND?
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below.
Each Director who is an "interested person" of the Fund, as defined in the
Investment Company Act of 1940, is indicated by an asterisk. Unless otherwise
indicated, their addresses are 239 S. FIFTH STREET, LOUISVILLE, KENTUCKY.
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NAME, AGE AND ADDRESS POSITION WITH THE OTHER BUSINESS ACTIVITIES IN PAST 5
FUND YEARS
WILLIAM B. FAULKNER ( ) DIRECTOR PRESIDENT, WILLIAM FAULKNER &
ASSOCIATES, BUSINESS AND INSTITUTIONAL
ADVISER SINCE 1986; CONSULTANT TO
AMERICAN HOIST & DERRICK
COMPANY, CONSTRUCTION EQUIPMENT
MANUFACTURER, FROM 1986 TO 1989;
PRIOR THERETO, VICE PRESIDENT AND
ASSISTANT TO THE PRESIDENT, AMERICAN
HOIST & DERRICK COMPANY. DIRECTOR
OF THE OTHER MUTUAL FUNDS IN THE
STATE BOND GROUP
PATRICK M. FINLEY (57) DIRECTOR PRESIDENT, UNIVERSAL COOPERATIVES,
INC., A FARMERS' COOPERATIVE.
DIRECTOR OF THE OTHER MUTUAL FUNDS
IN THE STATE BOND GROUP
CHRIS L. MAHAI (40) DIRECTOR SENIOR VICE PRESIDENT, STRATEGIC
INTEGRATION UNIT, STAR
TRIBUNE/COWLES MEDIA COMPANY,
SINCE AUGUST 1993; VICE PRESIDENT,
MARKETING DIRECTOR, STAR TRIBUNE,
SINCE SEPTEMBER 1992; FROM 1990 TO
1992, SELF-EMPLOYED CONSULTANT,
MARKETING SERVICES; PRIOR THERETO,
SENIOR VICE PRESIDENT OF CORPORATE
RELATIONS AND MARKETING, FIRST BANK
SYSTEM, INC. DIRECTOR OF THE OTHER
MUTUAL FUNDS IN THE STATE BOND
GROUP
</TABLE>
5
<PAGE>
<TABLE>
NAME, AGE AND ADDRESS POSITION WITH THE OTHER BUSINESS ACTIVITIES IN PAST 5
FUND YEARS
<S> <C> <C>
JOHN R. LINDHOLM (46)* PRESIDENT OF INTEGRITY LIFE INSURANCE
COMPANY ("INTEGRITY") AND VICE
PRESIDENT-CHIEF MARKETING OFFICER
OF NATIONAL INTEGRITY LIFE INSURANCE
COMPANY ("NATIONAL INTEGRITY")
SINCE NOVEMBER 26, 1993; EXECUTIVE
VICE PRESIDENT-CHIEF MARKETING
OFFICER OF ARM FINANCIAL GROUP,
INC. SINCE JULY 27, 1993; SINCE
MARCH 1992 CHIEF MARKETING
OFFICER OF ANALYTICAL RISK
MANAGEMENT, L.P.; FROM JUNE 1990
TO FEBRUARY 1992, CHIEF MARKETING
OFFICER AND A MANAGING DIRECTOR OF
THE ICH CAPITAL MANAGEMENT
GROUP, ICH CORPORATION, LOUISVILLE,
KENTUCKY; PRIOR THERETO, CHIEF
MARKETING OFFICER AND MANAGING
DIRECTOR FOR CAPITAL HOLDING
CORPORATION'S ACCUMULATION AND
INVESTMENT GROUP. DIRECTOR OF THE
OTHER MUTUAL FUNDS IN THE STATE
BOND GROUP AND OF THE LEGENDS
FUND, INC.
KEITH O. MARTENS (56 ) VICE PRESIDENT SENIOR PORTFOLIO MANAGER, ARM
CAPITAL ADVISORS, INC. SINCE JUNE 14,
1995; PRIOR TO JUNE 14, 1995,
EXECUTIVE VICE PRESIDENT -
INVESTMENTS, SBM COMPANY; VICE
PRESIDENT STATE BOND AND MORTGAGE
LIFE INSURANCE COMPANY AND SBM
CERTIFICATE COMPANY. VICE PRESIDENT
OF THE OTHER MUTUAL FUNDS IN THE STATE
BOND GROUP.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS POSITION WITH THE OTHER BUSINESS ACTIVITIES IN PAST 5
FUND YEARS
<S> <C> <C>
DON W. CUMMINGS (32 ) CONTROLLER CONTROLLER OF ARM FINANCIAL GROUP,
INC. SINCE JULY 15, 1993, AND INTEGRITY
AND NATIONAL INTEGRITY SINCE
NOVEMBER 26, 1993. PRIOR TO JULY 15,
1993 HE SERVED AS CONTROLLER OF ARM,
LTD., A POSITION HE HELD FROM JULY
1992. FROM 1985 TO JUNE 1992, MR.
CUMMINGS SERVED IN VARIOUS POSITIONS
WITHIN ERNST & YOUNG'S INSURANCE
INDUSTRY ACCOUNTING AND AUDITING
PRACTICE, THE LAST OF WHICH WAS
MANAGER. CONTROLLER OF THE OTHER
MUTUAL FUNDS IN THE STATE BOND
GROUP AND OF THE LEGENDS FUND, INC.
KEVIN L. HOWARD (31) VICE PRESIDENT AND ASSISTANT GENERAL COUNSEL OF ARM
SECRETARY FINANCIAL GROUP, INC. SINCE JANUARY
31, 1994; ASSISTANT GENERAL COUNSEL
OF CAPITAL HOLDING CORPORATION FROM
APRIL 1992 TO JANUARY 1994;
ATTORNEY, GREENEBAUM DOLL &
MCDONALD, 1989 TO APRIL 1992. VICE
PRESIDENT AND SECRETARY OF THE OTHER
MUTUAL FUNDS IN THE STATE BOND
GROUP AND SECRETARY OF THE LEGENDS
FUND, INC.
PETER S. RESNIK (34) TREASURER TREASURER OF ARM FINANCIAL GROUP,
INC., INTEGRITY AND NATIONAL INTEGRITY
SINCE DECEMBER 1993; EMPLOYED IN
VARIOUS FINANCIAL AND OPERATIONAL
CAPACITIES BY ANALYTICAL RISK
MANAGEMENT LTD. FROM DECEMBER
1992 TO DECEMBER 1993; ASSISTANT
VICE PRESIDENT OF THE COMMONWEALTH
LIFE INSURANCE COMPANY SUBSIDIARY OF
CAPITAL HOLDING CORPORATION FROM
1986 TO DECEMBER 1992. TREASURER OF
THE OTHER MUTUAL FUNDS IN THE STATE
BOND GROUP AND OF THE LEGENDS
FUND, INC.
PAM FREEMAN (28 ) ASSISTANT SECRETARY FINANCIAL ANALYST WITH ARM
FINANCIAL GROUP, INC. SINCE OCTOBER
1993; SENIOR ACCOUNTANT AND VARIOUS
OTHER CAPACITIES WITH ERNST & YOUNG
LLP FROM 1989 TO SEPTEMBER 1993.
</TABLE>
7
<PAGE>
* MR. LINDHOLM IS AN INTERESTED PERSON, AS DEFINED IN THE 1940 ACT, BY VIRTUE
OF HIS POSITIONS WITH ARM FINANCIAL GROUP, INC.
DIRECTORS OF THE FUND (INCLUDING FORMER DIRECTORS) RECEIVED AGGREGATE
REMUNERATION OF $3,897 DURING THE FUND'S FISCAL YEAR ENDED JULY 31, 1995.
DIRECTORS AND OFFICERS OF THE FUND AS A GROUP OWNED DIRECTLY OR INDIRECTLY
39,866.31 SHARES, OR 1.47% OF THE FUND'S CAPITAL STOCK AT JULY 31, 1995.
THE FOLLOWING TABLE SETS FORTH, FOR THE FISCAL YEAR ENDED JULY 31, 1995,
COMPENSATION PAID BY THE FUND TO THE NON-INTERESTED DIRECTORS AND, FOR THE 1994
CALENDAR YEAR, THE AGGREGATE COMPENSATION PAID TO THE NON-INTERESTED DIRECTORS
BY ALL OF THE FUNDS IN THE FUND COMPLEX INCLUDING THE SIX FUNDS IN THE STATE
BOND GROUP OF MUTUAL FUNDS.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM FUND COMPLEX
AGGREGATE INCLUDING THE STATE
COMPENSATION BOND GROUP OF
NAME OF DIRECTOR FROM FUND (a) MUTUAL FUNDS (b)
- ---------------- ------------- -------------------
<S> <C> <C>
WILLIAM B. FAULKNER $588 $ 3,528
PATRICK M. FINLEY $588 $ 3,528
CHRIS L. MAHAI $588 $ 3,528
ARTHUR J. GARTLAND, JR.* $ 75 $ 9,500
JOHN KATZ* $147 $10,000
THEODORE S. ROSKY* $147 $10,000
</TABLE>
- -------------------------
(a) THERE WERE NO PENSION OR RETIREMENT BENEFITS ACCRUED FOR ANY OF THE NAMED
PERSONS BY ANY OF THE FUNDS.
(b) THIS INCLUDES THE AGGREGATE COMPENSATION PAID TO THE NAMED PERSONS BY ALL
OF THE MUTUAL FUNDS IN THE STATE BOND GROUP AND ALSO THE AMOUNTS PAID TO
SUCH PERSONS IN CALENDAR YEAR 1994 BY THE STATE BOND PROGRESS FUND
("PROGRESS FUND"). THE PROGRESS FUND FORMERLY WAS A MEMBER OF THE STATE
BOND GROUP OF MUTUAL FUNDS. ALL OF THE ASSETS OF PROGRESS FUND WERE
ACQUIRED BY STATE BOND COMMON STOCK FUND ON JUNE 24, 1994.
* MESSRS. GARTLAND, KATZ AND ROSKY HAVE BEEN DIRECTORS OF THE FUND, AND THE
OTHER MUTUAL FUNDS IN THE STATE BOND GROUP, SINCE JUNE 14, 1995. IN
ADDITION, THEY ARE DIRECTORS OF THE LEGENDS FUND, INC. A MUTUAL FUND WHICH
IS ADVISED BY INTEGRITY LIFE INSURANCE COMPANY, AN AFFILIATE OF ARM, AND
WHICH MAY BE DEEMED TO BE A PART OF THE SAME FUND COMPLEX AS THE STATE BOND
GROUP OF MUTUAL FUNDS. THE AMOUNTS PAID TO SUCH DIRECTORS IN 1994 WERE
PAID EXCLUSIVELY BY THE LEGENDS FUND, INC. FROM JUNE 14, 1995 THROUGH
JULY 31, 1995, THESE DIRECTORS RECEIVED THE FOLLOWING RESPECTIVE AGGREGATE
COMPENSATION FROM ALL OF THE MUTUAL FUNDS IN THE STATE BOND GROUP: $450,
$882 AND $882.
8
<PAGE>
THE MANAGER
ARM CAPITAL ADVISORS, INC. (THE "MANAGER") MANAGES THE INVESTMENTS OF THE
FUND AND ADMINISTERS ITS BUSINESS AND OTHER AFFAIRS. THE ADDRESS OF THE MANAGER
IS 200 PARK AVENUE, 20TH FLOOR, NEW YORK, NEW YORK 10166. THE PREDECESSOR TO THE
MANAGER WAS SBM COMPANY, WHICH SERVED AS MANAGER OF THE FUND FROM THE FUND'S
INCEPTION UNTIL JUNE 13, 1995. THE MANAGER ASSUMED MANAGEMENT OF THE FUND ON
JUNE 14, 1995, EFFECTIVE FOR ACCOUNTING PURPOSES AS OF JUNE 1, 1995, FOLLOWING
THE ACQUISITION OF SUBSTANTIALLY ALL OF THE BUSINESS OPERATIONS OF SBM COMPANY
BY ARM.
THE MANAGER is a wholly-owned subsidiary of ARM FINANCIAL GROUP, INC.
("ARM"), a Delaware corporation. ARM IS A FINANCIAL SERVICES COMPANY PROVIDING
RETAIL AND INSTITUTIONAL PRODUCTS AND SERVICES TO THE LONG-TERM SAVINGS AND
RETIREMENT MARKET. THE MORGAN STANLEY LEVERAGED EQUITY FUND II, L.P., MORGAN
STANLEY CAPITAL PARTNERS III, L.P., MORGAN STANLEY CAPITAL INVESTORS, L.P. AND
MSCP III 892 INVESTORS, L.P., INVESTMENT FUNDS SPONSORED BY MORGAN STANLEY
GROUP, INC. ("MORGAN STANLEY"), OWN APPROXIMATELY 91% OF THE OUTSTANDING SHARES
OF VOTING STOCK OF ARM. THE MANAGER CURRENTLY PROVIDES INVESTMENT MANAGEMENT
SERVICES TO INSTITUTIONAL AND INDIVIDUAL CLIENTS, INCLUDING ARM AND ITS
SUBSIDIARIES, WITH COMBINED ASSETS IN EXCESS OF $4.0 BILLION.
THE MANAGER IS ALSO MANAGER OF THE OTHER MUTUAL FUNDS IN THE STATE BOND
GROUP OF MUTUAL FUNDS: STATE BOND COMMON STOCK FUND, STATE BOND DIVERSIFIED
FUND, STATE BOND MINNESOTA TAX-FREE FUND, STATE BOND TAX EXEMPT FUND, AND STATE
BOND U.S. GOVERNMENT AND AGENCY SECURITIES FUND.
MANAGEMENT AGREEMENT AND EXPENSES
UNDER the Investment Advisory and Management Agreement (the "Agreement"),
dated JUNE 14, 1995 subject to the control of the Board of Directors, the
Manager manages the investment of the assets of the Fund, including making
purchases and sales of portfolio securities consistent with the Fund's
investment objectives and policies and administers its business and other
affairs. The Manager provides the Fund with such office space, administrative
and other services, and executive and other personnel as are necessary for Fund
operations. The Manager pays all the compensation of the directors of the Fund
who are employees of the Manager and of the officers and employees of the
Fund.
The Fund pays the Manager a management fee for its services, calculated
daily and payable monthly, based upon the Fund's average daily net assets as set
forth in the following table:
<TABLE>
<CAPTION>
Average Daily Net Assets ANNUAL INVESTMENT ADVISORY AND Management Fee
- ------------------------- ===============================--------------
<S> <C>
For the first $500 million .60 of 1%
For the next $250 million .55 of 1%
For the next $250 million .50 of 1%
For assets over $1 billion .45 of 1%
</TABLE>
FOR THE PERIOD FROM JUNE 1, 1995, THE EFFECTIVE DATE FOR ACCOUNTING
PURPOSES ON WHICH THE MANAGER ASSUMED ITS DUTIES WITH RESPECT TO THE FUND
THROUGH JULY 31, 1995, THE MANAGER RECEIVED
9
<PAGE>
A MANAGEMENT FEE OF $1,771. SBM COMPANY, THE PREVIOUS INVESTMENT MANAGER OF THE
FUND, RECEIVED AS A MANAGEMENT FEE $7,998, $10,334 AND $16,425, RESPECTIVELY,
FOR THE FISCAL YEARS ENDED JULY 31, 1995, 1994 AND 1993. THE MANAGER HAS
VOLUNTARY UNDERTAKEN, AND SBM COMPANY PREVIOUSLY VOLUNTARILY UNDERTOOK, TO
REIMBURSE THE FUND FOR ANY EXPENSES INCURRED BY THE FUND TO THE EXTENT THE
FUND'S TOTAL EXPENSES EXCEEDED .80% OF AVERAGE DAILY NET ASSETS, DESPITE THE
FACT THAT HIGHER EXPENSES MAY BE PERMITTED BY STATE LAW. FOR THE PERIOD JUNE 1,
1995 TO JULY 31, 1995, THE MANAGER REIMBURSED THE FUND IN THE AMOUNT OF $14,411.
SBM COMPANY REIMBURSED THE FUND DURING THE FISCAL PERIODS ENDED JULY 31, 1995,
1994, AND 1993 IN THE FOLLOWING AMOUNTS: $59,605, $64,232, AND $71,688.
The Fund pays all its expenses other than those assumed by the Manager,
including outside legal, auditing, and accounting expenses; bookkeeping, record
keeping, and Fund portfolio and Fund share pricing expenses; interest, taxes,
and governmental fees; expenses incurred in connection with membership in
investment company organizations; brokerage commissions or charges, if any;
fees of custodians, transfer agents, registrars, accounting services agents, or
other agents; expense of preparing share certificates; expenses relating to the
redemption or repurchase of the Fund's shares; investor services expenses;
expenses of registering and qualifying Fund shares for sale under applicable
Federal and State law; expenses of preparing, setting in print, printing, and
distributing prospectuses, reports, notices, and dividends to Fund shareholders;
cost of stationery; costs of stockholder and other meetings of the Fund;
traveling expenses of officers, directors, and employees of the Fund, if any;
fees of the Fund's independent directors and salaries of any officers or
employees who are not affiliated with the Manager; the Fund's pro rata portion
of premiums on any fidelity bond and insurance covering the Fund; and general
corporate fees and expenses.
Under the regulations of various states in which the Fund's shares are
qualified for sale, the amount of ANNUAL expenses which the Fund may PAY ARE
limited to certain percentages of its AVERAGE net assets. The most stringent of
such requirements limits such expenses, with certain limited categories of
expenses excepted, to 2 1/2% of the first $30 million of average net assets, 2%
of the next $70 million, and 1 1/2% of the remaining average net assets.
THE AGREEMENT WAS APPROVED BY THE DIRECTORS OF THE FUND, INCLUDING A
MAJORITY OF THE DISINTERESTED DIRECTORS, AT A MEETING HELD MARCH 24, 1995, AND
BY THE SHAREHOLDERS OF THE FUND AT A MEETING HELD MAY 15, 1995. THE AGREEMENT
MAY BE TERMINATED AT ANY TIME ON 60 DAYS' WRITTEN NOTICE BY THE BOARD OF
DIRECTORS, OR BY VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OR BY THE MANAGER.
THE AGREEMENT WILL TERMINATE AUTOMATICALLY UPON ASSIGNMENT. THE AGREEMENT WILL
CONTINUE IN EFFECT FROM YEAR TO YEAR SO LONG AS CONTINUANCE IS APPROVED ANNUALLY
BY EITHER THE BOARD OF DIRECTORS OF THE FUND OR BY A VOTE OF A MAJORITY OF THE
OUTSTANDING VOTING SHARES, PROVIDED THAT IN EITHER EVENT SUCH CONTINUANCE IS
ALSO APPROVED BY THE VOTE OF A MAJORITY OF THE DIRECTORS WHO ARE NOT PARTIES TO
SUCH AGREEMENT, OR INTERESTED PERSONS OF SUCH PARTIES, CAST IN PERSON AT A
MEETING CALLED FOR THE PURPOSE OF VOTING ON SUCH APPROVAL.
TRANSFER AGENT
SBM FINANCIAL SERVICES, INC. acts as the transfer and dividend disbursing
agent for the Fund pursuant to an agreement with the Fund and is compensated on
a transactional basis under a schedule approved by the Fund's Board of
Directors. THE TRANSFER AGENT maintains SHAREHOLDERS lists, processes requested
account registration changes and stock certificate issuance and redemption
requests, administers withdrawal plans, administers mailing and tabulation of
Fund proxy solicitations, and administers payment of distributions declared by
the Fund. SBM FINANCIAL SERVICES, INC. RECEIVED $4,067 IN TRANSFER AGENCY FEES
FROM THE FUND FOR THE PERIOD JUNE 1, 1995 TO JULY 31, 1995. SBM COMPANY, THE
FUND'S PREVIOUS TRANSFER AND DIVIDEND DISBURSING AGENT, received the
following
10
<PAGE>
amounts from the Fund FOR THE FISCAL YEARS ENDED JULY 31, 1995, 1994, AND 1993,
RESPECTIVELY; $16,933; $21,600; AND $27,400.
CUSTODIAN
First Bank National Association, Minneapolis, Minnesota 55440 serves as THE
custodian for the Fund.
INDEPENDENT AUDITORS
ERNST & YOUNG LLP, ONE KANSAS CITY PLACE, 1200 MAIN STREET, KANSAS CITY,
MISSOURI 64105-2143, independent certified public accountants, have been
selected as auditors of the Fund and issue a report on the Fund's financial
statements.
REDEMPTION OF SHARES
Whether shares are redeemed pursuant to the Regular or the Quick Redemption
Service (if less than $500), a check for the proceeds ordinarily will be sent
within seven calendar days following redemption. The Fund intends to pay all
redemptions in cash. However, payment may be made in securities, subject to the
review of some state securities commissions, if the Board of Directors believes
that economic conditions exist which would make the practice of redemption for
cash detrimental to the best interests of the Fund. If requests for redemption
are paid in portfolio securities, such securities would be valued in accordance
with procedures described under "How Is Net Asset Value Per Share Determined?".
If payment were to be made in securities, shareholders receiving securities
could incur certain transaction costs.
The Fund reserves the right to suspend redemptions or postpone the date of
payment (1) for any periods during which the New York Stock Exchange is closed
(other than for the customary weekend and holiday closings), (2) when trading in
the markets the Fund usually utilizes is restricted or an emergency exists, as
determined by the Securities and Exchange Commission, so that disposal of the
Fund's investments or the determination of the Fund's net asset value is not
reasonably practicable, or (3) for such other periods as the Securities and
Exchange Commission by order may permit for the protection of the Fund's
shareholders.
WHAT IS THE TAX STATUS OF THE FUND?
