<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 1995
File Nos. 2-51914
and 811-2521
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. 50
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 28
KEYSTONE LIQUID TRUST
(Exact name of Registrant as specified in Charter)
200 Berkeley Street, Boston, Massachusetts 02116-5034
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code:
(617) 338-3200
Rosemary D. Van Antwerp, Esq., 200 Berkeley Street,
Boston, MA 02116-5034
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on (date) pursuant to paragraph (b) of Rule 485
_X_ 60 days after filing pursuant to paragraph (a)(i) of Rule 485
___ on (date) pursuant to paragraph (a)(i) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
___ on (date) pursuant to paragraph (a)(ii) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite amount of its securities under the Securities Act of
1933. The Rule 24f-2 Notice for the issuer's fiscal year ended June 30, 1995 was
filed on August, 18, 1995.
<PAGE>
KEYSTONE LIQUID TRUST
CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 50
to
REGISTRATION STATEMENT
This Post-Effective Amendment No. 50 to Registration
Statement No. 2-51914/811-2521 consists of the following pages,
items of information and documents.
The Facing Sheet
The Contents Page
The Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
PART C - OTHER INFORMATION - ITEM 24(a) and 24(b)
Financial Statements
Independent Auditors' Report
Listing of Exhibits
PART C - OTHER INFORMATION - ITEMS 25-32 - AND SIGNATURE PAGES
Number of Holders of Securities
Indemnification
Business and Other Connections
Principal Underwriter
Location of Accounts and Records
Signatures
Exhibits (including Powers of Attorney)
<PAGE>
KEYSTONE LIQUID TRUST
Cross-Reference Sheet pursuant to Rules 404 and 495 under the Securities Act of
1933.
Items in
Part A of
Form N-1A Prospectus Caption
--------- -------------------
1 Cover Page
2 Fee Table
3 Performance Data
Financial Highlights
4 Cover Page
Fund Description
Fund Investment Objective and Policies
Investment Restrictions
Risk Factors
5 Fund Management and Expenses
Additional Information
5a Not Applicable
6 Fund Description
Dividends and Taxes
Fund Shares
Shareholder Services
Pricing Shares
7 How to Buy Shares
Alternative Sales Options
Distribution Plans
Shareholder Services
8 How to Redeem Shares
Contingent Deferred Sales Charge and
Waiver of Sales Charge
9 Not applicable
<PAGE>
Items in
Part B of
Form N-1A Statement of Additional Information Caption
--------- -------------------------------------------
10 Cover Page
11 Table of Contents
12 Not applicable
13 The Fund's Objectives and Policies
Investment Restrictions
Brokerage
Appendix
14 Declaration of