The Fund HAS FULFILLED DURING ITS MOST RECENT FISCAL YEAR, AND INTENDS TO
CONTINUE TO FULFILL, the requirements of subchapter M of the Internal Revenue
Code OF 1986, AS AMENDED (THE "CODE"), TO QUALIFY AS A REGULATED INVESTMENT
COMPANY, AND SO LONG AS IT REMAINS SO QUALIFIED, IT WILL NOT BE LIABLE FOR
FEDERAL INCOME TAX TO THE EXTENT THAT IT DISTRIBUTES ALL OF ITS NET TAXABLE AND
NON-TAXABLE INCOME TO SHAREHOLDERS.
WILL THE FUND WITHHOLD TAXES ON DISTRIBUTIONS?
Under FEDERAL law, the Fund is required, subject to certain exceptions, to
withhold and remit to the U. S. Treasury 31% of dividends paid and other
reportable payments on an account if the holder of the account provides the Fund
with either an incorrect tax identification number or no number at all, or fails
to certify to the Fund that he is not subject to such withholding.
HOW IS NET ASSET VALUE PER SHARE DETERMINED?
11
<PAGE>
The net asset value per share of the Fund is determined as of 3 p.m.
Central time, on days on which the Fund is open for business. It is computed
by dividing the value of the net assets of the Fund (i.e., the value of its
assets less liabilities) by the total number of outstanding shares of the Fund.
All expenses of the Fund, including the Manager's fee, are accrued daily and
taken into account for the purpose of determining its net asset value.
Pursuant to an exemptive rule of the Securities and Exchange Commission,
the Fund's portfolio securities are valued by the amortized cost method. This
method of valuation involves valuing a security at its cost at the time of
purchase and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the security. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the security. During periods of declining interest rates, the quoted yield
on shares of the Fund may tend to be higher than that of a fund with identical
investments which uses a method of valuation based on market prices and
estimates of market prices for all its portfolio securities. Thus, if the use
of amortized cost by the Fund resulted in lower aggregate portfolio value on a
particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield if he purchased shares on that day than he would be able
to receive from a fund using solely market values and existing investors in the
Fund would receive less investment income. The converse is true in a period of
rising interest rates.
The rule permitting the Fund to use the amortized cost method of valuation
requires that, under the direction of the Board of Directors, certain procedures
be adopted to monitor and stabilize the price per share of the Fund.
Calculations are made to compare the value of its investments valued at
amortized cost with market values. Market valuations are obtained by using
actual quotations provided by issuers or market makers, estimates of market
value, or values obtained from yield data relating to classes of money market
instruments or U. S. Government securities published by reputable sources at the
mean between the bid and asked prices for the instruments. In the event that a
deviation of 1/2 of 1% or more exists between the Fund's $1.00 per share net
asset value and the net asset value calculated by reference to market
quotations, or if there is any other deviation which the Board of Directors
believes would result in a material dilution of shareholders or purchasers, the
Board of Directors will promptly consider what action, if any, should be
initiated.
Under the exemptive rule of the Securities and Exchange Commission allowing
the Fund to use the amortized cost method of valuation of portfolio securities,
the Fund must maintain a dollar-weighted average portfolio maturity of 90 days
or less. In addition, all investments in securities must be in First Tier
Securities or Second Tier Securities (as defined in the exemptive rule) and,
with certain limited exceptions, the Fund cannot invest more than 5% of its
assets in the securities of a single issuer (other than government securities).
Investments in Second Tier securities in the aggregate must be limited to 5% of
the Fund's total assets, and investment in a single Second Tier Security cannot
exceed the greater of 1% of total assets or $1 million. See "What Are The
Fund's Investment Objectives and Policies?"
The Fund can only invest in instruments having remaining maturities of 397
days or less and can only invest in securities determined by the Board of
Directors to be of high quality with minimal credit risks.
DOES THE FUND BEAR DISTRIBUTION EXPENSES?
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940 PURSUANT TO WHICH A PORTION OF
THE ADVISORY FEE THE FUND PAYS THE MANAGER IS PAID BY THE MANAGER TO THE
DISTRIBUTOR, AS DESCRIBED BELOW. The Plan as amended was
12
<PAGE>
approved by the Board of Directors of the Company on September 23, 1994 and was
most recently approved by the Fund's shareholders on March 17, 1993.
Under the Investment Advisory and Management Agreement (the "Agreement"), a
portion of the advisory fee the Fund pays the Manager is paid by the Manager to
the Distributor to be used to pay for account servicing, to compensate those who
sell Fund shares, and to pay certain other expenses of selling Fund shares. As
noted above, for the first $500 million of Fund assets, the Manager will receive
a monthly fee equivalent on an annual basis to .6 of 1% of the average daily net
assets of the Fund. From this amount, of which .2 of 1% of the average daily net
assets of the Fund will be paid under the Plan to the Distributor to pay for
account servicing and to compensate those who sell Fund shares and to pay
certain other selling expenses. This .2 of 1% paid to the Distributor remains
constant, although the percentage fee paid to the Manager decreases when the
Fund attains average daily net assets in excess of $500 million. A portion of
the fee paid to the Distributor may be used for advertising and promotional
expenses including, by way of example but not by way of limitation, costs of
printing and mailing prospectuses, statements of additional information and
shareholder reports to prospective investors; preparation and distribution of
sales literature; advertising of any type; an allocation of overhead and other
expenses of the Distributor related to the distribution of Fund shares; and
payments to, and expenses of, officers, employees or representatives of the
Distributor, of other broker-dealers, banks or other financial institutions, and
of any other person who provides support services in connection with the
distribution of Fund shares, including travel, entertainment, and telephone
expenses.
The Prospectus outlines the general uses to which the Distributor is
authorized to apply the fees received by it. During the Fund's last fiscal year
the Distributor received $4,885 in such fees and incurred $11,291 in expenses.
The Distributor used these fees toward the following expenses: compensation of
sales personnel - $3,049; compensation of sales administration personnel -
$2,366; marketing materials - $5,146; miscellaneous marketing expenses - $185;
promotion and travel - $536; branch office - $9.
The Plan provides:
(i) That it shall continue in effect for a period of more than one year
from the date of its execution or adoption only so long as such
continuance is specifically approved at least annually by the Board
of Directors in the manner described above for its original approval;
(ii) That any person authorized to direct the disposition of monies paid
or payable by the Fund pursuant to the Plan or any related agreement
shall provide to the Fund's Board of Directors, and the Directors
shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made; and
(iii) That it may be terminated at any time by vote of a majority of the
members of the Board of Directors of the Fund who are not interested
persons of the Fund and have no direct or indirect financial interest
in the operation of the Plan or in any agreements related to the Plan
or by vote of a majority of the outstanding voting shares of the
Fund.
The Plan provides that it may not be amended to increase materially the
amount to be spent for distribution without shareholder approval and that all
material amendments of the Plan must be approved by the Fund's Board of
Directors and shareholders in the manner described above for its original
approval. The Fund may implement the Plan only if the selection and nomination
of the Fund's disinterested directors are committed to the discretion of the
Fund's existing disinterested directors. Under the terms of the referenced Rule
12b-1, the Fund must preserve copies of any plan, agreement or report
13
<PAGE>
made pursuant to the rule for a period of not less than six years from the date
of such plan, agreement, or report, the first two years in an easily accessible
place.
GENERAL INFORMATION ABOUT STATE BOND CASH MANAGEMENT FUND
STATE BOND MONEY FUNDS, INC. IS A DIVERSIFIED, OPEN-END INVESTMENT COMPANY,
OR MUTUAL FUND, INCORPORATED IN MARYLAND IN 1981. STATE BOND MONEY FUNDS, INC.
CURRENTLY CONSISTS OF ONE INVESTMENT PORTFOLIO, THE STATE BOND CASH MANAGEMENT
FUND (THE "FUND").
14
<PAGE>
State Bond Cash Management Fund
Schedule of Investments
July 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
--------------------
COMMERCIAL PAPER (40.6%)
American Express Credit Corporation, 5.70%, due
8/15/95 $122,000 $ 121,730
American General Finance Corporation, 5.73%, due
8/14/95 125,000 124,741
Associates Corporation of North America, 5.70%, due
8/9/95 98,000 97,876
Beneficial Corporation, 5.74%, due 8/8/95 125,000 124,861
Chevron Oil Finance Corporation, 5.70%, due 8/2/95 130,000 129,979
Deere and Company, 5.71%, due 8/1/95 128,000 128,000
Ford Motor Credit Company, 5.73%, due 8/11/95 120,000 119,809
General Electric Capital Corporation, 5.72%, due
8/4/95 132,000 131,937
Household Finance Corporation, 5.72%, due 8/7/95 135,000 134,871
----------
TOTAL COMMERCIAL PAPER
(Cost $1,113,804) 1,113,804
U.S. TREASURY OBLIGATIONS (59.4%)
U.S. Treasury Bill, 5.30%, due 8/3/95 190,000 189,944
U.S. Treasury Bill, 5.30%, due 8/3/95 255,000 254,925
U.S. Treasury Bill, 5.31%, due 8/10/95 150,000 149,801
U.S. Treasury Bill, 5.35%, due 8/17/95 325,000 324,227
U.S. Treasury Bill, 5.29%, due 8/24/95 180,000 179,392
U.S. Treasury Bill, 5.32%, due 8/31/95 255,000 253,870
U.S. Treasury Bill, 5.35%, due 9/7/95 280,000 278,460
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,630,619) 1,630,619
----------
TOTAL INVESTMENTS (100.0%) (Cost $2,744,423) $2,744,423
==========
</TABLE>
See accompanying notes.
2
<PAGE>
State Bond Cash Management Fund
Statement of Assets and Liabilities
July 31, 1995
<TABLE>
<S> <C>
ASSETS
Investment in securities, at amortized cost (Note 1)-See
accompanying schedule $2,744,423
Cash 382
Receivable for reimbursable expenses (Note 2) 6,871
Prepaid expenses 160
----------
TOTAL ASSETS 2,751,836
LIABILITIES
Dividends payable 10,446
Accrued expenses 23,766
----------
TOTAL LIABILITIES 34,212
----------
NET ASSETS, for 2,717,624 shares outstanding $2,717,624
==========
NET ASSET VALUE, offering and redemption price per share $ 1.00
==========
</TABLE>
See accompanying notes.
3
<PAGE>
State Bond Cash Management Fund
Statement of Operations
Year Ended July 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $129,226
EXPENSES (Note 2)
Investment advisory and management fees, net of 12b-1 plan fees 9,769
12b-1 plan fees 4,885
Professional fees 12,500
Shareholders' reports 10,100
Transfer agent fees 21,000
Custodian fees 13,100
Registration fees 13,785
Directors' fees and expenses 5,000
Other expenses 3,415
--------
Total expenses before reimbursement 93,554
Less: expense reimbursement (74,016)
--------
Net expenses 19,538
--------
Net investment income 109,688
--------
Net increase in net assets resulting from operations $109,688
========
</TABLE>
See accompanying notes.
4
<PAGE>
State Bond Cash Management Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
<S> <C> <C>
------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 109,688 $ 63,949
Distributions to shareholders from:
Net investment income (109,688) (63,949)
Capital share transactions at net asset value of
$1.00 per share:
Proceeds from sales of shares 5,107,717 5,642,187
Proceeds from reinvested dividends 98,558 45,253
Cost of shares redeemed (4,508,194) (7,325,191)
------------------------
Net increase (decrease) in net assets resulting
from share transactions 698,081 (1,637,751)
------------------------
Total increase (decrease) in net assets 698,081 (1,637,751)
NET ASSETS
Beginning of year 2,019,543 3,657,294
------------------------
End of year $ 2,717,624 $ 2,019,543
========================
</TABLE>
See accompanying notes.
5
<PAGE>
State Bond Cash Management Fund
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------
1995 1994 1993 1992 1991
---------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of
year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income .04 .03 .02 .04 .06
Less distributions:
From net investment income (.04) (.03) (.02) (.04) (.06)
---------------------------------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=======================================
TOTAL RETURN 4.51% 2.54% 2.40% 3.74% 6.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in
thousands) $2,718 $2,020 $3,657 $4,770 $9,378
Ratio of expenses to average net
assets .80% .80% .80% .90% 1.00%
Ratio of net investment income
to average net assets 4.49% 2.55% 2.38% 3.71% 6.19%
Ratio of expenses to average net
assets before voluntary expense
reimbursements 3.83% 3.38% 2.54% 1.99% 1.54%
Ratio of net investment income
to average net assets before
voluntary expense
reimbursements 1.46% (.01%) .64% 2.91% 5.64%
</TABLE>
6
<PAGE>
State Bond Cash Management Fund
Notes to Financial Statements
July 31, 1995
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The State Bond Cash Management Fund (the "Fund") is the only investment
portfolio of the State Bond Money Funds, Inc., which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
diversified management investment company. The primary investment objective of
the Fund is to maximize current income, preserve capital, and maintain
liquidity. The Fund invests exclusively in money market instruments maturing
in twelve months or less.
On June 14, 1995, ARM Financial Group, Inc. ("ARM") completed the acquisition
of substantially all of the assets and business operations of SBM Company
("SBM"). As part of the acquisition, ARM Capital Advisors, Inc. ("ARM Capital
Advisors"), a subsidiary of ARM, assumed the responsibilities of SBM as
manager of the Fund. The Investment Advisory and Management Agreement between
the Fund and ARM Capital Advisors contains the same material terms and
conditions (including the fees payable to ARM Capital Advisors) as were
contained in the Fund's prior Investment Advisory and Management Agreement
with SBM.
As part of the acquisition, ARM acquired all of the issued and outstanding
common stock of SBM Financial Services, Inc. ("SBM Financial Services"), the
Fund's distributor. Effective June 14, 1995, SBM Financial Services also
became the transfer agent for the Fund. Prior to the acquisition SBM
functioned as the transfer agent for the Fund.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for investment companies.
INVESTMENTS IN SECURITIES
The Fund uses the amortized cost method for valuing portfolio securities in
accordance with Rule 2a-7 of the 1940 Act. Security transactions are accounted
for as of the trade date. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as earned.
7
<PAGE>
State Bond Cash Management Fund
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Fund complied with the requirements of the Internal Revenue Code applicable
to regulated investment companies and distributed its taxable net investment
income. Therefore, no provision for federal or state income tax is required.
The aggregate cost of investments in securities is the same for book and tax
purposes.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and distributed
monthly. Dividends are recorded on the ex-dividend date.
2. INVESTMENT ADVISORY AGREEMENT AND PAYMENTS TO RELATED PARTIES
ARM Capital Advisors is the Fund's investment adviser. The investment advisory
fee is computed at the annual rate of .60% of average daily net assets of the
Fund. Included in the investment advisory fee is .20% of the average daily net
assets which ARM Capital Advisors pays to SBM Financial Services under a Rule
12b-1 plan of share distribution. ARM Capital Advisors has voluntarily
undertaken to reimburse the Fund for any expenses in excess of .80% of the
average daily net assets for fiscal years ended 1995, 1994, and 1993 and .90%
and 1.00% for fiscal years ended 1992 and 1991, respectively, despite the fact
that higher expenses may be permitted by state law.
Certain officers and directors of the Fund are also officers of ARM, ARM
Capital Advisors, and SBM Financial Services.
3. CAPITAL SHARES
At July 31, 1995, the Fund had authority to issue twenty billion shares of
common stock, each with a par value of $.00001.
8
<PAGE>
Report of Independent Auditors
Board of Directors and Shareholders
State Bond Cash Management Fund
We have audited the accompanying statement of assets and liabilities including
the schedule of investments of the State Bond Cash Management Fund (the
"Fund") as of July 31, 1995 and the related statements of operations and
changes in net assets and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The
statement of changes in net assets for the year ended July 31, 1994 and
financial highlights for the four years ended July 31, 1994 of the State Bond
Cash Management Fund were audited by other auditors whose report dated August
26, 1994 expressed an unqualified opinion.
We conducted our audit 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 at July 31, 1995, by correspondence with the custodian. As to
uncompleted securities transactions, we performed other auditing procedures.
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 audit provides 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 the
State Bond Cash Management Fund at July 31, 1995, and the results of its
operations, changes in its net assets and financial highlights for the year
then ended in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Kansas City, Missouri
September 14, 1995
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors of State Bond Money Funds, Inc.
and Shareholders of State Bond Cash Management Fund:
We have audited the accompanying balance sheet and statement of net assets of
State Bond Cash Management Fund (the Fund) as of July 31, 1994 and the related
statement of operations for the year then ended, the statements 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 the Fund's
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 the securities owned as of
July 31, 1994 by correspondence with the custodian and brokers. 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 State
Bond Cash Management Fund as of July 31, 1994, 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.
/s/ Deloitte & Touche LLP
- -------------------------
Minneapolis, Minnesota
August 26, 1994
<PAGE>
APPENDIX A
Description of Investments:
- --------------------------
U.S. GOVERNMENT, AGENCY AND INSTRUMENTALITY OBLIGATIONS - are securities issued
or guaranteed as to principal and interest by the United States government or by
agencies or instrumentalities thereof and include a variety of obligations,
which differ in their interest rates, maturities, and dates of issue. Some of
these obligations are issued directly by the United States Treasury such as U.S.
Treasury bills, notes, and bonds; others are guaranteed by the U.S. Treasury,
such as securities issued by the Small Business Administration, the General
Services Administration, and Farmers Home Administration; others are supported
by the right of the issuer to borrow from the Treasury, such as securities
issued by Federal Home Loan Banks; while others are supported only by the credit
of the agency or instrumentality and not by the Treasury, such as securities
issued by the Federal National Mortgage Association. There can be no assurance
that the U.S. Government will provide financial support to such an agency or
instrumentality if it is not obligated to do so by law.
REPURCHASE AGREEMENTS - involve the purchase of obligations which the Fund is
qualified to purchase and the simultaneous agreement to resell the same
obligations on demand or at a future specified date and at an agreed upon price.
Such transactions afford an opportunity for the Fund to earn a return which is
only temporarily available.
NEGOTIABLE CERTIFICATES OF DEPOSIT - are certificates issued against funds
deposited in a bank. They are for a definite period of time, earn a specified
rate of return, and are negotiable.
BANKERS' ACCEPTANCES - are short-term credit instruments primarily used to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity.
FIXED TIME DEPOSITS - represent funds deposited in a bank. They are for a
definite period of time and earn a specified rate of return. Unlike negotiable
certificates of deposit, they do not have a market, and they may be subject to
penalties for early withdrawal of funds. Fixed time deposits are made in
foreign branches of domestic banks and in foreign banks.
COMMERCIAL PAPER - refers to promissory notes issued by corporations to finance
short-term credit needs.
CORPORATE DEBT SECURITIES - include bonds and notes issued by corporations to
finance longer-term credit needs.
Description of A-1, A-2, and P-1, P-2 Commercial Paper Ratings:
- --------------------------------------------------------------
Commercial paper rated A-1 or A-2 by Standard & Poor's has the following
characteristics: Liquidity ratios are adequate to meet cash requirements. Long-
term senior debt is rated "A" or better. 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 reliability and quality of management are unquestioned. The
relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper
ratings assigned by
16
<PAGE>
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 interest
questions and preparations to meet such obligations. Relative strength or
weakness of the above factors determines whether the issuer's commercial paper
is rated Prime-1, 2 or 3.
Description of Bond Ratings:
- ---------------------------
Bonds rated AAA have the highest rating Standard & Poor's assigns to a debt
obligation. Such a rating indicates an extremely strong capacity to pay
principal and interest. Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in a small degree.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than Aaa bonds because margins
of protection may not be as large or fluctuations of protective elements may be
of greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat large.
17
<PAGE>
PART C
OTHER INFORMATION
STATE BOND CASH MANAGEMENT FUND
Item 24. Financial Statements and Exhibits
- -------------------------------------------
(a) Financial Statements and Independent Auditors' Reports:
Included in Part A:
Financial Highlights for each year in the ten year
period ended July 31, 1995
Included in Part B:
Schedule of Investments - July 31, 1995
Statement of Assets and Liabilities - July 31, 1995
Statement of Operations - Year ended July 31, 1995
Statements of Changes in Net Assets - Years ended
July 31, 1995 and 1994
Financial Highlights for each year in the five years
ended July 31, 1995
Notes to Financial Statements
Independent Auditors' Reports
(b) Exhibits
(1) Articles of Incorporation - filed as an exhibit hereto.
(2) By-laws - filed as an exhibit hereto.
(3) Not applicable.
(4) See generally Article IV of the Articles of Incorporation, and
Articles II and VII of the Bylaws, filed as exhibits to this
Registration Statement.
(5) Investment Advisory Contract - filed as an exhibit hereto.
(6) (a) Underwriting Agreement - filed as an exhibit hereto.
(b) Form of Agreements between principal underwriter and dealers
filed as an exhibit to the Registration Statement on Form
N-1A of State Bond Securities Funds, Inc., on September 28,
1993, File No. 2-30162 and incorporated herein by reference.
(7) Not applicable.
(8) Custodian Agreement - filed as an exhibit hereto.
(9) Administration Agreement (Transfer Agent Agreement) - filed as an
exhibit hereto.
(10) Opinion of Counsel - filed as an exhibit hereto.
(11) Other opinions, appraisals, rulings and consents.
(i) Independent Auditors' Consent:
Ernst & Young LLP dated September 25, 1995
(ii) Independent Auditors' Consent:
Deloitte & Touche LLP dated September 25, 1995
(12) Not applicable.
(13) Agreement regarding initial capital - filed as an exhibit to Pre-
Effective Amendment #1 to Form N-1A on February 23, 1982, File
#2-74561, and incorporated herein by reference.
(14) Copy of prototype defined contribution plan - filed as an exhibit
to the Registration Statement on Form N-1A of State Bond
Securities Funds, Inc., on September 28, 1993, File No. 2-30162
and incorporated herein by reference.
<PAGE>
(15) Plan pursuant to Rule 12b-1 - filed as an exhibit hereto.
(16) Not applicable.
(17) Other Exhibits - Power of Attorney dated July 31, 1995 -Filed as
an Exhibit hereto.
(18) Not applicable.
(27) Financial Data Schedule - filed as an exhibit hereto.
Item 25. Persons Controlled by or under Common Control with Registrant
None
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class (within last 90 days)
-------------- -------------------------
Capital Stock--$.00001 par value 620 as of August 31, 1995
Item 27. Indemnification
Article VII, Section 1 of the Amended and Restated Articles of Incorporation
of the Registrant provides that the Registrant shall indemnify its directors and
officers, whether serving the Registrant or at its request any other entity, to
the full extent permitted by the laws of the State of Maryland. This
indemnification shall not protect any director or officer against liability to
the Registrant or its shareholders to which he otherwise would be subject by
reason of willful misfeasance, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
Section 6.01 of the By-Laws of the Registrant provides that the Registrant
shall indemnify any person who was or is a party or is threatened to be made a
party to any action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than a proceeding by or in the right of the Registrant
in which such person shall have been adjudged to be liable to the Registrant),
by reason of being or having been a director or officer of the Registrant, or
serving or having served at the request of the Registrant as a director,
officer, partner, trustee, employee or agent of another entity in which the
Registrant has an interest as a shareholder, creditor or otherwise (a "Covered
Person"), against all liabilities and penalties, and reasonable expenses
(including attorney's fees) actually incurred by the Covered Person in
connection with such action, suit or proceeding, except (i) liability in
connection with any proceeding in which it is determined that (A) the act or
omission of the Covered Person was material to the matter giving rise to the
proceeding, and was committed in bad faith or was the result of active and
deliberate dishonesty, or (B) the Covered Person actually received an improper
personal benefit in money, property or services, or (C) in the case of any
criminal proceeding, the Covered Person had reasonable cause to believe that the
act or omission was unlawful and (ii) liability to the Corporation or its
security holders to which the Covered 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 his office.
<PAGE>
Article VII, Section 2 of the Amended and Restated Articles of Incorporation
of the Registrant provides that no director or officer of the Registrant shall
be personally liable to the Registrant or its security holders for money
damages, to the full extent permitted by Maryland law and the Investment Company
Act of 1940.
Pursuant to the Registrant's agreement with its principal underwriter, the
Registrant has agreed to indemnify the underwriter from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which it or any controlling person may incur, under the
Investment Company Act of 1940, or under common law or otherwise, arising out of
or based upon any alleged untrue statement of a material fact contained in the
Registrant's registration statement or prospectus or arising out of or based
upon any alleged omission to state a material fact required to be stated in
either thereof or necessary to make the statements in either thereof not
misleading; provided, however, that the indemnity agreement, to the extent that
it might require indemnity of any person who is a controlling person and who is
also a director of the Registrant, may not inure to the benefit of such person
unless a court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the Investment Company Act of 1940; and further
provided that in no event shall any thing contained in the indemnity agreement
be so construed as to protect the underwriter against any liability to the
Registrant or its security holders to which the underwriter would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence, in the
performance of its duties, or by reason of its reckless disregard of any
obligations and duties under the underwriting agreement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provision, 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 liabilities (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.
The Registrant, its investment adviser, and its principal underwriter have
obtained directors and officers and errors and omissions liability insurance
insuring the activities of the Registrant, the investment advisory activities of
the investment adviser, and the activities of the principal underwriter as
distributor of investment company securities.
Item 28. Business and Other Connections of Investment Adviser
<PAGE>
ARM Capital Advisors, Inc., the Registrant's investment adviser, is a registered
investment adviser providing investment management services to investment
companies and institutional and individual companies.
The business, profession, vocation or employment of a substantial nature which
each director or officer of the investment adviser, is or has been, at any time
during the past two fiscal years, engaged for his own account or in the capacity
of director, officer, employee, partner, or trustee is as follows:
Position and Offices
Name and Principal Business Address* with Adviser
- ------------------------------------ --------------------
John Franco Director and Co-Chief
Co-Chief Executive Officer Executive Officer
Martin H. Ruby Director and Co-Chief
Co-Chief Executive Officer Executive Officer
Emad A. Zikry Director and President
Since October 1994:
Executive Vice President-Chief
Investment Officer
200 Park Avenue, 20th Floor
New York NY 10166
1992-October 1994:
President-Chief Investment Officer
Klienwort Benson Investment Management
Americas Inc.
200 Park Avenue, 20th Floor
New York NY 10166
Keith O. Martens Senior Vice President
Since June 1995: and Senior Portfolio
200 Park Avenue, 20th Floor Manager
New York NY 10166
1969-June 1995:
Executive Vice President-Investments
SBM Company
8400 Normandale Lake Boulevard
Suite 1150
Minneapolis MN 55437
John R. McGeeney Secretary
Co-General Counsel and Secretary
Peter S. Resnik Treasurer
Treasurer
Don W. Cummings Controller
Controller
Rose M. Culbertson Tax Officer
Tax Officer
Kevin Howard Assistant Secretary
Since January 1994: and Compliance Officer
<PAGE>
Assistant General Counsel and
Compliance Officer
1992-January 1994:
Providian Corp.
Assistant General Counsel
400 West Market Street
Louisville KY 40202
*All addresses are ARM Financial Group, Inc., 239 S. Fifth Street, 12th Floor,
Louisville KY 40202. Unless otherwise indicated, each individual has been
employed by ARM Financial Group or its predecessor-in-interest, Analytical Risk
Management, Ltd., for the last two years.
Item 29. Principal Underwriters
(a) SBM Financial Services, Inc. acts as principal underwriter for the
Fund, and for each of the following investment companies:
State Bond Investment Funds, Inc.
(State Bond Diversified Fund Portfolio)
State Bond Equity Funds, Inc.
(State Bond Common Stock Fund Portfolio)
State Bond Income Funds, Inc.
(State Bond U.S. Government and Agency
Securities Fund Portfolio)
State Bond Tax-Free Income Funds, Inc.
(State Bond Minnesota Tax-Free Income Fund Portfolio)
State Bond Municipal Funds, Inc.
(b) The following table sets forth information concerning each director,
officer or partner of the principal underwriter.
<TABLE>
<CAPTION>
Name and Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
- ---------------------------- ---------------------- -------------------
<S> <C> <C>
John R. McGeeney* Director, Secretary, None
General Counsel and
Compliance Officer
Edward J. Haines* Director and President None
Walter W. Balek*** Vice President None
Dale C. Bauman*** Vice President President
Robert Bryant Vice President None
1550 East Shaw, #120
Fresno CA 93710
Richard M. Carlblom*** Vice President None
Gregory A. Erickson*** Vice President None
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Ronald Geiger Vice President None
100 North Minnesota Street
New Ulm MN 56073
Peter S. Resnik* Treasurer Treasurer
Don W. Cummings* Controller Controller
William H. Guth** Operations Officer None
David L. Anders** Marketing Officer None
Rose M. Culbertson* Tax Officer None
Patricia L. Mack* Assistant Secretary None
</TABLE>
* Address is 239 S. Fifth Street, 12th Floor, Louisville KY 40202
** Address is 200 East Wilson Bridge Road, Worthington OH 43085
*** Address is 8400 Normandale Lake Boulevard, Suite 1150, Minneapolis
MN 55437
(c) Not applicable.
Item 30. Location of Accounts and Records
SBM Financial Services, Inc
8400 Normandale Lake Boulevard
Suite 1150
Minneapolis, Minnesota 55437-3807
Item 31. Management Services
None
Item 32. Undertakings
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(a) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Louisville and State of Kentucky, on the 29th day of September, 1995.
STATE BOND MONEY FUNDS, INC.
By: /s/Kevin Howard
--------------------------------
Kevin Howard, Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/Dale Bauman President September 29,
- --------------------- (Principal Executive 1995
Officer)
/s/Peter Resnik Treasurer September 29,
- --------------------- (Principal Financial 1995
Officer)
/s/Don Cummings Controller September 29,
- --------------------- (Principal Accounting 1995
Officer)
* Director
- ---------------------
(William B. Faulkner)
* Director
- ---------------------
(Patrick M. Finley)
* Director
- ---------------------
(Chris L. Mahai)
* Director
- ---------------------
(John R. Lindholm)
</TABLE>
<PAGE>
* Director
- ---------------------
(John Katz)
* Director
- ---------------------
(Theodore S. Rosky)
* This Amendment has been signed
by each of the persons so indicated
by the undersigned as Attorney-in-Fact.
*By: /s/Kevin Howard
----------------------- September 29, 1995
<PAGE>
EXHIBIT 1
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
STATE BOND CASH MANAGEMENT FUND, INC.
State Bond Cash Management Fund, Inc., a Maryland corporation, having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland that:
FIRST: The Articles of Incorporation of the Corporation are amended and
restated in their entirety to read as follows:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
STATE BOND MONEY FUNDS, INC.
ARTICLE I
NAME
The name of the corporation (hereinafter referred to as the "Corporation")
is "State Bond Money Funds, Inc."
ARTICLE II
PURPOSES AND POWERS
The purposes for which the Corporation is formed are to act as an open-end
management investment company registered as such with the Securities and
Exchange Commission pursuant to the Investment Company Act of 1940 (as amended,
and together with the rules and regulations promulgated thereunder, the "1940
Act"), and to exercise and generally to enjoy all of the powers, rights, and
privileges granted to, or conferred upon, corporations by the General Laws of
the State of Maryland now or hereafter in force.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the corporation in the State of
Maryland is:
State Bond Money Funds, Inc.
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
The name and address of the resident agent of the Corporation in the State
of Maryland is:
The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
The resident agent is a corporation organized under the laws
<PAGE>
of the State of Maryland.
ARTICLE IV
CAPITAL STOCK
Section 1. (a) The total number of shares of capital stock that the
Corporation has authority to issue is 20,000,000,000 shares of common stock
(individually, a "Share" and, collectively, the "Shares"), of the par value of
$.00001 per Share and of the aggregate par value of $200,000. Unless otherwise
prohibited by law, so long as the Corporation is registered as an open-end
investment company under the 1940 Act, the Board of Directors shall have the
power and authority, without the approval of the holders of any outstanding
Shares, to increase or decrease the number of shares of capital stock or the
number of shares of capital stock of any class or series that the Corporation
has authority to issue.
(b) Of the total authorized Shares, 2,000,000,000 Shares shall constitute
the class designated as "Class A Common Shares," and the remaining
18,000,000,000 authorized Shares shall initially be unclassified Shares. Any
class of the Shares, including the Class A Common Shares and each class
hereafter created by the Board of Directors, shall be referred to herein
individually as a "Class" and collectively as "Classes." The Board of Directors
of the Corporation may further classify or reclassify any unissued Shares into a
Class or Series thereof (whether or not such Shares have been previously
classified or reclassified into a Class or a Series thereof) from time to time
by setting or changing the preferences, conversion, or other rights, voting
powers, designations, restrictions, limitations as to dividends, qualifications,
or terms or conditions of redemption of such unissued Shares. Each currently
issued and outstanding share of the Corporation's common stock is hereby
automatically classified and designated as a Class A Common Share of the
Corporation. The name of each Class of Shares shall be as provided in the
Bylaws of the Corporation. The name ascribed to a Class of Shares shall be
subject to amendment by the Corporation's Board of Directors without approval by
the shareholders of such Class.
(c) The Shares of each Class may be further classified by the Board of
Directors into one or more series (individually a "Series" and collectively,
together with any other series within any Class, the "Series") with such
relative rights and preferences as shall be contained in Articles Supplementary
filed with the State Department of Assessments and Taxation of the State of
Maryland. All Series of a particular Class of the Corporation shall represent
the same interest in the Corporation and have identical voting, dividend,
liquidation, and other rights of any other Shares of such Class, except that the
shares of each Series within a Class may be subject to such charges and expenses
(including by way of example, but not by way of limitation, such front-end and
deferred sales charges as may be permitted in the 1940 Act and rules of the
National Association of Securities Dealers, Inc. ("NASD"), expenses under Rule
12b-1 plans, administration plans, service plans, or other plans or
arrangements, however designated) adopted from time to time by the Board of
Directors of the Corporation in accordance, to the extent applicable, with the
1940 Act, which charges and expenses may differ from those applicable to another
Series within
2
<PAGE>
such Class, and all of the charges and expenses to which a Series is subject
shall be borne by such Series and shall be appropriately reflected (in the
manner determined by the Board of Directors) in determining the net asset value
and the amounts payable with respect to dividends and distributions on and
redemptions or liquidations of, the Shares of such Series.
(d) A description of the relative preferences, conversion, and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of all Classes of Shares
is as follows, unless otherwise set forth in Articles Supplementary filed with
the State Department of Assessments and Taxation of the State of Maryland
describing any further Class or Classes from time to time created by the Board
of Directors of the Corporation:
(i) Assets Belonging to a Class. All consideration received by the
Corporation for the issue or sale of Shares of a particular Class, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds
received from the sale, exchange, or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that Class for
all purposes, subject only to the rights of creditors, and shall be so
recorded upon the books of account of the Corporation. Such consideration,
assets, income, earnings, profits, and proceeds, including any proceeds
derived from the sale, exchange, or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds, in
whatever form the same may be, together with any General Assets (as
hereinafter defined) allocated to that Class as provided in the following
sentence, are herein referred to as "assets belonging to" that Class. In
the event that there are any assets, income, earnings, profits, or proceeds
thereof, funds or payments which are not readily identifiable as belonging
to any particular Class (collectively, "General Assets"), the Board of
Directors shall allocate such General Assets to and among any one or more
of the Classes created from time to time in the manner and on such basis as
the Board of Directors, in its sole discretion, deems fair and equitable;
and any General Assets so allocated to a particular Class shall belong to
that Class. Each such allocation by the Board of Directors shall be
conclusive and binding upon the stockholders of all Classes for all
purposes.
(ii) Liabilities Belonging to a Class. The assets belonging to each
particular Class shall be charged with the liabilities of the Corporation
in respect of that Class and with all expenses, costs, charges, and
reserves attributable to that Class, and such charges shall be so recorded
upon the books of account of the Corporation. Such liabilities, expenses,
costs, charges and reserves, together with any General Liabilities (as
hereinafter defined) allocated to that Class as provided in the following
sentence, so charged to that class are herein referred to as "liabilities
belonging to" that Class. In the event there are any general
3
<PAGE>
liabilities, expenses, costs, charges, or reserves of the Corporation which are
not readily identifiable as belonging to any particular Class (collectively,
"General Liabilities"), the Board of Directors shall allocate and charge such
General Liabilities to and among any one or more of the Classes created from
time to time in such manner and on such basis as the Board of Directors, in its
sole discretion, deems fair and equitable; and any General Liabilities so
allocated and charged to a particular Class shall belong to that Class. Each
such allocation by the Board of Directors shall be conclusive and binding upon
the stockholders of all Classes for all purposes.
(iii) Dividends and Distributions. Dividends and distributions on Shares
of a particular Class may be paid to the holders of Shares of that Class at such
times, in such manner and from such of the income and capital gains, accrued or
realized, from the assets belonging to that Class, after providing for actual
and accrued liabilities belonging to that Class, as the Board of Directors may
determine.
(iv) Liquidation. In the event of the liquidation or dissolution of the
Corporation, the stockholders of each Class that has been created shall be
entitled to receive, as a Class, when and as declared by the Board of Directors,
the excess of the assets belonging to that Class over the liabilities belonging
to that Class. The assets so distributable to the stockholders of any
particular Class shall be distributed among the stockholders in proportion to
the number of Shares of that Class held by them and recorded on the books of the
Corporation.
(v) Voting. On each matter submitted to a vote of the stockholders, each
holder of a Share shall be entitled to one vote for each such Share standing in
his name on the books of the Corporation, irrespective of the Class thereof, and
all Shares of all Classes shall vote as a single class ("Single Class Voting");
provided, however, that (A) as to any matter with respect to which a separate
vote of any Class is required by the 1940 Act or would be required under the
General Corporation Law of the State of Maryland, such requirements as to a
separate vote by that Class shall apply in lieu of Single Class Voting as
described above; (B) in the event that the separate vote requirements referred
to in (A) above apply with respect to one or more Classes, then, subject to (C)
below, the Shares of all other Classes shall vote as a single class; (C) as to
any matter which does not affect the interest of a particular Class, only the
holders of Shares of the one or more affected Classes shall be entitled to vote;
and (D) as to any matter which affects only a particular Series, only the
holders of the Shares of the affected Series shall be entitled to vote and, if
permitted by the 1940 Act and any other applicable law, the Series of more than
one Class may vote together as a single class on any such matter which shall
have the same effect on each Series.
(vi) Equality. All Shares of each particular Class shall
4
<PAGE>
represent an equal proportionate interest in the assets belonging to that
Class (subject to the liabilities belonging to that Class), and each Share
of any particular Class shall be equal to each other Share of that Class;
but the provisions of this sentence shall not restrict any distributions
permissible pursuant to subsection (iii) of this Section 1(d) of this
Article IV or otherwise under these Articles of Incorporation that may
exist with respect to stockholder elections to receive dividends or
distributions in cash or Shares of the same Class or that may otherwise
exist with respect to dividends and distributions on Shares of the same
Class.
(e) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the time of
issue or transfer of Shares without certificates, the Corporation shall provide
the stockholder with such information as may be required under the Maryland
General Corporation Law.
Section 2. Subject to compliance with the requirements of the 1940 Act,
the Board of Directors shall have the authority to provide that Shares of any
Series shall be convertible (automatically, optionally, or otherwise) into
Shares of one or more other Series in accordance with such requirements and
procedures as may be established by the Board of Directors.
Section 3. The presence in person or by proxy of the holders of record of
one-third of the Shares of all Classes issued and outstanding and entitled to
vote thereat shall constitute a quorum for the transaction of any business at
all meetings of the stockholders except as otherwise provided by law or in these
Articles of Incorporation and except that where the holders of Shares of any
Class or Series thereof are entitled to a separate vote as a Class or Series
(for purposes of this Section 3, such Series or Class, being referred to as a
"Separate Class") or where the holders of Shares of two or more (but not all)
Classes or Series thereof are required to vote as a single Class or Series for
purposes of this Section 3 (such Series or Classes being referred to as a
"Combined Class"), the presence in person or by proxy of the holders of one-
third of the Shares of that Separate Class or Combined Class, as the case may
be, issued and outstanding and entitled to vote thereat shall constitute a
quorum for such vote. If, however, a quorum with respect to all Classes, a
Separate Class or a Combined Class, as the case may be, shall not be present or
represented at any meeting of stockholders, the holders of a majority of the
Shares of all Classes, such Separate Class or such Combined Class, as the case
may be, present in person or by proxy and entitled to vote shall have power to
adjourn the meeting from time to time (to a date or dates not more than 120 days
after the original record date) as to all Classes, such Separate Class or such
Combined Class, as the case may be, without notice other than announcement at
the meeting, until the requisite number of Shares entitled to vote at such
meeting shall be present. At such adjourned meeting at which the requisite
number of Shares entitled to vote thereat shall be represented any business may
be transacted which might have been transacted at the meeting as originally
5
<PAGE>
notified. The absence from any meeting of stockholders of the number of Shares
in excess of one-third of the Shares of all Classes or of the affected Class or
Classes or Series thereof, as the case may be, which may be required by the laws
of the State of Maryland, the 1940 Act, any other applicable law or these
Articles of Incorporation, for action upon any given matter shall not prevent
action at such meeting upon any other matter or matters which may properly come
before the meeting, if there shall be present thereat, in person or by proxy,
holders of the number of Shares required for action in respect of such other
matter or matters. Notwithstanding any provision of law requiring any action to
be taken or authorized by the holders of a greater proportion than a majority of
the Shares of all Classes or of the Shares of a particular Class or Classes, as
the case may be, entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of the Shares of all Classes or of such Class or Classes, as the case
may be, outstanding and entitled to vote thereon.
Section 4. All Shares now or hereafter authorized shall be subject to
redemption and redeemable at the option of the stockholder, in the sense used in
the General Corporation Law of the State of Maryland. Each holder of a Share of
any Class (or Series thereof), upon request to the Corporation accompanied by
surrender of the appropriate stock certificate or certificates, if any, in
proper form for transfer, shall be entitled to require the Corporation to redeem
all or any part of the Shares of that Class (or Series thereof) standing in the
name of such holder on the books of the Corporation at a redemption price per
Share based on the net asset value per Share of that Class (or Series thereof)
determined in accordance with Section 4 of Article VI hereof. Nothing herein
shall prohibit the Corporation from imposing, at the time of the redemption of
Shares of any Class or Series thereof, a fee or sales charge provided that such
fee or sales charge has been duly adopted by the Board of Directors and is
permitted under the applicable provisions of the 1940 Act and applicable rules
of the NASD.
Section 5. Notwithstanding Section 4, the Board of Directors of the
Corporation may suspend the right of the holders of Shares to require the
Corporation to redeem such Shares or may suspend any voluntary purchase of such
Shares:
(a) for any period (i) during which the New York Stock Exchange is
closed other than customary weekend and holiday closings, or (ii) during
which trading on the New York Stock Exchange is restricted as determined by
the Securities and Exchange Commission or any successor thereto;
(b) for any period during which an emergency, as determined by the
Securities and Exchange Commission or any successor thereto, exists as a
result of which (i) disposal by the Corporation of securities owned by it
is not reasonably practicable, or (ii) it is not reasonably practicable for
the Corporation fairly to determine the value of its net assets; or
6
<PAGE>
(c) for such other periods as the Securities and Exchange Commission
or any successor thereto may by order permit for the protection of
stockholders of the Corporation.
Section 6. All Shares now or hereafter authorized shall be subject to
redemption and redeemable at the option of the Corporation. The Board of
Directors may by resolution from time to time authorize the Corporation to
require the redemption of all or any part of the outstanding Shares of any Class
(or Series thereof) upon the sending of written notice thereof to each
stockholder any of whose Shares of that Class (or Series thereof) are so
redeemed and upon such terms and conditions as the Board of Directors shall deem
advisable, out of funds legally available therefor, at a redemption price per
Share based on the net asset value per Share of that Class (or Series thereof)
determined in accordance with Section 4 of Article VI hereof and to take all
other steps deemed necessary or advisable in connection therewith. The
Corporation shall have the right to require the redemption of all Shares owned
or held by any one stockholder and having an aggregate net asset value, as
determined at any time in accordance with Article VI hereof, of less than
$500.00; provided that the Corporation shall give any such stockholder at least
30 days' notice of the effective date of such redemption; and provided further
that, if prior to the effective date of such redemption, the aggregate net asset
value of the Shares owned or held by such stockholder shall increase to $500.00
or more, the redemption shall be automatically cancelled.
Section 7. The Board of Directors may by resolution from time to time
authorize the repurchase by the Corporation, either directly or through an
agent, of Shares of any Class upon such terms and conditions and for such
consideration as the Board of Directors shall deem advisable, out of funds
legally available therefor, at prices per Share not in excess of the net asset
value per Share of that Class determined in accordance with Section 4 of Article
VI hereof and to take all other steps deemed necessary or advisable in
connection therewith.
Section 8. Except as otherwise permitted by the 1940 Act, payment of the
redemption or repurchase price of Shares surrendered to the Corporation for
redemption pursuant to the provisions of Section 4 or 6 of this Article IV or
for repurchase by the Corporation pursuant to the provisions of Section 7 of
this Article IV shall be made by the Corporation within seven days after
surrender of such Shares to the Corporation for such purpose. Any such payment
may be made in whole or in part in portfolio securities or in cash, as the Board
of Directors shall deem advisable, and no stockholder shall have the right,
other than as determined by the Board of Directors, to have his Shares redeemed
or repurchased in portfolio securities.
Section 9. No holder of Shares shall, as such holder, have any preemptive
right to purchase or subscribe for any part of any new or additional issue of
stock of any Class, or of rights or options to purchase any stock, or of
securities convertible into, or carrying rights or options to purchase, stock of
any Class, whether now or hereafter authorized or whether issued for money, for
a consideration other than money or by way of a dividend or
7
<PAGE>
otherwise, and all such rights are hereby waived by each holder of capital stock
of any other Class of stock or securities of the Corporation that may hereafter
be created.
Section 10. All persons who shall acquire any of the Shares shall acquire
the same subject to the provisions of these Articles of Incorporation.
ARTICLE V
DIRECTORS
Section 1. The Board of Directors shall consist of three or more members.
The Bylaws of the Corporation, however, may fix the number of directors at a
number larger than three and may authorize the Board of Directors to increase or
decrease the number of directors within a limit specified by the Bylaws, and to
fill the vacancies created by any such increase in the number of directors.
Unless otherwise provided by the Bylaws of the Corporation, the directors of the
Corporation need not be stockholders.
Section 2. The Bylaws of the Corporation may divide the Directors of the
Corporation into classes and prescribe the tenure of office of the several
classes.
Section 3. Stockholders of the Corporation may remove a Director by the
affirmative vote of a majority of the Corporation's outstanding Shares.
Section 4. Currently there are nine directors of the Corporation, who are:
Robert H. Baker, Richard M. Evjen, William B. Faulkner, Patrick M. Finley, Alden
M. Hansen, Chris E. Mahai, Keith O. Martens, Kennon V. Rothchild, and Roman G.
Schmid.
ARTICLE VI
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
Section 1. The Board of Directors shall have the general management and
control of the business and property of the Corporation, and may exercise all
the powers of the Corporation, except such as are by statute or by these
Articles of Incorporation or by the Bylaws conferred upon or reserved to the
stockholders. The Corporation may in its Bylaws confer powers on the Board of
Directors in addition to the powers expressly conferred by statute.
Section 2. The Board of Directors shall have the power to adopt, alter, or
repeal the Bylaws of the Corporation except to the extent that the Bylaws
otherwise provide.
Section 3. The Board of Directors shall have the power from time to time
to determine whether and to what extent, at what times and places, and under
what conditions and regulations, the accounts and books of the Corporation or
any of them shall be open to the inspection of stockholders, and no stockholder
shall have any right to inspect any account, book or document of the Corporation
except to the extent required by statute or permitted by the Bylaws.
8
<PAGE>
Section 4. The Board of Directors shall have the power to determine, as
provided in these Articles of Incorporation, or if provision is not made herein,
in accordance with generally accepted accounting principles, what constitutes
net income, total assets, and the net asset value of the Shares of each Class of
the Corporation, and of the Shares of each Series of such Class. Any such
determination made in good faith shall be final and conclusive, and shall be
binding upon the Corporation, and all holders of shares of each Series of each
Class (past, present, and future), and Shares of each Class are issued and sold
on the condition and undertaking, evidenced by acceptance of certificates for
such Shares by, or confirmation of such Shares being held for the account of,
any stockholder, that any and all such determinations shall be binding as
aforesaid. Nothing in this Section 4 shall be construed to protect any director
or officer of the Corporation against any liability to the Corporation or its
stockholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE VII
INDEMNIFICATION; LIABILITY
Section 1. The Corporation shall indemnify (i) its directors and officers,
whether serving the Corporation or at its request any other entity, to the full
extent required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (ii) other employees and agents to such
extent as shall be authorized by the Board of Directors or the Bylaws and as
permitted by law. Nothing contained herein shall be construed to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office. The foregoing rights of
indemnifcation shall not be exclusive of any other rights to which those seeking
indemnification may be entitled. The Board of Directors may take such action as
is necessary to carry out these indemnification provisions and is expressly
empowered to adopt, approve, and amend from time to time such bylaws,
resolutions, or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of the
charter of the Corporation or repeal of any of its provisions shall limit or
eliminate the right of indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal.
Section 2. To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the 1940 Act, no director or
officer of the Corporation shall be personally liable to the Corporation or its
security holders for money damages; provided, however, that nothing herein shall
be construed to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he would otherwise
be subject by reason of willful
9
<PAGE>
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or eliminate the
limitation of liability provided to directors and officers hereunder with
respect to any acts or omissions occuring prior such amendment or repeal.
ARTICLE VIII
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
ARTICLE IX
AMENDMENTS
The Corporation reserves the right from time to time to make any amendments
of its charter which may now or hereafter be authorized by law, including any
amendments changing the terms or contract rights, as expressly set forth in its
charter, of any of its outstanding stock by classification, reclassification, or
otherwise.
_________________________
The terms "Articles of Incorporation" as used herein and in the Bylaws of
the Corporation shall be deemed to mean these Articles of Incorporation as from
time to time amended, restated, or supplemented.
_________________________
SECOND:
(a) As of immediately before the amendment, the total number of shares of
stock of all classes which the Corporation has authority to issue is
20,000,000,000 shares, all of which are shares of common stock (par value $.001
per share).
(b) As amended, the total number of shares of stock of all classes which
the Corporation has authority to issue is 20,000,000,000 shares, all of which
are shares of common stock (par value $.00001 per share).
(c) The aggregate par value of all shares having a par value is
$20,000,000 before the amendment and $200,000 as amended.
(d) Because the amendment effects a change in the par value of each
authorized share of the Corporation's common stock from $.001 per share to
$.00001 per share, the Corporation's charter is hereby amended by changing and
reclassifying each of the shares of the Corporation's common stock (par value
$.001 per share) into one share of common stock (par value $.00001 per share),
and by transferring from the common stock account of the Corporation to the
capital in excess of par value account $.00099 for each share of common stock
which is issued and outstanding at the effective time of this amendment.
THIRD:
10
<PAGE>
The foregoing Articles of Amendment and Restatement have been advised by
the Board of Directors and approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its President and witnessed by its Secretary on
March 19, 1993.
STATE BOND MONEY FUNDS, INC.
WITNESS: By: /s/Roman G. Schmid
----------------------------
Roman G. Schmid, President
/s/Helen M. Wischstadt
- ------------------------------
Helen M. Wischstadt, Secretary
THE UNDERSIGNED, President of the Corporation, who executed on behalf of
the Corporation the foregoing Articles of Amendment and Restatement of which
this certificate is made a part, hereby acknowledges in the name and on behalf
of said Corporation the foregoing Articles of Amendment and Restatement to be
the corporate act of said Corporation and hereby certifies that to the best of
his knowledge, information, and belief the matters and facts set forth therein
with respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/Roman G. Schmid
--------------------------
Roman G. Schmid, President
11
<PAGE>
EXHIBIT 2
STATE BOND MONEY FUNDS, INC.
BY-LAWS
ARTICLE I
NAME
Section 1.01 Name. The name of the Corporation is State Bond Money Funds,
Inc. The name of the class represented by the Class A Common Shares shall be
State Bond Cash Management Fund.
ARTICLE II
STOCKHOLDERS
Section 2.01. Annual Meetings. The Corporation is not required to hold an
annual meeting of its stockholders in any year in which the election of
directors is not required to be acted upon under the Investment Company Act of
1940. If the Corporation is required by the Investment Company Act of 1940 to
hold a meeting of stockholders to elect directors, such meeting shall be held at
a date and time set by the Board of Directors in accordance with the Investment
Company Act of 1940 and no later than 120 days after the occurrence of the event
requiring the meeting. Any stockholders' meeting held in accordance with the
preceding sentence shall for all purposes constitute the annual meeting of
stockholders for the fiscal year of the Corporation in which the meeting is
held. Except as the charter or statute provides otherwise, any business may be
considered at an annual meeting without the purpose of the meeting having been
specified in the notice. Failure to hold an annual meeting does not invalidate
the Corporation's existence or affect any otherwise valid corporate acts.
Section 2.02. Special Meetings. At any time in the interval between
annual meetings, a special meeting of the stockholders may be called by the
Chairman of the Board or the President or by a majority of the Board of
Directors by vote at a meeting or in writing (addressed to the Secretary of the
Corporation) with or without a meeting. The Secretary of the Corporation shall
call a special meeting of stockholders on the written request of stockholders
entitled to cast at least 25 percent of all the votes entitled to be cast at the
meeting. A request for a special meeting shall state the purpose of the meeting
and the matters proposed to be acted on at it. The Secretary shall inform the
stockholders who make the request of the reasonably estimated costs of preparing
and mailing a notice of the meeting and, on payment of these costs to the
Corporation, notify each stockholder entitled to notice of the meeting. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted on at any special
meeting of stockholders held in the preceding 12 months.
<PAGE>
Section 2.03. Place of Meetings. Meetings of the stockholders shall be
held at such place in the United States as is set from time to time by the Board
of Directors.
Section 2.04. Notice of Meetings; Waiver of Notice. Not less than ten nor
more than 90 days before each stockholders' meeting, the Secretary shall give
written notice of the meeting to each stockholder entitled to vote at the
meeting and each other stockholder entitled to notice of the meeting. The
notice shall state the time and place of the meeting and, if the meeting is a
special meeting or notice of the purpose is required by statute, the purpose of
the meeting. Notice is given to a stockholder when it is personally delivered
to him, left at his residence or usual place of business, or mailed to him at
his address as it appears on the records of the Corporation. Notwithstanding
the foregoing provisions, each person who is entitled to notice waives notice if
he before or after the meeting signs a waiver of the notice which is filed with
the record of stockholders' meetings, or is present at the meeting in person or
by proxy.
Section 2.05. Quorum; Adjournment of Meetings. The presence in person or by
proxy of the holders of record of one-third of the shares of the capital stock
of the Corporation issued and outstanding and entitled to vote thereat, shall
constitute a quorum at all meetings of the stockholders. Where the holders of
shares of any series or class thereof are entitled to a separate vote as a
series or class (such series or class being referred to as a "Separate Class")
or where the holders of shares of two or more (but not all) series or classes
thereof are required to vote as a single series or class (such series or classes
being referred to as a "Combined Class"), the presence in person or by proxy of
the holders of one-third of the shares of that Separate Class or Combined Class,
as the case may be, issued and outstanding and entitled to vote thereat shall
constitute a quorum for such vote. If at any meeting of the stockholders there
shall be less than a quorum present, the stockholders present at such meeting
may, without further notice, adjourn the same from time to time until a quorum
shall attend. If a quorum with respect to a Separate Class or a Combined Class,
as the case may be, shall not be present, the holders of the shares of such
Separate Class or such Combined Class, as the case may be, present and entitled
to vote shall have power to adjourn the meeting from time to time as to such
Separate Class or such Combined Class, as the case may be, without notice other
than announcement at the meeting, until the requisite number of shares entitled
to vote at such meeting shall be present. No business shall be transacted at
any such adjourned meeting except such as might have been lawfully transacted
had the meeting not been adjourned. This Section 2.05 may be altered, amended,
or repealed only upon the affirmative vote of the holders of the majority of all
the shares of the capital stock of the Corporation at the time outstanding and
entitled to vote.
<PAGE>
Section 2.06. Voting. A majority of all the votes cast at a meeting at
which a quorum is present is sufficient to approve any matter which properly
comes before the meeting, except that a plurality of all the votes cast at a
meeting at which a return quorum is present is sufficient to elect a director.
Section 2.07. General Right to Vote; Proxies. Unless the charter provides
for a greater or lesser number of votes per share or limits or denies voting
rights, each outstanding share of stock, regardless of class or series, is
entitled to one vote on each matter submitted to a vote at a meeting of
stockholders. In all elections of directors, each share of stock may be voted
for as many individuals as there are directors to be elected and for whose
election the share is entitled to be voted. A stockholder may vote the stock he
owns of record either in person or by written proxy signed by the stockholder or
by his duly authorized attorney in fact. Unless a proxy provides otherwise, it
shall not be valid for more than 11 months after its date. In addition to
written proxies and to the extent permitted by Maryland law, the Corporation may
permit stockholders to vote by proxies in the forms of telegrams, mailgrams,
proxygrams, facsimile transmission, or other form of electronic transmission
provided the stockholder complies with such procedures as the Corporation may
determine to be necessary or appropriate to determine the authenticity of such
proxies, which may include a requirement that such proxies set forth or are
submitted with information, as required by the Corporation, from which the
authenticity of the proxies can be determined.
Section 2.08. List of Stockholders. At each meeting of stockholders, a
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number and class or series of shares held by each, shall be
furnished by the Secretary.
Section 2.09. Conduct of Business and Voting. At all meetings of
stockholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions touching the qualification of
voters and the validity of proxies, the acceptance or rejection of votes and
procedures for the conduct of business not otherwise specified by these By-Laws,
the charter or law, shall be decided or determined by the chairman of the
meeting. If demanded by stockholders, present in person or by proxy, entitled
to cast ten percent in number of votes entitled to be cast, or if ordered by the
chairman, the vote upon any election or question shall be taken by ballot and,
upon like demand or order, the voting shall be conducted by one or more
inspectors, in which event the proxies and ballots shall be received, and all
questions touching the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot and voting need not be
conducted by inspectors. The stockholders at any meeting may choose an
inspector or inspectors to act at such meeting, and in default of such election
the chairman of the meeting may appoint an inspector or inspectors. No
<PAGE>
candidate for election as a director at a meeting shall serve as an inspector
thereat.
Section 2.10. Informal Action by Stockholders. Any action required or
permitted to be taken at a meeting of stockholders may be taken without a
meeting if there is filed with the record of stockholders' meetings a unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter and a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at it.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01. Function of Directors. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the charter or By-Laws. The Board may delegate the duty of management of the
assets and the administration of the day-to-day operations of the Corporation to
one or more entities or individuals pursuant to a written contract or contracts
which have obtained the approvals, including the approval of renewals thereof,
required by the Investment Company Act of 1940.
Section 3.02. Number of Directors. The Corporation shall have at least
three directors; provided that, if there is no stock outstanding, the number of
directors may be less than three but not less than one, and if there is stock
outstanding and so long as there are fewer than three stockholders, the number
of directors may be less than three but not less than the number of
stockholders. The Corporation shall have the number of directors provided in
its charter until changed as herein provided. A majority of the entire Board of
Directors may alter the number of directors set by the charter to a number not
exceeding 25 nor less than the minimum number then permitted herein, but the
action may not affect the tenure of office of any director.
Section 3.03. Election and Tenure of Directors. At each annual meeting,
the stockholders shall elect directors to hold office until the next annual
meeting or special meeting at which directors are elected and until their
successors are elected and qualify. No director shall be qualified for election
by the stockholders if he or she has attained the age of 70.
Section 3.04. Removal of Directors. Unless statute or the charter
provides otherwise, the stockholders may remove any director, with or without
cause, by the affirmative vote of a majority of all the votes entitled to be
cast for the election of directors. The Board of Directors shall promptly call
a meeting of
<PAGE>
stockholders for the purpose of voting upon the question of removal of any
director or directors when requested in writing to do so by the record holders
of not less than ten percent of the outstanding shares.
Section 3.05. Vacancy on Board. The stockholders may elect a successor to
fill a vacancy on the Board of Directors which results from the removal of a
director by the stockholders. A director elected by the stockholders to fill a
vacancy which results from the removal of a director serves for the balance of
the term of the removed director. Unless otherwise provided by statute or the
charter, a majority of the remaining directors, whether or not sufficient to
constitute a quorum, may fill a vacancy on the Board of Directors which results
from any cause except an increase in the number of directors and a majority of
the entire Board of Directors may fill a vacancy which results from an increase
in the number of directors. A director elected by the Board of Directors to
fill a vacancy serves until the next annual meeting of stockholders or special
meeting at which directors are elected and until his successor is elected and
qualifies.
Section 3.06. Election of New Board. If at any time after the first
annual meeting of stockholders of the Corporation a majority of the Directors in
office shall consist of Directors elected by the Board of Directors, a special
meeting of the stockholders shall be called forthwith for the purpose of
electing the entire Board of Directors, and the terms of office of the Directors
then in office shall terminate upon the election and qualification of such Board
of Directors. This Section 3.06 may be altered, amended or repealed only upon
the affirmative vote of the holders of a majority of all the shares of the
capital stock of the Corporation at the time outstanding and entitled to vote.
Section 3.07. Regular Meetings. After each meeting of stockholders at
which directors shall have been elected, the Board of Directors shall meet as
soon as practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified (in a notice
provided in accordance with Section 3.09) by the Board, the President or the
Chairman, the Board of Directors shall meet immediately following the close of,
and at the place of, such stockholders' meeting. Any other regular meeting of
the Board of Directors shall be held on such date and at any place as may be
designated from time to time by the Board of Directors.
Section 3.08 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board or the President or by a
majority of the Board of Directors by vote at a meeting or in writing with or
without a meeting. A special meeting of the Board of Directors shall be held on
such date and at any place as may be designated from time to time by the Board
of Directors. In the absence of designation such meeting shall be held at such
place as may be designated in the call.
<PAGE>
Section 3.09. Notice of Meetings; Waiver of Notice. Except as provided
in Section 3.07, the Secretary shall give notice to each director of each
regular and special meeting of the Board of Directors. The notice shall state
the time and place of the meeting. Notice is given to a director when it is
delivered personally to him, left at his residence or usual place of business,
or sent by telegraph, facsimile transmission or telephone, at least 24 hours
before the time of the meeting or, in the alternative, by mail to his address as
it shall appear on the records of the Corporation at least 72 hours before the
time of the meeting. Unless statute, the By-Laws or a resolution of the Board
of Directors provides otherwise, the notice need not state the business to be
transacted at or the purposes of any regular or special meeting of the Board of
Directors. No notice of any meeting of the Board of Directors need be given to
any director who attends, or to any director who, in a writing executed and
filed with the records of the meeting either before or after the holding
thereof, waives such notice. Any meeting of the Board of Directors, regular or
special, may adjourn from time to time to reconvene at the same or some other
place, and no notice need be given of any such adjourned meeting other than by
announcement.
Section 3.10. Action by Directors. Unless statute or the charter or the
By-Laws requires a greater proportion, the action of a majority of the directors
present at a meeting at which a quorum is present is action of the Board of
Directors. A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business. In the absence of a quorum, the
directors present by majority vote and without notice other than by announcement
may adjourn the meeting from time to time until a quorum shall attend. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified. Unless otherwise provided by statute or regulation, any action
required or permitted to be taken at a meeting of the Board of Directors may be
taken without a meeting, if a unanimous written consent which sets forth the
action is signed by each member of the Board and filed with the minutes of
proceedings of the Board.
Section 3.11. Telephone Meetings. Members of the Board of Directors may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Unless provided otherwise by statute or
regulation, participation in a meeting by these means constitutes presence in
person at the meeting.
Section 3.12 Compensation. By resolution of the Board of Directors a
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Directors or of committees thereof, and other
compensation for their services as
<PAGE>
such or on committees of the Board of Directors, may be paid to directors. A
director who serves the Corporation in any other capacity also may receive
compensation for such other services, pursuant to a resolution of the Board of
Directors.
ARTICLE IV
COMMITTEES
Section 4.01. Committees. The Board of Directors may appoint from among
its members an Executive Committee and other committees composed of two or more
directors and delegate to these committees any of the powers of the Board of
Directors, except the power to declare dividends or other distributions on
stock, elect directors, issue stock other than as provided in the next sentence,
recommend to the stockholders any action which requires stockholder approval,
amend the By-Laws, or approve any merger or share exchange which does not
require stockholder approval. If the Board of Directors has given general
authorization for the issuance of stock, a committee of the Board, in accordance
with a general formula or method specified by the Board by resolution or by
adoption of a stock option or other plan, may fix the terms of stock subject to
classification or reclassification and the terms on which any stock may be
issued, including all terms and conditions required or permitted to be
established or authorized by the Board of Directors.
Section 4.02. Committee Procedure. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the action of a majority
of those present at a meeting at which a quorum is present shall be action of
the committee. The members of a committee present at any meeting, whether or
not they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if a unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may conduct any
meeting thereof by telephone in accordance with the provisions of Section 3.11.
Section 4.03. Emergency. In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Corporation by its directors and officers as contemplated by the
charter and these By-Laws, any two or more available members of the then
incumbent Executive Committee shall constitute a quorum of that Committee for
the full conduct and management of the affairs and business of the Corporation
in accordance with the provisions of Section 4.01. In the event of the
unavailability, at such time, of a minimum of two members of the then incumbent
Executive Committee, the available directors shall elect an Executive Committee
composed of any two members of
<PAGE>
the Board of Directors, whether or not they be officers of the Corporation,
which two members shall constitute the Executive Committee for the full conduct
and management of the affairs of the Corporation in accordance with the
foregoing provisions of this Section. This Section shall be subject to
implementation by resolution of the Board of Directors passed from time to time
for that purpose, and any provisions of the By-Laws (other than this Section)
and any resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementing resolutions shall be suspended until it
shall be determined by any interim Executive Committee acting under this Section
that it shall be to the advantage of the Corporation to resume the conduct and
management of its affairs and business under all the other provisions of these
By-Laws.
ARTICLE V
OFFICERS
Section 5.01. Executive and Other Officers. The Corporation shall have a
President, a Secretary, and a Treasurer. It may also have a Chairman of the
Board. The Board of Directors shall designate who shall serve as chief
executive officer, who shall have general supervision of the business and
affairs of the Corporation, and may designate a chief operating officer, who
shall have supervision of the operations of the Corporation. In the absence of
any designation the Chairman of the Board, if there be one, shall serve as chief
executive officer and the President shall serve as chief operating officer. In
the absence of the Chairman of the Board, or if there be none, the President
shall be the chief executive officer. The same person may hold both offices.
The Corporation may also have one or more Vice-Presidents, assistant officers,
and subordinate officers as may be established by the Board of Directors. A
person may hold more than one office in the Corporation except that no person
may serve concurrently as both President and Vice-President of the Corporation.
The Chairman of the Board shall be a director. The other officers may be
directors.
Section 5.02. Chairman of the Board. The Chairman of the Board, if one be
elected, shall preside at all meetings of the Board of Directors and of the
stockholders at which he shall be present. Unless otherwise specified by the
Board of Directors, he shall be the chief executive officer of the Corporation
and perform the duties customarily performed by chief executive officers, and
may perform any duties of the President. In general, he shall perform all such
duties as are from time to time assigned to him by the Board of Directors.
Section 5.03. President. Unless otherwise provided by resolution of the
Board of Directors, the President, in the absence of the Chairman of the Board,
shall preside at all meetings of the Board of Directors and of the stockholders
at which he shall be
<PAGE>
present. Unless otherwise specified by the Board of Directors, the President
shall be the chief operating officer of the Corporation and perform the duties
customarily performed by chief operating officers. He may sign and execute, in
the name of the Corporation, all authorized deeds, mortgages, bonds, contracts
or other instruments, except in cases in which the signing and execution thereof
shall have been expressly delegated to some other officer or agent of the
Corporation. In general, he shall perform all duties usually performed by a
president of a corporation and such other duties as are from time to time
assigned to him by the Board of Directors or the chief executive officer of the
Corporation.
Section 5.04 Vice-Presidents. The Vice-President or Vice-Presidents, at
the request of the chief executive officer or the President, or in the
President's absence or during his inability to act, shall perform the duties and
exercise the functions of the President, and when so acting shall have the
powers of the President. If there be more than one Vice-President, the Board of
Directors may determine which one or more of the Vice-Presidents shall perform
any of such duties or exercise any of such functions, or if such determination
is not made by the Board of Directors, the chief executive officer or the
President may make such determination; otherwise any of the Vice-Presidents may
perform any of such duties or exercise any of such functions. The Vice-
President or Vice-Presidents shall have such other powers and perform such other
duties, and have such additional descriptive designations in their titles (if
any), as are from time to time assigned to them by the Board of Directors, the
chief executive officer, or the President.
Section 5.05. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors and of any committees,
in books provided for that purpose; he shall see that all notices are duly given
in accordance with the provisions of the By-Laws or as required by law; he shall
be custodian of the records of the Corporation; he may witness any document on
behalf of the Corporation, the execution of which is duly authorized; and, in
general, he shall perform all duties incident to the office of a secretary of a
corporation, and such other duties as are from time to time assigned to him by
the Board of Directors, the chief executive officer, or the President.
Section 5.06. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts, and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by the Board of
Directors; he shall render to the President and to the Board of Directors,
whenever requested, an account of the financial condition of the Corporation;
and, in general, he shall perform all the duties incident to the office of a
treasurer of a corporation, and such other duties as are from time to time
assigned to him by
<PAGE>
the Board of Directors, the chief executive officer, or the President.
Section 5.07. Assistant and Subordinate Officers. The assistant and
subordinate officers of the Corporation are all officers below the office of
Vice-President, Secretary or Treasurer. The assistant or subordinate officers
shall have such duties as are from time to time assigned to them by the Board of
Directors, the chief executive officer, or the President.
Section 5.08. Election, Tenure and Removal of Officers. The Board of
Directors shall elect the officers of the Corporation. The Board of Directors
may from time to time authorize any committee or officer to appoint assistant
and subordinate officers. Election or appointment of an officer, employee or
agent shall not of itself create contract rights. All officers shall be
appointed to hold their offices, respectively, during the pleasure of the Board.
The Board of Directors (or, as to any assistant or subordinate officer, any
committee or officer authorized by the Board) may remove an officer at any time.
The removal of an officer does not prejudice any of his contract rights. The
Board of Directors (or, as to any assistant or subordinate officer, any
committee or officer authorized by the Board) may fill a vacancy which occurs in
any office for the unexpired portion of the term.
Section 5.09. Compensation. The Board of Directors shall have power to
fix the salaries and other compensation and remuneration, of whatever kind, of
all officers of the Corporation. It may authorize any committee or officer,
upon whom the power of appointing assistant and subordinate officers may have
been conferred, to fix the salaries, compensation, and remuneration of such
assistant and subordinate officers.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification of Directors and Officers. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than a
proceeding by or in the right of the Corporation in which such person shall have
been adjudged to be liable to the Corporation), by reason of being or having
been a director or officer of the Corporation, or serving or having served at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another entity in which the Corporation has an interest as
a shareholder, creditor or otherwise (a "Covered Person"), against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and reasonable expenses
(including attorney's fees) actually incurred by the Covered Person in
connection with such action, suit or proceeding, except (i)
<PAGE>
liability in connection with any proceeding in which it is determined that (A)
the act or omission of the Covered Person was material to the matter giving rise
to the proceeding, and was committed in bad faith or was the result of active
and deliberate dishonesty, or (B) the Covered Person actually received an
improper personal benefit in money, property or services, or (C) in the case of
any criminal proceeding, the Covered Person had reasonable cause to believe that
the act or omission was unlawful and (ii) liability to the Corporation or its
security holders to which the Covered 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 his office (any or all of the conduct
referred to in clauses (i) and (ii) being hereinafter referred to as "Disabling
Conduct").
Section 6.02. Procedure For Indemnification. Any indemnification under
Section 6.01 shall (unless ordered by a court) be made by the Corporation only
as authorized for a specific proceeding by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the Covered
Person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of the proceeding against the Covered Person for insufficiency of
evidence of any Disabling Conduct, or (iii) a reasonable determination, based
upon a review of the facts, by a majority of a quorum of the directors who are
neither "interested persons" of the Corporation as defined in the Investment
Company Act of 1940 nor parties to the proceeding ("disinterested, non-party
directors"), or an independent legal counsel in a written opinion, that the
Covered Person was not liable by reason of Disabling Conduct. The termination
of any proceeding by judgment, order or settlement shall not create a
presumption that the Covered Person did not meet the required standard of
conduct; the termination of any proceeding by conviction, or a plea of nolo
contendere or its equivalent, or any entry of an order of probation prior to
judgment, shall create a rebuttable presumption that the Covered Person did not
meet the required standard of conduct. Any determination pursuant to this
Section 6.02 shall not prevent recovery from any Covered Person of any amount
paid to him in accordance with this By-Law as indemnification if such Covered
Person is subsequently adjudicated by a court of competent jurisdiction to be
liable by reason of Disabling Conduct.
Section 6.03. Advance Payment of Expenses. Reasonable expenses (including
attorney's fees) incurred by a Covered Person may be paid or reimbursed by the
Corporation in advance of the final disposition of an action, suit or proceeding
upon receipt by the Corporation of (i) a written affirmation by the Covered
Person of his good faith belief that the standard of conduct necessary for
indemnification under this By-Law has been met and (ii) a written undertaking by
or on behalf of the Covered Person to repay the amount if it is ultimately
determined that such standard of conduct has not been met, so long as either (A)
the Covered Person has provided a security for his undertaking, (B) the
Corporation is
<PAGE>
insured against losses arising by reason of any lawful advances, or (C) a
majority of a quorum of the disinterested, non-party directors, or an
independent legal counsel in a written opinion, has determined, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
Section 6.04. Exclusivity, Etc. The indemnification and advance of
expenses provided by this By-Law shall not be deemed exclusive of any other
rights to which a Covered Person seeking indemnification or advance of expenses
may be entitled under any law (common or statutory), or any agreement, vote of
stockholders or disinterested directors, or other provision that is consistent
with law, both as to action in an official capacity and as to action in another
capacity while holding office or while employed by or acting as agent for the
Corporation, and such indemnification shall continue in respect of all events
occurring while the Covered Person was a director or officer after such Covered
Person has ceased to be a director or officer, and shall inure to the benefit of
the estate, heirs, executors and administrators of such Covered Person. All
rights to indemnification and advance of expenses under the charter and
hereunder shall be deemed to be a contract between the Corporation and each
director or officer of the Corporation who serves or served in such capacity at
any time while this By-Law is in effect. Nothing herein shall prevent the
amendment of this By-Law, provided that no such amendment shall diminish the
rights of any Covered Person hereunder with respect to events occurring or
claims made before its adoption or as to claims made after its adoption in
respect of events occurring before its adoption. Any repeal or modification of
this By-Law shall not in any way diminish any rights to indemnification or
advance of expenses of a Covered Person or the obligations of the Corporation
arising hereunder with respect to events occurring, or claims made, while this
By-Law or any provision hereof is in force.
Section 6.05. Insurance. The Corporation may purchase and maintain
insurance on behalf of any Covered Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, to the full extent permitted by applicable law.
Section 6.06. Severability: Definitions. The invalidity or
unenforceability of any provision of this Article VI shall not affect the
validity of enforceability of any other provision hereof. The phrase "this By-
Law" in this Article VI means this Article VI in its entirety.
ARTICLE VII
STOCK
Section 7.01. Certificates for Stock. If the Board of Directors
<PAGE>
authorizes the issue of a class or series of stock with certificates, each
holder of shares of that class or series, upon written request therefor in
accordance with such procedures as may be established by the Board from time to
time, is entitled to certificates which represent and certify the shares of that
class or series he holds in the Corporation. Each stock certificate shall
include on its face the name of the Corporation, the name of the stockholder or
other person to whom it is issued, and the class or series of stock and number
of shares it represents. It shall be in such form, not inconsistent with law or
with the charter, as shall be approved by the Board of Directors or any officer
or officers designated for such purpose by resolution of the Board of Directors.
Each stock certificate shall be signed by the Chairman of the Board, the
President, or a Vice-President, and countersigned by the Secretary, an Assistant
Secretary, the Treasurer, or an Assistant Treasurer. The signatures may be
either manual or facsimile signatures. A certificate is valid and may be issued
whether or not an officer who signed it is still an officer when it is issued.
The Board of Directors may authorize the issue of some or all of the shares of
any or all classes or series without certificates. Such authorization shall not
affect shares already represented by certificates until they are surrendered to
the Corporation. At the time of issue or transfer of shares without
certificates the Corporation shall send each stockholder a written statement of
the information required by the Maryland General Corporation Law.
Section 7.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of shares of stock; and may appoint
transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.
Section 7.03. Record Date and Closing of Transfer Books. The Board of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
receive notice of a meeting, to vote at a meeting, to receive a dividend, or to
be allotted other rights. The record date may not be prior to the close of
business on the day the record date is fixed nor, subject to Section 2.05, more
than 90 days before the date on which the action requiring the determination
will be taken; the transfer books may not be closed for a period longer than 20
days; and, in the case of a meeting of stockholders, the record date or the
closing of the transfer books shall be at least ten days before the date of the
meeting.
Section 7.04. Stock Ledger. The Corporation shall maintain a stock ledger
which contains the name and address of each stockholder and the number of shares
of stock of each class or series which the stockholder holds. The stock ledger
may be in
<PAGE>
written form or in any other form which can be converted within a reasonable
time into written form for visual inspection. The original or a duplicate of
the stock ledger shall be kept at the offices of a transfer agent for the
particular class or series of stock, or, if none, at the principal office in the
State of Maryland or the principal executive offices of the Corporation.
Section 7.05. Certification of Beneficial Owners. The Board of Directors
may adopt by resolution a procedure by which a stockholder of the Corporation
may certify in writing to the Corporation that any shares of stock registered in
the name of the stockholder are held for the account of a specified person other
than the stockholder. The resolution shall set forth the class of stockholders
who may certify, the purpose for which the certification may be made, the form
of certification and the information to be contained in it, and, if the
certification is with respect to a record date or closing of the stock transfer
books, the time after the record date or closing of the stock transfer books
within which the certification must be received by the Corporation, and any
other provisions with respect to the procedure which the Board considers
necessary or desirable. On receipt of a certification which complies with the
procedure adopted by the Board in accordance with this Section, the person
specified in the certification is, for the purpose set forth in the
certification, the holder of record of the specified stock in place of the
stockholder who makes the certification.
Section 7.06. Lost Stock Certificates. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen or destroyed, including
the requirement that the owner furnish a bond as indemnity against any claim
that may be made against the Corporation in respect of the lost, stolen or
destroyed certificate, or the Board of Directors may delegate such power to any
officer or officers of the Corporation. In their discretion, the Board of
Directors or such officer or officers may refuse to issue such new certificate
save upon the order of some court having jurisdiction in the premises.
ARTICLE VIII
FINANCE
Section 8.01. Annual Statement of Affairs. The President or chief
accounting officer shall prepare annually a full and correct statement of the
affairs of the Corporation, to include a statement of net assets and a financial
statement of operations for the preceding fiscal year. The statement of affairs
shall be placed on file at the Corporation's principal office within 120 days
after the end of the fiscal year.
Section 8.02. Fiscal Year. The fiscal year of the Corporation shall be
the twelve-calendar-month period ending July 31 in each
<PAGE>
year, unless otherwise provided by the Board of Directors.
Section 8.03. Dividends. If declared by the Board of Directors at any
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the capital stock of the Corporation, unless such
dividend is contrary to law or to a restriction contained in the charter of the
Corporation.
Section 8.04. Net Asset Value. The net asset value per share of each
class or series of stock of the Corporation shall be determined in good faith by
or under supervision of the officers of the Corporation as authorized by the
Board of Directors as often and on such days and at such time(s) as the Board of
Directors shall determine, or as otherwise may be required by law, rule,
regulation or order of the Securities and Exchange Commission.
Section 8.05. Employment of Custodian. The Corporation shall place and
maintain its securities and similar investments in the custody of one or more
custodians meeting the requirements of the Investment Company Act of 1940 or may
serve as its own custodian but only in accordance with such rules and
regulations or orders as the Securities and Exchange Commission may from time to
time prescribe for the protection of investors. Securities held by a custodian
may be registered in the name of the Corporation, including the designation of
the particular class or series to which such assets belong, or any such
custodian, or the nominee of either of them. Subject to such rules,
regulations, and orders as the Commission may adopt as necessary or appropriate
for the protection of investors, the Corporation or any custodian, with the
consent of the Corporation, may deposit all or any part of the securities owned
by the Corporation in a system for the central handling of securities, pursuant
to which system all securities of a particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities.
ARTICLE IX
INVESTMENT LIMITATIONS
The Corporation may not:
(a) Borrow money, except for temporary purposes in an aggregate amount not
to exceed 10% of the value of the total assets of the Corporation;
provided, that borrowings in excess of 5% of such value will be only from
banks, and the Corporation will not purchase additional portfolio
securities while its borrowings exceed 5%;
(b) Underwrite the securities of other issuers;
(c) Invest more than 25% of the market value of its total assets in
securities of issuers in any one industry, except
<PAGE>
that the Corporation reserves the right to concentrate investments in money
market instruments issued by the U.S. Government or its agencies or
instrumentalities or by domestic banks or bank holding companies;
(d) Buy or hold any real estate, except that the Corporation may buy and
hold marketable securities of companies which invest in real estate or
interests therein;
(e) Buy or hold any commodity or commodity future contracts, or any oil,
gas or mineral exploration or development program;
(f) Make loans, except loans of portfolio securities and except to the
extent that the purchase of notes, bonds or debt obligations, or the entry
into repurchase agreements, or deposits may be considered loans;
(g) Mortgage or pledge any of its assets, except to the extent, up to a
maximum of 10% of the value of its total assets, necessary to secure
borrowings permitted by subparagraph (a);
(h) Buy securities on "margin" or make "short" sales of securities;
(i) Write or purchase put or call options;
(j) Invest more than 5% of its total assets (taken at market value) in the
securities of any one issuer, other than the U.S, Government, its agencies
or instrumentalities;
(k) Buy more than 10% of the securities of any one issuer, other than the
U.S. Government, its agencies or instrumentalities;
(l) Invest more than 5% of its total assets (taken at market value) in the
securities of issuers which (including predecessors) have been in operation
fewer than three continuous years, but this restriction will not apply to
such securities which are guaranteed by a company which (including
predecessors) has been in operation at least three continuous years;
(m) Buy securities which have legal or contractual restrictions on resale,
except in connection with repurchase agreements;
(n) Buy or hold the securities of any issuer, if to its knowledge,
Directors or officers of the Corporation or of its investment advisor
individually owning beneficially more than 1/2 of 1% of the securities of
that issuer own in the aggregate more than 5% of such securities; or
<PAGE>
(o) Buy securities of any issuer for the purpose of exercising control or
management; or buy securities issued by any investment company, except in
connection with a merger, consolidation, acquisition or reorganization.
If a percentage restriction described above is complies with at the time an
investment is made, a later increase or decrease in percentage resulting from a
change in values of portfolio securities or in the amount of net assets of the
Corporation will not be considered a violation of any of those restrictions.
ARTICLE X
SUNDRY PROVISIONS
Section 10.01. Books and Records. The Corporation shall keep correct and
complete books and record of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors.
The books and records of the Corporation may be in written form or in any other
form which can be converted within a reasonable time into written form for
visual inspection. Minutes shall be recorded in written form but may be
maintained in the form of a reproduction. The original or a certified copy of
these By-Laws shall be kept at the principal office of the Corporation.
Section 10.02. Corporate Seal. The Corporation shall have no corporate
seal.
Section 10.03. Bonds. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his duties, with one or more sureties
and in such amount as may be satisfactory to the Board of Directors.
Section 10.04. Voting Shares in Other Corporations. Shares of other
corporations or associations, registered in the name of the Corporation, may be
voted by the President, a Vice-President, or a proxy appointed by either of
them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to vote
such shares upon the production of a certified copy of such resolution.
Section 10.05. Mail. Any notice or other document which is required by
these By-Laws to be mailed shall be deposited in the United States mail, postage
prepaid.
Section 10.06. Execution of Documents. A person who holds more than one
office in the Corporation may not act in more than one capacity to execute,
acknowledge or verify an instrument required by law to be executed, acknowledged
or verified by more than one
<PAGE>
officer.
ARTICLE XI
AMENDMENTS
Section 11.01. General. Except as provided in Section 11.02 hereof, all
By-Laws of the Corporation, whether adopted by the Board of Directors or the
stockholders, shall be subject to amendment, alteration or repeal, and new By-
Laws may be made, by the affirmative vote of a majority of either:
(a) the holders of record of the outstanding shares of stock of the
Corporation entitled to vote at any annual or special meeting, the notice
or waiver of notice of which shall have specified or summarized the
proposed amendment, alteration, repeal or new By-Law; or
(b) the entire Board of Directors at any regular or special meeting, the
notice or waiver of notice of which shall have specified or summarized the
proposed amendment, alteration, repeal or new By-Law.
Section 11.02. Amendment by Stockholders Only.
(a) No amendment of any Article of these By-Laws shall be made except by
the stockholders of the Corporation, if the By-Laws provide that such
Article may not be amended, altered or repealed except by the stockholders.
(b) From and after the issue of any shares of the capital stock of the
Corporation, no amendment of this Article XI or of Article IX shall be made
except by the stockholders of the Corporation.
* * *
March 26, 1993
<PAGE>
EXHIBIT 5
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, made this 14th day
of June, 1995, by and between State Bond Money Funds, Inc., a Maryland
Corporation (hereinafter called the "Fund"), and ARM Capital Advisors, Inc., a
Delaware Corporation (hereinafter called the "Manager").
WHEREAS, the Fund is registered as an open-ended, diversified
investment company under the Investment Company Act of 1940, and wishes to
retain the Manager to provide investment advisory, management, and
administrative services to the Fund; and the Manager is willing to furnish such
services on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund shall at all times keep the Manager fully informed with regard
to the securities owned by it, its funds available, or to become available, for
investment, and generally as to the condition of its affairs. It shall furnish
the Manager with such other documents and information with regard to its affairs
as the Manager may from time to time reasonably request.
2. Subject to the direction and control of the Fund's Board of Directors,
the Manager shall regularly provide the Fund with investment research, advice,
management and supervision and shall furnish a continuous investment program for
the Fund's portfolio of securities consistent with the Fund's investment goals
and policies. The Manager will determine from time to time what securities will
be purchased, retained or sold by the Fund, and will implement those decisions,
all subject to the provisions of the Fund's Articles of Incorporation and By-
laws, the Investment Company Act of 1940, applicable rules and regulations of
the Securities and Exchange Commission, and other applicable federal and state
law, and to the investment goals and policies of the Fund. The Manager shall
also provide advice and recommendations with respect to other aspects of the
business and affairs of the Fund, and shall perform such other functions of
management and supervision as may be directed by the Board of Directors of the
Fund.
3. (a) The Manager, at its expense, shall supply the Board of Directors
and officers of the Fund with all statistical information and reports reasonably
required by them and reasonably available to the Manager and shall furnish the
Fund with office facilities, including space, furniture and equipment and all
personnel reasonably necessary for the operation of the Fund. The Manager shall
authorize and permit any of its directors, officers and employees, who may be
elected as directors or officers of the Fund, to serve in the capacities in
which they are elected.
(b) Other than as herein specifically indicated, the Manager will
not be responsible for the Fund's expenses. Specifically, the Manager will not
be responsible, except to the extent of the reasonable compensation of employees
of the Fund whose services may be used by the Manager hereunder, for any of the
following expenses of the Fund, which expenses shall be borne by the Fund:
legal, auditing and accounting expenses; interest, taxes, governmental fees or
membership dues; brokerage commissions or charges, if any; fees of custodians,
transfer agents, registrars or other agents; expense of preparing share
certificates; expenses relating to the redemption or repurchase of the Fund's
shares; expenses of registering and qualifying Fund shares for sale under
applicable Federal and State law; expenses of preparing, setting in print,
printing and distributing prospectuses, reports, notices and dividends to Fund
shareholders; cost of stationary; costs of stockholders and other meetings of
the Fund; traveling expenses of officers, directors and employees of the Fund,
if any; fees of the Fund's independent directors and salaries of any officers or
employees who are not affiliated with the Manager; and the Fund's pro rata
portion of premiums on any fidelity bond covering the Fund.
4. No director, officer or employee of the Fund shall receive from the
Fund any salary or other compensation as such director, officer or employee
while he is at the same time a director, officer or employee of the Manager.
This paragraph shall not apply to directors, executive committee members,
consultants and other persons who are not regular members of the Manager's
staff.
5. As compensation for the services performed and the facilities furnished
and expenses assumed by the
<PAGE>
Manager, including the services of any consultants retained by the Manager, the
Fund shall pay the Manager, as promptly as possible after the last day of each
month, a monthly fee based upon a percentage of the average daily net assets of
the Fund, calculated daily as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY
NET ASSETS MONTHLY FEE
---------------------------- --------------
<S> <C>
For the first $500 million .60 of 1% - 12
For the next $250 million .55 of 1% - 12
For the next $250 million .45 of 1% - 12
</TABLE>
If this Agreement is terminated as of any date not the last day of a month, such
fee shall be paid as promptly as possible after such date of termination, shall
be based on the average daily net assets of the Fund in that period from the
beginning of such month to such date of termination, and shall be that
proportion of such average daily net assets as the number of business days in
such period bears to the number of business days in such month. The average
daily net assets of the Fund shall in all cases by based only on business days
and be computed as of 3:00 p.m., Minnesota time, or such other time as may be
determined by the Board of Directors of the Fund. Each such payment shall be
accompanied by a report of the Fund prepared either by the Fund or by a
reputable firm of independent accountants which shall show the amount properly
payable to the Manager under this Agreement and the detailed computation
thereof. Upon receipt of each such payment from the Fund, the Manager shall pay
to SBM Financial Services, Inc., the principal underwriter for the Fund, a
portion of the payment received by the Manager equal to .20 of 1% - 12 of the
daily net assets of the Fund for the month. Such payment to SBM Financial
Services, Inc. shall be compensation for its services as distributor of the
Fund's shares.
6. The Manager assumes no responsibility under this Agreement other than
to render the services called for hereunder, in good faith, and shall not be
responsible for any action of the Board of Directors of the fund in following or
declining to follow any advice or recommendations of the Manager; provided, that
nothing in this Agreement shall protect the Manager against any liability to the
Fund or its stockholders to which it would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
hereunder.
7. Nothing in the Agreement shall limit or restrict the right of any
director, officer, or employee of the Manager who may also be a director,
officer, or employee of the Fund, to engage in any other business or to devote
his time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature, nor to limit or
restrict the right of the Manager to engage in any other business or to render
services of any kind, including investment advisory and management services, to
any other corporation, firm, individual or association.
8. As used in this Agreement, the terms "assignment", "interested person",
and "majority of the outstanding voting securities" shall have the meanings
given to them by Section 2(a) of the Investment Company Act of 1940, subject to
such exemptions as may be granted by the Securities and Exchange Commission by
any rule, regulation or order.
9. This Agreement shall terminate automatically in the event of its
assignment by the Manager and shall not be assignable by the Fund without the
consent of the Manager.
10. This Agreement may be terminated at any time, without the payment of
any penalty, (a) by the Board of Directors of the Fund or by vote of a majority
of the outstanding voting securities of the Fund by sixty (60) days' written
notice addressed to the Manager at its principal place of business; and (b) by
the Manager by sixty (60) days' written notice addressed to the Fund at its
principal place of business.
11. This Agreement shall be submitted for approval to the Board of
Directors of the Fund annually and shall continue in effect only so long as
specifically approved annually by vote of a majority of the directors of the
Fund who are not parties to the Agreement or interested persons of such parties,
cast in person at a meeting called for that purpose, and either by vote of the
holders of a majority of the outstanding voting securities of the Fund or by
majority vote of the Fund's Board of Directors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
<PAGE>
STATE BOND MONEY FUNDS, INC.
By: /s/ Stewart Gregg
----------------------------------
Its: /s/ Vice President
---------------------------
ARM CAPITAL ADVISORS, INC.
By: /s/ Martin H. Ruby
----------------------------------
Its: /s/ CEO
---------------------------
a:\cash\mngr
<PAGE>
EXHIBIT 6a
UNDERWRITING AGREEMENT
BETWEEN
STATE BOND MONEY FUNDS, INC.
AND
SBM FINANCIAL SERVICES, INC.
This Underwriting Agreement made this 14th day of June, 1995, by and
between State Bond Money Funds, Inc., a Maryland corporation (hereinafter called
the "Fund") and SBM Financial Services, Inc., a Minnesota corporation
(hereinafter called "Distributor").
WITNESSETH THAT:
1. The Fund hereby appoints Distributor as principal underwriter in
connection with the offering and sale of shares of the capital stock
of the Fund. The Fund authorizes Distributor, as agent for the Fund,
subject to applicable law and the Articles and By-laws of the Fund to
solicit orders for the purchase of its shares, satisfactory to the
Fund, and otherwise promote the Fund and, as agent for the Fund, to
accept orders from dealers with whom it has written agreements.
Distributor shall offer the Fund's shares only in states in which such
shares are qualified and in which Distributor is qualified as a
broker/dealer. Distributor shall distribute the Fund's shares on an
agency of "best efforts" basis under which the Fund shall only issue
such shares as are actually sold.
2. The public offering price of such shares shall be the net asset value
per share (as determined by the Fund) of the outstanding shares of the
Fund. Such net asset value shall be regularly determined as set forth
from time to time in the Fund's current prospectus. The Fund shall
promptly furnish Distributor a statement of each computation of net
asset value and of the details entering into such computation.
Distributor shall not charge any sales load with respect to any sale
of the Fund's shares.
3. Distributor, at no expense to the Fund, shall print and distribute to
prospective investors Prospectuses, and may print and distribute such
other sales literature, forms, and advertisements in connection with
sale of the shares of the Fund as comply with the applicable
provisions of federal and state law. Except as specifically provided
herein, the Fund shall bear none of the expenses of Distributor in
connection with its offer and sale of shares of the Fund. Distributor
shall, as agent for the Fund, have the right to sell Fund shares to
dealers or to the public or both; provided, however, that in
connection with the sale or arranging for the sale of Fund shares,
Distributor shall give only such information and make only such
statements or representations as are contained in the Prospectus or in
such information as is furnished in writing to Distributor pursuant to
Paragraph 4 below, and the Fund shall not be responsible in any way
for any other information, statements or representations given or made
by Distributor or its representatives or agents.
4. The Fund shall keep Distributor fully informed with regard to its
affairs, and shall cooperate fully in the efforts of Distributor under
this Agreement.
5. The Fund agrees at its own expense to register its shares with the
Securities and Exchange Commission, State and other regulatory bodies
and to pay the related registration and filing fees therefor and to
file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statements of a
material fact in the Registration Statement or Prospectus or necessary
in order that there may be no omission to state a material fact
therein, in the light of the circumstances under which they were
made, not misleading. As used in this Agreement, the term
"Registration Statement" shall mean from time to time the Registration
Statement most recently filed by the Fund with the Securities and
Exchange Commission and effective under the Securities Act of 1933, as
amended (hereinafter called the "Act"), as such Registration Statement
is amended by any amendments thereto at the time in effect, and the
term "Prospectus" shall mean from time to time the form of prospectus
file by the Fund as part of the Registration Statement.
<PAGE>
6. The Fund agrees to prepare, set in print, print and distribute
Prospectuses to shareholders of the Fund, and furnish Distributor from
time to time a copy of the Prospectus in form as then most recently
filed with the Securities and Exchange Commission. The Fund authorizes
Distributor to print copies of and use such Prospectus in connection
with the sale of the Fund's shares. The Fund agrees to indemnify,
defend and hold Distributor, and any person who controls Distributor
within the meaning of Section 15 of the Act, free and harmless from and
against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith)
which Distributor or any such controlling person may incur, under the
Act, or under common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or arising out of or based upon
any alleged omission to state a material fact required to be stated in
either thereof or necessary to make the statements in either thereof
not misleading; provided, however, that this indemnity agreement, to
the extent that it might require indemnity of any person who is such a
controlling person and who is also a director of the Fund, shall not
inure to the benefit of such person unless a court of competent
jurisdiction shall determine, or it shall have been determined by
controlling precedent, that such result would not be against public
policy as expressed in the Act; and further provided that in no event
shall anything herein contained be so construed as to protect
Distributor against any liability to the Fund or its security holders
to which Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
The Fund's agreement to indemnify Distributor and any such controlling
person as aforesaid is expressly conditioned upon the Fund being
notified of any action brought against Distributor or any such
controlling person, such notification to be given by letter or by
telegram addressed to the Fund at its principal office in Minneapolis,
Minnesota, and sent to the Fund by the person against whom such action
is brought, within ten (10) days after the summons or other first legal
process shall have been served. The failure so to notify the Fund of
any such action shall not relieve the Fund from any liability which the
Fund may have to the person against whom such action is brought by
reason of any such alleged untrue statement or omission otherwise than
on account of the indemnity agreement contained in this Paragraph 6.
The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but in such case, such
defense shall be conducted by counsel of good standing chosen by the
Fund and approved by Distributor. In the event the Fund does elect to
assume the defense of any such suit and retain counsel of good standing
approved by Distributor, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of
them; but in case the Fund does not elect to assume the defense of any
such suit, or in case Distributor does not approve of counsel chosen by
the Fund, the Fund will reimburse Distributor or the controlling person
or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor or them.
The indemnification agreement contained in this Paragraph 6 and the
Fund's representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of Distributor or any controlling person. This
agreement of indemnity will inure exclusively to the benefit of
Distributor and its successors and their respective estates, and to the
benefit of any controlling persons and their successors. The Fund
agrees promptly to notify Distributor of the commencement of any
litigation or proceedings against the Fund in connection with the issue
and sale of any of its capital stock.
7. Distributor agrees to indemnify, defend and hold the Fund, its several
officers and directors, and any person who controls within the meaning
of Section 15 of the Act, free and harmless from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its
officers or directors, or any such controlling person may incur under
the Act or under common law or otherwise; but only to the extent that
such liability or expense incurred by the Fund, its officers or
directors or such controlling person resulting from such claims or
demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished in
writing by
<PAGE>
Distributor to the Fund for use in the Registration Statement or Prospectus
or shall arise out of or be based upon any alleged omission to state a
material fact in connection with such information required to be stated in
the Registration Statement or Prospectus or necessary to make such
information not misleading.
Distributor's agreement to indemnify the Fund, its officers and directors,
and any such controlling person as aforesaid is expressly conditioned upon
Distributor being notified of any action brought against the Fund, its
officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to Distributor at its principal
office in Minneapolis, Minnesota, and sent to Distributor by the person
against whom such action is brought, within ten (10) days after the summons
or other first legal process shall have been served. Distributor shall
have a right to control the defense of such action, with counsel of its own
choosing, satisfactory to the Fund, if such action is based solely upon
such alleged misstatement or omission on Distributor's part, and in any
other event Distributor or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any
such action. The failure so to notify Distributor of any such action shall
not relieve Distributor from any liability which Distributor may have to
the Fund, its officers or directors or to such controlling person by reason
of any such untrue statement or omission on Distributor's part otherwise
that on account of the indemnity agreement contained in this Paragraph 7.
8. This Agreement may be terminated by either party upon sixty (60) days'
written notice to the other party and shall terminate automatically in the
event of its assignment. The term "assignment" for this purpose shall have
the meaning defined in Section 2(a)(4) of the Investment Company Act of
1940.
9. This Agreement shall continue for successive annual periods, provided that
such continuance is specifically approved annually by the vote of a
majority of the Fund's Directors who are not "interested persons" of the
parties hereto as defined in the Investment Company Act of 1940, cast in
person at a meeting called for that purpose, and by either the vote of a
majority of the Board of Directors of the Fund or by the vote of a majority
of the outstanding voting securities of the Fund, as defined in the
Investment Company Act of 1940.
10. In order to compensate Distributor for its services hereunder, Distributor
will receive after the end of each month from ARM Capital Advisors, Inc.,
pursuant to the terms of the Investment Advisory and Management Agreement
between it and the Fund, a payment equal to .20 of 1% - 12 of the average
daily net assets of the Fund for the month. Distributor shall use such
payment in the following manner:
a.) To the extent that the Fund's average daily net assets were
attributable to shares sold by registered representatives of
broker/dealers other than the Distributor, the portion of such payment
attributable to shares sold by such broker/dealers and which were
still owned by such broker/dealers' clients during the month, shall be
paid to such broker/dealers.
b.) To the extent that the average daily net assets were attributable to
shares sold by registered representatives of Distributor, the portion
of such payment attributable to shares sold by such registered
representatives and which were still owned representatives' clients
during the month shall be paid to such representatives and field
supervisors, in such proportions as may be determined from time to
time, as set forth in written agreements.
c.) To the extent that the average daily net assets were attributable to
shares sold to individuals wherein there is no registered
representatives and/or field supervisors of Distributor or other
broker/dealer associated with the sales who is entitled to receive
that attributable portion of such payment, such portion of the payment
shall be retained by the Distributor and shall be expended by it on
any activities primarily intended to result in the sale of Fund
shares, including, by example, but not by way of limitation, the
printing of prospectuses and reports for other than existing
shareholders, preparation and distribution of sales literature,
advertising of any type, expenses of branch offices maintained by the
Distributor, compensation paid to and expenses incurred by officers,
employees or registered representatives of Distributor, including
travel,
<PAGE>
entertainment and telephone expenses.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers thereunto duly authorized.
STATE BOND MONEY FUNDS, INC.
By: /s/ Stewart Gregg
----------------------------------
Its: /s/ Vice President
----------------------------
SBM FINANCIAL SERVICES, INC.
By: /s/ John R. McGeeney
----------------------------------
Its: /s/ Secretary, General Counsel
-----------------------------
& Compliance Officer
-----------------------------
a:\cash\undrag
<PAGE>
EXHIBIT 8
AGREEMENT
THIS AGREEMENT made on March 25, 1988, between STATE BOND CASH MANAGEMENT
FUND, INC., a Maryland Corporation, (hereinafter called the "Fund"), and FIRST
BANK NATIONAL ASSOCIATION, a corporation organized under the laws of the State
of Minnesota (hereinafter called the "Custodian").
WITNESSETH:
Whereas, the Fund desires that its securities and cash shall be hereafter
held and administered by the Custodian pursuant to the terms of this Agreement:
Now, Therefore, in consideration of the mutual agreements herein made, the
Fund and Custodian agree as follows:
Sec. 1. Definitions
The word "securities" as used herein includes stock, shares, bonds,
debentures, notes, mortgages or other obligations and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Fund by any two of the
Chairman of the Executive Committee, the President, a Vice-President, the
Secretary and the Treasurer of the Fund, or any other persons duly authorized to
sign by the Board of Directors or the Executive Committee of the Fund.
Sec. 2. Names, Titles and Signatures of Fund's Officers
An officer of the Fund will certify to the Custodian the names and
signatures of the persons authorized to sign under Sec. 1 hereof, and the names
of the members of the Board of Directors and any of the Executive Committee
thereof, together with any changes which may occur from time to time.
Sec. 3. Receipt and Disbursement of Money
A. The Custodian shall open and maintain a separate account or accounts in
the name of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement. The Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Fund. The Custodian shall make payments of cash
to, or for the account of, the Fund from such cash only (a) upon the purchase of
securities for the portfolio of the Fund and the delivery of such securities to
the Custodian, registered in the name of the Fund or of the nominee of the
Custodian referred to in Sec. 7 or in proper form for transfer, (b) for the
purchase or redemption of shares of the capital stock of the Fund, (c) for the
payment of interest, dividends, taxes, management or supervisory fees or
operating expenses (including, without limitation thereto, fees for legal,
accounting and
<PAGE>
2
auditing services), (d) for payments in connection with the conversion, exchange
or surrender of securities owned or subscribed to by the Fund held by or to be
delivered to the Custodian, or (e) for other proper corporate purposes. Before
making any such payment the Custodian shall receive (and may rely upon) an
officers' certificate requesting such payment and stating that it is for a
purpose permitted under the terms of items (a), (b), (c) or (d) of this
subsection A, or upon receipt of a certified copy of a resolution of the Board
of Directors or of the Executive Committee of the Fund signed by an officer of
the Fund and certified by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper corporate purpose, and naming
the person or persons to whom such payment is to be made, in respect of item
(e).
B. The Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by the Custodian for
the account of the Fund.
Sec. 4. Receipt of Securities
Custodian shall hold in a separate account, and physically segregated at
all times from those of any other persons, firms or corporations, pursuant to
the provisions hereof, all securities received by it for or for the account of
the Fund. All such securities are to be held or disposed of by Custodian for,
and subject at all times to the instructions of, the Fund pursuant to the terms
of this Agreement. The Custodian shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such securities and investments,
except pursuant to the directive of the Fund and only for the account of the
Fund as set forth in Sec. 5 of this Agreement.
Sec. 5. Transfer, Exchange, Redelivery, etc. of Securities
The Custodian shall have sole power to release or deliver any securities of
the Fund held by it pursuant to this Agreement. The Custodian agrees to
transfer, exchange or deliver securities held by it hereunder only (a) upon
sales of such securities for the account of the Fund and receipt by the
Custodian of payment therefor, (b) when such securities are called, redeemed or
retired or otherwise become payable, (c) for examination by any broker selling
any such securities in accordance with "street delivery" custom, (d) in exchange
for or upon conversion into other securities alone or other securities and cash
whether pursuant to any plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise, (e) upon conversion of such
securities pursuant to their terms into other securities, (f) upon exercise of
subscription, purchase or other similar rights represented by such securities,
(g) for the purpose of exchanging interim receipts or temporary securities for
definitive securities, (h) for the purpose of redeeming in kind shares of
capital stock of the Fund, or (i) for other proper corporate purposes. As to
any deliveries made by the Custodian pursuant to items (b), (d), (e), (f) and
(g), securities or cash receivable in exchange therefor shall be deliverable to
the Custodian. Before making any such transfer, exchange or delivery the
Custodian shall receive (and may rely upon) an officers' certificate requesting
such transfer, exchange or delivery and stating that it is for a purpose
permitted under the terms of items (a), (b), (c), (d), (e), (f), (g) or (h) of
this Sec. 5 or upon receipt of a certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the securities
to be delivered, setting forth the purpose for which such
<PAGE>
3
delivery is to be made, declaring such purposes to be proper corporate purposes,
and naming the person or persons (each of whom shall be stated in such
resolution to be a properly bonded officer or employee of the Fund) to whom
delivery of such securities shall be made in addition to an officers'
certificate, in respect of item (i).
Sec. 6. The Custodian Acts Without Instructions
Unless and until the Custodian receives an officers' certificate to the
contrary, the Custodian shall:
(a) Present for payment all coupons and other income items held by it
for the account of the fund which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Fund;
(b) Collect interest and cash dividends received, with notice to the
Fund, to the account of the Fund;
(c) Hold for the account of the Fund hereunder all stock dividends,
rights and similar securities issues with respect to any securities held by
it hereunder;
(d) Execute as agent on behalf of the Fund all necessary ownership
certificates required by the Internal Revenue Code or the Income Tax
Regulations of the United States Treasury Department or under the laws of
any State now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.
Sec. 7. Registration of Securities
Except as otherwise directed b an officers' certificate the Custodian shall
register all securities, except such as are in bearer form, in the name of a
registered nominee of the Custodian as defined in the Internal Revenue Code and
any Regulations of the Treasury Department issued thereunder or in any provision
of any subsequent Federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or Regulations or under the
laws of any State. The Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times identifiable in
its records.
The Fund shall from time to time furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any securities
which it may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
Sec. 8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Fund, except in
accordance with the instructions
<PAGE>
4
contained in an officers' certificate. Custodian shall promptly deliver, or
cause to be executed and delivered, to the Fund all notices, proxies and proxy
soliciting materials with relation to such securities, such proxies to be
executed by the registered holder of such securities (if registered otherwise
than in the name of the Fund), but without indicating the manner in which such
proxies are to be voted.
Custodian shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by Custodian from
issuers of the securities being held for the Fund. With respect to tender or
exchange offers, Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer.
Sec. 9. Deposits of Securities in Securities Depositories
The Custodian may deposit all or any part of the securities owned by the
Fund in a (1) clearing agency registered with the Securities Exchange Commission
under Section 17A of the Securities Exchange Act of 1934 (clearing agency),
which acts as a securities depository, and/or (2) the book-entry system as
provided in Subpart O of Treasury Circular No. 300, CFR 306, Subpart B of 31 CFR
Part 350, and the book-entry regulations of federal agencies substantially in
the form of Subpart O. For the purposes herein, a "securities depository" is a
system for the central handling of securities where all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the securities. Any deposits made by the Custodian of the
Fund's securities in a clearing agency which acts as a securities' depository or
the book-entry system, or both shall be under an arrangement that contains the
following elements:
(a) The Custodian may deposit the securities directly or through one
or more agents which are also qualified to act as custodians for investment
companies.
(b) The Custodian shall send the Fund a confirmation of any transfers
to or from the account of the Fund. Where securities are transferred to
that account, the Custodian shall also, by book-entry or otherwise,
identify as belonging to the Fund a quantity of securities in a fungible
bulk of securities (i) registered in the name of the Custodian (or its
nominee) or (ii) shown on the Custodian's account on the books of the
clearing agency, the book-entry system, or the Custodian's agent. For this
purpose, the term "confirmation" means advise or give notice of a
transaction; it is not intended to require preparation by the Custodian of
the confirmation required of broker-dealer under the Securities Exchange
Act of 1934.
(c) The Custodian, or its agent which deposits the securities, shall
promptly send to the Fund reports it receives from the appropriate Federal
Reserve Bank or clearing agency on its respective system of the internal
accounting control. The Custodian and all the agents through which the
securities are deposited shall send to the Fund such reports on their own
systems of internal accounting control as the Fund may reasonably request
from time to time.
<PAGE>
5
(d) The underlying agreement between the custodian and the clearing
agency, or the agreements between the Custodian and its agent and the
agreement of said agent and the clearing agency, and any amendments
thereto, shall be submitted to the Fund for its review
Sec. 10. Transfer Tax and Other Disbursements
The Fund shall pay or reimburse the Custodian from time to time for any
transfer taxes payable upon transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses made or incurred by the
Custodian in the performance of this Agreement.
The Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State, to exempt
from taxation any exemptible transfers and/or deliveries of any such securities.
Sec. 11. Concerning the Custodian
The Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties.
The Custodian shall not be liable for any action taken in good faith upon
any certificate herein described or certified copy of any resolution of the
Board of Directors or of the Executive Committee, and may rely on the
genuineness of any such document which it may in good faith believe to have been
validly executed.
The Fund agrees to indemnify and hold harmless the Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. The Custodian is authorized to charge any account of the Fund for
such items other than those items which are associated with asserted claims and
liabilities of the Custodian for its conduct. Payment to the Custodian for
items which are associated with asserted claims and liabilities of the Custodian
for its conduct may only be charged against an account of the Fund by the
Custodian upon receipt of an officers' certificate from the Fund authorizing
such payment. In the event of any advance of cash for any purpose made by the
Custodian resulting from orders or instructions of the Fund, or in the event
that the Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Fund shall be security therefor.
<PAGE>
6
Sec. 12. Reports by the Custodian
The Custodian shall furnish the Fund regular statements of income and
principal transactions as of the last day of each month and a monthly list of
the portfolio securities at share or par value. The books and records of the
Custodian pertaining to its actions under this Agreement shall be open to
inspection and audit at reasonable times by officers of and auditors employed by
the Fund.
Sec. 13. Termination or Assignment
This Agreement may be terminated by the Fund, or by the Custodian, on sixty
days' notice, given in writing and sent by registered mail to the Custodian, at
First Trust Company, First Trust Center, 180 East 5th Street, Saint Paul,
Minnesota, 55101, or to the Fund at 100-106 North Minnesota Street, New Ulm,
Minnesota, 56073, as the case may be. Upon any termination of this Agreement,
pending appointment of a successor to the Custodian or a vote of the
shareholders of the Fund to dissolve or to function without a custodian of its
cash, securities and other property, the Custodian shall not deliver cash,
securities or other property of the Fund to the Fund, but may deliver them to a
bank or trust company in the City of Minneapolis of its own selection, having an
aggregate capital, surplus and undivided profits, as shown by its last published
report of not less than two million dollars ($2,000,000) as a custodian for the
Fund to be held under terms similar to those of this Agreement; provided,
however, that the Custodian shall not be required to make any such delivery or
payment until full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by the Custodian or
on or against the Custodian, and until full payment shall have been made to the
Custodian of all its fees, compensation, costs and expenses, subject to the
provisions of Sec. 10 of this Agreement.
This Agreement may not be assigned by the Custodian without the consent of
the Fund, authorized or approved by a resolutions of its Board of Directors.
Sec. 14. Sub-Custodians
Upon receipt of an officers' certificate, the Custodian shall appoint one
or more U. S. banking institutions as Sub-Custodian (including but not limited
to, U. S. banks located in foreign countries) of securities at any time owned by
the Fund. The Custodian shall advise the Fund in writing in advance of using
the services of any such Sub-Custodian and the fees and expenses to be charged
by such Sub-Custodian to the Fund. The Fund may by officers' certificate
require that the Custodian cease use of the services of any such Sub-Custodian.
Any such Sub-Custodian must have aggregate capital, surplus, and undivided
profits of not less than $2,000,000. Any such Sub-Custodian must agree to keep
physically segregated from the securities of other persons all securities
received by it for the Fund. The Fund shall pay all fees and expenses of any
Sub-Custodian.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed and their respective corporate seals to be affixed hereto as of the
date first above written by their respective officers thereunto duly authorized.
<PAGE>
7
Executed in several counterparts, each of which is an original.
STATE BOND AND CASH MANAGEMENT FUND, INC.
By /s/ Roman G. Schmid
---------------------------------------
Roman G. Schmid, President
Attest:
/s/ Helen M. Wischstadt
- ------------------------------------
Helen M. Wischstadt, Secretary
FIRST BANK NATIONAL ASSOCIATION
By /s/ Robert L. Spies
---------------------------------------
Robert L. Spies
<PAGE>
EXHIBIT 9
ADMINISTRATION AGREEMENT
This Agreement, dated as of the 14th day of June, 1995, made by and between
State Bond Money Funds, Inc. (the "Fund"), a corporation operating as an open-
end investment company, duly organized and existing under the laws of the State
of Maryland, and SBM Financial Services, Inc. (the "Agent"), a Minnesota
corporation;
WITNESSETH THAT:
WHEREAS, the Agent has agreed to act as Transfer Agent and Dividend Disbursing
Agent of the Fund, as Administrator of Plans, and to perform certain check
redemption procedures.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto, intending to be legally bound, do hereby agree as
follows:
Section 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified, unless the context otherwise requires.
Bank: The term Bank shall mean the entity that maintains the Fund's check
redemption account.
Custodian: The term Custodian shall mean that entity which is acting as
Custodian of the Fund's assets from time to time.
Share Certificates: The term Share Certificates shall mean the stock
certificates for the Shares of the Fund.
Shareholders: The term Shareholders shall mean the registered owners from
time to time of the Shares of the Fund in accordance with the stock registry
records of the Fund.
Shares: The term Shares shall mean the issued and outstanding shares of
common stock of the Fund.
Plan: The term Plan shall include such investment plans, dividend or
capital gains reinvestment plans, systematic withdrawal plans or other types of
plans set forth in the prospectus of the Fund, in form acceptable to the Agent,
which the Fund may from time to time adopt and made available to its
Shareholders, including plans or accounts established for pension and profit-
sharing plans established by self-employed individuals and partnerships.
Planholder: The term Planholder shall mean a Shareholder who, at the time
of reference, is participating in a Plan, and shall include any underwriter,
representative or broker-dealer.
Section 2. The Fund hereby appoints the Agent as its Transfer, Redemption
and Dividend Disbursing Agent and as Administrator of its Plans, and the Agent
accepts such appointment and agrees to act in such capacities upon the terms set
forth in this Agreement.
TRANSFER AGENCY
Section 3. The Fund shall furnish to the Agent, as Transfer Agent, a
sufficient supply of blank Share Certificates and from time to time will renew
such supply upon the request of the Agent. Such blank Share Certificates shall
be signed manually or by facsimile signatures of officers of the Fund authorized
by law or the bylaws of the Fund to sign Share Certificates and, if required,
shall bear the corporate seal or a facsimile thereof.
Section 4. The Agent, as Transfer Agent, shall make original issues of
Shares in accordance with the provisions of Sections 14 and 15 below and the
Fund's prospectus.
Section 5. Transfers of Shares shall be registered and new shares issued
by the Agent upon surrender of outstanding shares (a) in form deemed by the
Agent to be properly endorsed for transfer, (b) with all necessary endorsers'
signatures guaranteed in such manner and form as the Agent may require by a
guarantor reasonably believed by the Agent to be responsible, accompanied by (c)
such assurances as the Agent shall deem necessary or appropriate to evidence the
genuineness and effectiveness of each necessary endorsement, and (d)
satisfactory evidence of compliance with all applicable laws relating to the
payment or collection of taxes.
<PAGE>
Section 6. When mail is used for delivery of Share Certificates, the Agent
shall forward Share Certificates in "non-negotiable" form by first-class mail,
and Share Certificates in "negotiable" form by registered mail, all mail
deliveries to be covered while in transit to the addressee by insurance arranged
for by the Agent.
Section 7. In registering transfers, the Agent, as Transfer Agent, may
rely upon the Uniform Commercial Code or any other statutes which in the opinion
of counsel protect the Agent and the Fund in not requiring complete
documentation, in registering transfer without inquiry into adverse claims, in
delaying registration for purposes of such inquiry, or in refusing registration
where in its judgment an adverse claim requires such refusal.
Section 8. The Agent, as Transfer Agent, may issue new Share Certificates
in place of Share Certificates represented to have been lost, destroyed or
stolen, upon receiving indemnity satisfactory to the Agent and may issue new
Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates.
Section 9. In case any officer of the Fund who shall have signed manually
or whose facsimile signature shall have been affixed to blank Share Certificates
shall die, resign or be removed prior to the issuance of such Share
Certificates, the Agent, as Transfer Agent, may issue or register such Share
Certificates as the Share Certificates of the Fund notwithstanding such death,
resignation or removal; and the Fund shall file promptly with the Agent such
approval, adoption or ratification as may be required by law.
Section 10. The Agent will maintain stock registry records in the usual
form in which it will note the issuance and redemption of Shares and the
issuance and transfer of Share Certificates, and is also authorized to maintain
an account entitled Unissued Certificate Account in which it will record the
Shares and fractions issued and outstanding from time to time for which issuance
of Share Certificates is deferred. The Agent is authorized to keep records,
which will be part of the stock transfer records, as well as its records of the
Plans, in which it will note the names and registered addresses of Planholders,
and the number of Shares and fractions from time to time owned by them for which
no Share Certificates are outstanding. Each Shareholder or Planholder, whether
he holds one or more Share Certificates or owns Shares held under one or more
Plans, or whether he holds or owns Shares by both methods, will be assigned a
single account number. Whenever a Shareholder deposits Shares represented by
Share Certificates in a Plan permitting the deposit of Shares thereunder, the
Agent, as Transfer Agent, upon receipt of the Share Certificates registered in
the name of the Shareholder (or, if not so registered, in proper form for
transfer), shall cancel such Share Certificates, debit the Shareholder's
individual stock account and credit the Shares to the Unissued Certificate
Account. The Agent, as Plan Administrator, shall credit the Shares so deposited
to the proper Plan account.
Section 11. The Agent will issue Share Certificates for Shares of the Fund
only upon receipt of a written request from a Shareholder. In all other cases,
the Fund authorizes the Agent to dispense with the issuance and countersignature
of Share Certificates whenever Shares are purchased. In such case, the Agent,
as Transfer Agent, shall merely note on its stock registry records the issuance
of the Shares and fractions (if any), shall credit the Unissued Certificate
Account with the Shares and fractions issued and shall credit the proper number
of Shares and fractions to the respective Shareholders. Likewise, whenever a
Shareholder requests the redemption of Shares for which the Agent's records
indicate that no Share Certificates have been issued, the Agent may cause said
Shares to be redeemed without tender of Share Certificates for same. The Fund
authorizes the Agent in such cases to process the transactions by appropriate
entries in its stock transfer records, and debiting of the Unissued Certificate
Account and the records of issued Shares outstanding.
Section 12. The Agent in its capacity as Transfer Agent will, in addition
to the duties and functions above-mentioned, perform the usual duties and
functions of a stock transfer agent for a corporation. It will countersign for
issuance or reissuance Share Certificates representing original issue or
reissued treasury shares, and will transfer Share Certificates, and Shareholder
account registrations where no Share Certificates are outstanding, registered in
the name of Shareholders from one Shareholder to another in the usual manner.
The Agent may rely conclusively and act without further investigation upon any
list, instruction, certification, authorization, Share Certificate or other
instrument or paper believed by it in good faith to be genuine and unaltered,
and to have been signed, countersigned or executed by duly authorized person or
persons, or upon the instructions of any officer of the Fund, or upon the advice
of counsel for the Fund or for the Agent. The Agent may record any transfer of
Share Certificates which is reasonably believed by it in good faith to have been
duly authorized or may refuse to record any transfer of Share Certificates if in
good faith the Agent in its capacity as Transfer Agent reasonable deems such
refusal necessary in order to avoid any liability either to the Fund or to the
Agent. The Fund agrees to indemnify and hold harmless the Agent from and
against any and all losses, costs, claims and liability which it may suffer or
incur by reason of so relying or acting or refusing to act.
Section 13. In case of any request or demand for the inspection of the
share records of the Fund, the Agent, as Transfer Agent, shall endeavor to
notify the Fund and to secure instructions as to permitting or refusing such
inspection. However, the Agent may exhibit such records to any person in any
case where it is advised by its counsel that it may be held liable for failure
to do so.
ISSUANCE OF SHARES
<PAGE>
Section 14. Prior to the daily determination of net asset value in
accordance with the Fund's prospectus, the Agent shall process all payments by
Shareholders and Planholders received in Federal Funds since the last
determination of the Fund's net asset value for which the Agent has sufficient
information to establish a new Shareholder account or purchase Shares for an
existing account. For purposes of this Section 14, the Fund hereby instructs
the Agent to consider Shareholder and Planholder payments as Federal Fund
according to the following schedule and the Fund's cash account with the
Custodian shall be deemed to have Federal Funds in accordance with the same
schedule:
a. Wire received prior to 3:00 p.m., Central time -- on the same day if
it is a business day of the Fund, otherwise on the next business day which is
both a business day of the Fund and the Agent;
b. Wire received on or after 3:00 p.m., Central time -- on the next day
which is a business day of both the Fund and the Agent;
c. Check received prior to 3:00 p.m., Central time -- on the second
following business day of both the Fund and the Agent;
d. Check received on or after 3:00 p.m., Central time -- on the third
following business day of both the Fund and the Agent.
Immediately after 3:00 p.m., Central time, on each day that both the Fund
and the Agent are open for business, the Agent shall obtain from the Fund a
quotation (on which it may conclusively rely) of the net asset value per Share
determined as of 3:00 p.m., Central time, on that day. The Agent shall proceed
to calculate the amount available for investment in Shares at the quoted net
asset value, the number of Shares and fractional Shares to be purchased and the
net asset value to be deposited with the Custodian. The Agent, as agent for the
Shareholder and Planholders, shall place a purchase order on each day that both
the Fund and Agent are open for business with the Fund for the proper number of
Shares and fractional Shares to be purchased and confirm such number to the Fund
in writing.
Section 15. The proper number of Shares and fractional Shares shall then
be issued daily and credited by the Agent to the Unissued Certificate Account.
The Shares and fractional Shares purchased for each Shareholder and Planholder
will be credited by the Agent to such Shareholder's or Planholder's separate
account. The Agent shall then cause to be mailed to each Shareholder and
Planholder a confirmation of each purchase, with copies to the Fund if
requested. Such confirmations will show the prior Share balance, the new Share
balance, the Shares held under a Plan (if any), the Shares for which Stock
Certificates are outstanding (if any), the amount invested and the price paid
for the newly purchased Shares.
REDEMPTIONS
Section 16. Except for check redemptions, which all shall be governed by
the check redemption procedures provided for in Sections 18 through 24, the
Agent shall, prior to the daily determination of net asset value in accordance
with the Fund's prospectus, process all requests from Shareholders to redeem
Shares received in accordance with the procedures set forth in the Fund's
prospectus. The Fund shall then quote to the Agent the applicable net asset
value, whereupon the Agent shall determine the number of Shares required to be
redeemed to make monthly payments, automatic payments or the like. The Agent
shall then advise the Fund of the number of Shares and fractional Shares
requested to be redeemed and shall process the redemption by filing with the
Custodian an appropriate statement and making the proper distribution and
application of the redemption proceeds in accordance with the Fund's prospectus.
The stock registry books recording outstanding Shares, the Unissued Certificate
Account and the individual account of the Shareholder or Planholder shall be
properly debited.
Section 17. The proceeds of redemption shall be remitted by the Agent in
accordance with the Fund's prospectus as follow:
(a) By check mailed to the Shareholder or Planholder at this registered
address. If a request for redemption of Shares is valued at $20,000 or more, or
the proceeds of the redemption are to be paid to someone other than the
Shareholder, a signature guarantee of a of a national securities exchange, a
member firm of a principal stock exchange, a registered securities association,
a clearing agency, a bank or trust company, a savings association, a credit
union, a broker, a dealer, a municipal securities broker or dealer, a government
securities broker or dealer, or a representative of the Distributor, SBM
Financial Services, Inc. shall accompany the redemption request.
(b) By wire to a designated bank upon telephone request without signature
guarantee, if such redemption procedure has been elected by the Shareholder or
Planholder's on an authorized form filed with the Agent and the redemption
proceeds are $500 or more. If a telephone redemption request is received before
3:00 p.m., Central time, the redemption
<PAGE>
shall be affected at the net asset value determined on that same day and the
redemption proceeds wired out, if $500 or more, on that same day. If a
telephone redemption request is received after 3:00 p.m., Central time, the
redemption shall be affected at the net asset value determined on the next
business day and wired out, if $500 or more, on said next business day. Any
change in the designated bank account will be accepted by the Agent only if made
in writing by the Planholder or Shareholder with signature guaranteed as
required by paragraph (a) of this Section 17.
(c) By check redemption procedures as provided for in Sections 18 through
24.
(d) By other procedures commonly followed by mutual funds and mutually
agreed upon by the Fund and the Agent.
For the purposes of redemption of Shares which have been purchased by
uncertified check, such Shares may not be redeemed within 15 days after
purchase.
CHECK REDEMPTION
Section 18. The Agent shall perform check redemption services for the Fund
subject to the terms and conditions set forth in the Fund's prospectus. The
duties and obligations of the Agent with respect to check redemptions are
limited to those specifically set forth in Sections 18 through 24 of this
Agreement.
Section 19. The Fund shall maintain balances in a check redemption account
with the Bank which shall be sufficient to pay all checks received by the Bank
drawn against the check redemption account. The balance to be maintained in the
check redemption account shall be estimated from time to time by the Fund and
the Agent, based on redemption experience.
Section 20. The Agent shall provide, at the Fund's expense, check blank
forms for the check redemption account to Shareholders of the Fund who
appropriately request the same on the Fund's investment application form and
shall process checks drawn by said Shareholders on the check redemption account
in accordance with applicable laws and rules governing checks; provided,
however, that the Agent shall be required, in verifying the drawer's signature,
only to ascertain whether the signature(s) on the check reasonably appear to be
the signature(s) on the Shareholder's signature card, but shall not be required,
either as drawee or as redemption agent for any Shareholder, to obtain any
guarantee of any Shareholder signature.
Section 21. If there are not sufficient Shares in the drawer's Share
account which have been held for 15 days or more which are not represented by
issued Share Certificates to cover the check, the Agent shall direct the Bank
not to pay the check and shall immediately notify the Fund of such fact.
Section 22. The Agent shall, from time to time as often as necessary for
the purpose of properly performing its check redemption duties hereunder,
determine whether the Fund has deposited in the check redemption account
sufficient balances to pay all checks received by the Bank drawn against the
check redemption account. If the Fund has not deposited sufficient balances to
pay all such checks, the Bank shall pay checks only to the extent balances are
in the check redemption account. The Agent may select those checks to be paid
and those to be returned arbitrarily by any method selected by the Agent. If
checks received by the Bank drawn against the check redemption account exceed
the balances in the check redemption account, the Agent shall immediately notify
the Fund of such fact and give the Fund reasonable time to provide sufficient
collected balances. In no event shall "reasonable time" for the Fund to provide
sufficient collected balances extend beyond 10:00 a.m. on the day of the Bank's
midnight deadline with respect to any check. In no event shall the Agent
authorize the Bank to honor or pay checks drawn on the check redemption account
for which balances are not on hand in the check redemption account, and the Fund
hereby agrees to indemnify, defend and hold the Bank and the Agent harmless from
any loss, claim or expense arising out of the return of redemption checks due to
any such insufficiency of collected balances of which the Agent gave the Fund
immediate notices as required below.
Section 23. The Agent shall notify the Fund, as of the morning of the next
business day, of the balances in the check redemption account and a list of all
redemptions paid the preceding day, by name of Shareholder and amount.
Section 24. The Fund may terminate the check redemption procedure at any
time upon 30 days' written notice to the Agent, and in the event of such
termination, the effect shall be to delete all references to check redemption
procedures in this Agreement.
DIVIDENDS AND DISTRIBUTIONS
Section 25. It is mutually understood by the parties that the Fund intends
to declare daily dividends payable to Shareholders and Planholders of record as
of the close of business each day, and that all dividends are to be payable and
automatically reinvested in additional Shares as of the last business day of the
Fund each month, except in cases where
<PAGE>
Shareholders have elected to receive dividends in cash, in which case checks
will be mailed within three business days after the payable date. On each
business day, the Fund shall notify the Agent of the amount of net income of the
Fund earned for that business day and the amount of net income that will be
earned for the ensuing days that will not be business days. Based on the number
of Shares outstanding as of the close of business on each such business day, the
Agent shall thereupon compute the dividends per Share payable with respect to
the account of each Shareholder and Planholder and monthly the number of
additional Shares and fractional Shares to be issued with respect to such
dividends. The Agent shall notify the Fund monthly of the total number of
additional Shares and fractional Share issued and the amount of dividends to be
paid in cash. On or before the payment date for each dividend, the Fund shall
transfer, or cause the Custodian to transfer, to the Agent sufficient cash to
pay those dividends payable in cash on that payment date. Dividend checks will
be mailed by the Agent within three days after the payment date. The Agent
shall maintain records as to the additional Shares and fractional Shares issued
with respect to dividends which are reinvested in additional Shares by crediting
each Shareholder's or Planholder's account for Shares purchased by them by means
of reinvestment of dividends payable on Shares in their account. The Agent
shall cause to be mailed to each Shareholder and Planholder a confirmation of
each such purchase by reinvestment of such dividend.
Section 26. In the event that the Fund changes its dividend policy or the
Fund orders the distribution of any extraordinary long-term gains, the Fund
shall notify the Agent of each resolution of the Fund's Board of Directors
declaring such distribution or change in its dividend policy, the amount payable
per share, the record date for determining Shareholders or Planholders entitled
to payment, the net asset value to be used for reinvestments of such other
distribution or dividends, and the payment date. The Agent shall, prior to the
designated payment date, calculate the amount of such dividend or other
distribution to be reinvested in Shares and fractional Shares of each
Shareholder and Planholder and the amount to be paid in cash. On or before each
payment date the Fund shall transfer, or cause the Custodian to transfer, to the
Agent sufficient cash to pay any such dividends or other distributions payable
in cash. Checks for such dividends or distributions payable in cash will be
mailed by the Agent within three business days after the payment date. The
Agent shall maintain records as to additional Shares and fractional Shares
issued with respect to such dividends or other distributions which are
reinvested in additional Shares by crediting each Shareholder's or Planholder's
account for Shares purchased by them by means of reinvestment of such dividends
or distributions payable on Shares in their account. The Agent shall cause to
be mailed to each Shareholder and Planholder a confirmation of each such
purchase by reinvestment of such dividend or distribution.
GENERAL PROVISIONS
Section 27. The Agent shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of
Shares, the disbursement of dividends and the administration of the Plans and
dividend reinvestments, in which will be noted the transactions effected for
each Shareholder and Planholder and the number of Shares and fractional Shares
owned by each for which no Share Certificates are outstanding.
Section 28. In addition to the services provided for in this Agreement,
the Agent will perform other services for the Fund as agreed from time to time,
including but not limited to, preparation of and mailing Federal 1099 Forms,
mailing semi-annual reports of the Fund, preparation of an annual list of
Shareholders and Planholders, mailing notices of Shareholders' meetings, proxies
and proxy statements, and examination and tabulation of returned proxies and
certification of the vote to the Fund.
Section 29. Nothing contained in this Agreement is intended to or shall
require the Agent, in any capacity hereunder, to perform any functions or duties
on any holiday or other day of special observance on which the Agent is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day on which the Fund and the Agent
are open.
Section 30. The Fund agrees to pay the Agent compensation for its services
and to reimburse the Agent for its expenses as shall be agreed upon from time to
time.
Section 31. The Agent shall not be liable for any taxes, assessments or
governmental charges which may be levied or assessed on any basis whatsoever,
upon the securities held or processed hereunder, or otherwise in connection with
the Agent's activities of status under this Agreement.
Section 32. The Agent, at any time, may apply to the Fund for instructions
with respect to any matter in connection with the Agent's performance of its
duties under this Agreement, and the Agent shall be entitled to rely
conclusively on such instructions from the Fund.
The Fund will indemnify and hold the Agent harmless from all loss, cost,
damage and expense, including reasonable expenses for counsel, incurred by it
resulting from any claim, demand, action or omission by it in the performance of
its duties hereunder, or as a result of acting upon any instruction believed by
it to have been given by a duly authorized officer of the Fund; provided that
this indemnification shall not apply to actions or omissions of the Agent in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties hereunder; and further provided that, prior to
<PAGE>
confessing any claim against it which may be the subject of this
indemnification, the Agent shall give the Fund reasonable opportunity to defend
against said claim in its own name or in the name of the Agent.
The Agent will indemnify and hold the Fund harmless from all loss, cost,
damage and expense, including reasonable expenses for counsel, incurred or
sustained by it as a result of or in connection with the Agent's failure to give
the Bank instructions to refuse acceptance and payment of any check under the
Fund's check redemption service which is wrongfully paid either when a signature
on a particular check is not authentic according to the applicable authorized
signature card supplied by the Shareholder or when the number of Shares in a
Shareholder's account is insufficient to cover the amount of the check.
Section 33. The practices and procedures of the Agent and the Fund set
forth in this Agreement, or any other terms or conditions of this Agreement, may
be altered or modified from time to time as may be mutually agreed by the
parties to this Agreement without the consent of any Shareholder or Planholder,
so long as the intent and purposes of the Plans, as stated from time to time in
the prospectus of the Fund, or other applicable limitations of the prospectus,
are observed. In special cases the parties hereto may adopt such procedures as
may be appropriate or practical under the circumstances, and the Agent may
conclusively assume that any special procedure which has been approved by the
Fund does not conflict with or violate any requirements of its Articles of
Incorporation, Bylaws or prospectus, or any rule, regulation or requirement of
any regulatory body.
Section 34. This Agreement may be amended from time to time by a
supplemental agreement executed by the Fund and the Agent.
Section 35. Either the Fund or the Agent may give 60 days' written notice
to the other of the termination of this Agreement, such termination to take
effect at the time specified in the notice.
Section 36. Any notice or other communication required by or permitted to
be given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first-class mail, postage prepaid, to the
respective parties as follows:
If to the Fund:
State Bond Money Funds, Inc.
8400 Normandale Lake Boulevard
Suite 1150
Minneapolis, Minnesota 55437
SBM Financial Services
8400 Normandale Lake Boulevard
Suite 1150
Minneapolis, Minnesota 55437
Section 37. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed an original, but such
counterparts shall together but one and the same instrument.
Section 38. This Agreement shall be governed by the laws of the State of
Minnesota.
Section 39. This Agreement shall extend and be binding upon the parties
hereto and their respective successor and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of the
Agent or by the Agent without the written consent of the Fund, authorized or
approved by a resolution of its Board of Directors.
Section 40. The accounts and records, in the agreed upon format, specified
herein to be maintained by the Bank shall be preserved for the period specified
by Rule 31a-2 under the Investment Company Act of 1940 and shall be the property
of the Fund and shall be made available to the Fund within a reasonable period
of time upon proper demand. The Agent shall assist the Fund's independent
auditors, or upon approval of the Fund or upon demand, any regulatory body, in
any requested review of the Fund's accounts and records, but shall be reimbursed
for all expenses and employee time invested in any such review outside of
routine and normal periodic reviews. Upon receipt from the Fund of the
necessary information, the Agent shall supply the necessary data for the Fund or
accountant's completion of any necessary tax returns, questionnaires, periodic
reports to Shareholders and such other reports and information requests as the
Fund and the Agent shall agree upon from time to time.
<PAGE>
IN WITNESS WHEREOF, the Fund and the Agent have caused this Agreement to be
signed by their receptive duly authorized officers as of the day and year first
above written.
STATE BOND MONEY FUNDS, INC.
By: /s/ Stewart Gregg
----------------------------------
Its: /s/ Vice President
----------------------------
SBM FINANCIAL SERVICES, INC.
By: /s/ John R. McGeeney
----------------------------------
Its: /s/ Secretary, General
----------------------------
Counsel & Compliance
----------------------------
Officer
----------------------------
a:\cash\tranag
<PAGE>
EXHIBIT 10
State Bond Money Funds, Inc.
8400 Normandale Lake Blvd., Suite 1150
Minneapolis, Minnesota 55437-3807
Dear Sirs:
State Bond Money Funds, Inc. proposes to issue and sell an indefinite number
of shares (the "Shares") of its Common Stock par value $.00001 per share (the
"Common Stock") in the manner and on the terms set forth in its Registration
Statement on Form N-1A filed with the Securities and Exchange Commission (File
No. 2-74561).
I have, as counsel, participated in various corporate and other proceedings
relating to the Fund and to the Shares. I have examined copies, either
certified or otherwise proved to my satisfaction to be genuine, of its Articles
of Incorporation and By-Laws, as currently in effect, a certificate of good
standing issued by the State Department of Assessments and Taxation of the State
of Maryland and other documents relating to its organization and operation. I
have also reviewed the above-mentioned Registration Statement and all amendments
filed as of the date of this opinion and the documents filed as exhibits
thereto. I am generally familiar with the corporate affairs of the Fund.
Based upon the foregoing, it is my opinion that:
1. The Fund has been duly organized and is validly existing under the laws
of the state of Maryland.
2. The Fund is authorized to issue twenty billion (20,000,000,000) shares of
Common Stock. Under Maryland law, shares of Common Stock which are issued and
subsequently redeemed by the Fund will be, by virtue of such redemption,
restored to the status of authorized and unissued shares.
3. Subject to the effectiveness of the above-mentioned Registration
Statement and compliance with applicable state securities laws, upon the
issuance of the Shares for a consideration not less than the par value thereof
as required by the laws of Maryland, and not less than the net asset value
thereof as required by the Investment Company Act of 1940 and in accordance with
the terms of the Registration Statement, such Shares will be legally issued and
outstanding and fully paid and non-assessable.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as part of the above-mentioned Registration Statement and
with any state securities commission where such filing is required. In giving
this consent I do not admit that I come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended.
I am a member of the Bar of the State of Kentucky and do not hold myself out
as being conversant with the laws of any jurisdiction other than those of the
United States of America and the State of Kentucky. I note that I am not
licensed to practice law in the State of Maryland, and to the extent that any
opinion expressed herein involves the law of Maryland, such opinion should be
understood to be based solely upon my review of the good standing certificate
referred to above, the published statues of that State and, where applicable,
published cases, rules or regulations or regulatory bodies of that State.
Very truly yours,
/s/Kevin L. Howard
<PAGE>
Exhibit 11(i)
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the use of our report dated
September 14, 1995, in the Post-Effective Amendment No. 14 to the Registration
Statement (Form N-1A) and related Prospectus of the State Bond Cash Management
Fund.
Ernst & Young LLP
Kansas City, Missouri
September 25, 1995
<PAGE>
Exhibit 11(ii)
INDEPENDENT AUDITORS' CONSENT
Board of Directors of State Bond Money Funds, Inc.
and Shareholders of State Bond Cash Management Fund:
We consent to the use in the Post-Effective Amendment No. 14 to the Registration
Statement on Form N-1A of State Bond Cash Management Fund filed under the
Investment Company Act of 1940 and the Securities Act of 1933 of our report
dated August 26, 1994 accompanying the financial statements of State Bond Cash
Management Fund for the year ended July 31, 1994, as listed in Item 24(a) of
such Registration Statement, and to the reference to us under the heading
"Financial Highlights" appearing in the Prospectus which is part of such
Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
Minneapolis, Minnesota
September 25, 1995
<PAGE>
EXHIBIT 15
STATE BOND MONEY FUNDS, INC.
AMENDED AND RESTATED PLAN OF DISTRIBUTION
This Amended and Restated Plan of Distribution (the "Plan") is adopted
pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 (as
amended, the "1940 Act") by State Bond Money Funds, Inc., a Maryland corporation
(the "Company"), for and on behalf of each series (or class thereof) of the
Company's shares of common stock set forth below (each, a "Fund"):
State Bond Cash Management Fund
1. Compensation.
Pursuant to the investment advisory and management agreement between the
Fund and its investment adviser (the "Adviser"), the Adviser is obligated to pay
the principal underwriter of the Fund (the "Underwriter") a total fee in
connection with the servicing of shareholder accounts of the Fund and in
connection with distribution related services provided in respect of the Fund,
calculated daily and paid monthly at the annual rate of .20% of the value of the
average daily net assets of the Fund.
A portion of such total fee may be payable as a Servicing Fee and a portion
may be payable as a Distribution Fee, as determined from time to time by the
Company's Board of Directors.
2. Expenses Covered by the Plan.
(a) The Servicing Fee may be used by the Underwriter to provide
compensation for ongoing servicing and/or maintenance of shareholder
accounts with the Company. Compensation may be paid by the Underwriter to
persons, including employees of the Underwriter, and institutions who
respond to inquiries of shareholders of each Fund regarding their ownership
of shares or their accounts with the Company or who provide other
administrative or accounting services not otherwise required to be provided
by the Company's investment adviser, transfer agent or other agent of the
Company.
(b) The Distribution Fee may be used by the Underwriter to provide
initial and ongoing sales compensation to its investment executives and to
other broker-dealers in respect of sales of Fund shares and to pay for
other advertising and promotional expenses in connection with the
distribution of Fund shares. These advertising and promotional expenses
include, by way of example but not by way of limitation, costs of printing
and mailing prospectuses, statements of additional information and
shareholder reports to prospective investors; preparation and distribution
of sales literature; advertising of any type; an allocation of overhead and
other expenses of the Underwriter related to the distribution of Fund
shares; and payments to, and expenses of, officers, employees or
representatives of the Underwriter, of other broker-dealers, banks or other
financial institutions, and of any
<PAGE>
other persons who provide support services in connection with the
distribution of Fund shares, including travel, entertainment, and telephone
expenses.
(c) Payments under the Plan are not tied exclusively to the expenses
for shareholder servicing and distribution related activities actually
incurred by the Underwriter, so that such payments may exceed expenses
actually incurred by the Underwriter. The Company's Board of Directors
will evaluate the appropriateness of the Plan and its payment terms on a
continuing basis and in doing so will consider all relevant factors,
including expenses borne by the Underwriter and amounts it receives under
the Plan.
3. Payments by Adviser. The Company's investment adviser may, at its
option, make payments from its own resources to cover the costs of additional
distribution activities.
4. Approval by Shareholders. The Plan will not take effect with respect
to any Fund, and no fee will be payable in accordance with Section 1 of the
Plan, until the Plan has been approved by a vote of at least a majority of the
outstanding voting securities of such Fund.
5. Approval by Directors. Neither the Plan nor any related agreements
will take effect until approved by a majority vote of both (a) the full Board of
Directors of the Company and (b) those Directors who are not interested persons
of the Company and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to it (the "Independent
Directors"), cast in person at a meeting called for the purpose of voting on the
Plan and the related agreements.
6. Continuance of the Plan. The Plan will continue in effect from year to
year so long as its continuance is specifically approved annually by vote of the
Company's Board of Directors in the manner described in Section 5 above.
7. Termination. The Plan may be terminated at any time with respect to
any Fund, without penalty, by vote of a majority of the Independent Directors or
by a vote of a majority of the outstanding voting securities of such Fund.
8. Amendments. The Plan may not be amended with respect to any Fund to
increase materially the amount of the fees payable pursuant to the Plan, as
described in Section 1 above, unless the amendment is approved by a vote of at
least a majority of the outstanding voting securities of that Fund, and all
material amendments to the Plan must also be approved by the Company's Board of
Directors in the manner described in Section 5 above.
9. Selection of Certain Directors. While the Plan is in effect, the
selection and nomination of the Company's Directors who are not interested
persons of the Company will be committed to the discretion of the Directors then
in office who are not interested persons of the Company.
10. Written Reports. In each year during which the Plan remains in
effect, the Underwriter and any person authorized to direct the disposition of
monies paid or payable by the Company pursuant to the Plan or any related
agreement will prepare and furnish to the Company's Board of Directors, and the
Board will review, at least quarterly, written reports, complying with the
requirements of the Rule, which set out the amounts expended
2
<PAGE>
under the Plan and the purposes for which those expenditures were made.
11. Preservation of Materials. The Company will preserve copies of the
Plan, any agreement relating to the Plan and any report made pursuant to Section
10 above, for a period of not less than six years (the first two years in an
easily accessible place) from the date of the Plan, agreement or report.
12. Meaning of Certain Terms. As used in the Plan, the terms "interested
person" and "majority of the outstanding voting securities" will be deemed to
have the same meaning that those terms have under the 1940 Act and the rules and
regulations under the 1940 Act, subject to any exemption that may be granted to
the Company under the 1940 Act by the Securities and Exchange Commission.
13. Effective Date. The effective date of the Plan with respect to each
Fund is as follows:
State Bond Cash Management Fund: March 17, 1993
3
<PAGE>
EXHIBIT 17
POWER OF ATTORNEY
-----------------
The undersigned Director of the State Bond Money Market Fund, a Maryland
corporation, hereby constitutes and appointed Kevin L. Howard, Richard M.
Carlblom, Peter S. Resnik and Don W. Cummings and each of them (with full power
to each of them to act alone), his true and lawful attorney-in-fact and agent,
with full power of substitution to each, for him and on his behalf and in his
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933 or the
Investment Company Act of 1940 (the "Acts"): registration statements on any form
or forms under the Acts, and any and all amendments and supplements thereto
(including post-effective amendments), with all exhibits and all agreements,
consents, exemptive applications and other documents and instruments necessary
or appropriate in connection therewith, each of said attorneys-in-fact and
agents being empowered to act with or without the others or other, to have full
power and authority to do or cause to be done in the name and on behalf of the
undersigned each and every act and thing requisite and necessary or appropriate
with respect thereto to be done in and about the premises in order to effectuate
the same, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 31st day
of July, 1995.
/s/William Faulkner
c:\stewart\armpoa
<PAGE>
POWER OF ATTORNEY
-----------------
The undersigned Director of the State Bond Money Market Fund, a Maryland
corporation, hereby constitutes and appointed Kevin L. Howard, Richard M.
Carlblom, Peter S. Resnik and Don W. Cummings and each of them (with full power
to each of them to act alone), his true and lawful attorney-in-fact and agent,
with full power of substitution to each, for him and on his behalf and in his
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933 or the
Investment Company Act of 1940 (the "Acts"): registration statements on any form
or forms under the Acts, and any and all amendments and supplements thereto
(including post-effective amendments), with all exhibits and all agreements,
consents, exemptive applications and other documents and instruments necessary
or appropriate in connection therewith, each of said attorneys-in-fact and
agents being empowered to act with or without the others or other, to have full
power and authority to do or cause to be done in the name and on behalf of the
undersigned each and every act and thing requisite and necessary or appropriate
with respect thereto to be done in and about the premises in order to effectuate
the same, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 31st day
of July, 1995.
/s/Patrick M. Finley
c:\stewart\armpoa
<PAGE>
POWER OF ATTORNEY
-----------------
The undersigned Director of the State Bond Money Market Fund, a Maryland
corporation, hereby constitutes and appointed Kevin L. Howard, Richard M.
Carlblom, Peter S. Resnik and Don W. Cummings and each of them (with full power
to each of them to act alone), his true and lawful attorney-in-fact and agent,
with full power of substitution to each, for him and on his behalf and in his
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933 or the
Investment Company Act of 1940 (the "Acts"): registration statements on any form
or forms under the Acts, and any and all amendments and supplements thereto
(including post-effective amendments), with all exhibits and all agreements,
consents, exemptive applications and other documents and instruments necessary
or appropriate in connection therewith, each of said attorneys-in-fact and
agents being empowered to act with or without the others or other, to have full
power and authority to do or cause to be done in the name and on behalf of the
undersigned each and every act and thing requisite and necessary or appropriate
with respect thereto to be done in and about the premises in order to effectuate
the same, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 31st day
of July, 1995.
/s/Chris L. Mahai
c:\stewart\armpoa
<PAGE>
POWER OF ATTORNEY
-----------------
The undersigned Director of the State Bond Money Market Fund, a Maryland
corporation, hereby constitutes and appointed Kevin L. Howard, Richard M.
Carlblom, Peter S. Resnik and Don W. Cummings and each of them (with full power
to each of them to act alone), his true and lawful attorney-in-fact and agent,
with full power of substitution to each, for him and on his behalf and in his
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933 or the
Investment Company Act of 1940 (the "Acts"): registration statements on any form
or forms under the Acts, and any and all amendments and supplements thereto
(including post-effective amendments), with all exhibits and all agreements,
consents, exemptive applications and other documents and instruments necessary
or appropriate in connection therewith, each of said attorneys-in-fact and
agents being empowered to act with or without the others or other, to have full
power and authority to do or cause to be done in the name and on behalf of the
undersigned each and every act and thing requisite and necessary or appropriate
with respect thereto to be done in and about the premises in order to effectuate
the same, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 31st day
of July, 1995.
/s/John R. Lindholm
c:\stewart\armpoa
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT TO SHAREHOLDERS FOR THE STATE BOND CASH MANAGEMENT FUND AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000355988
<NAME> STATE BOND MONEY FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> STATE BOND CASH MANAGEMENT FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 2,744,423
<INVESTMENTS-AT-VALUE> 2,744,423
<RECEIVABLES> 6,871
<ASSETS-OTHER> 542
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,751,836
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34,212
<TOTAL-LIABILITIES> 34,212
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,717,624
<SHARES-COMMON-STOCK> 2,717,624
<SHARES-COMMON-PRIOR> 2,019,543
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,717,624
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 129,226
<OTHER-INCOME> 0
<EXPENSES-NET> 19,538
<NET-INVESTMENT-INCOME> 109,688
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 109,688
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,107,717
<NUMBER-OF-SHARES-REDEEMED> 4,508,194
<SHARES-REINVESTED> 98,558
<NET-CHANGE-IN-ASSETS> 698,081
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,769
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93,554
<AVERAGE-NET-ASSETS> 2,442,250
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
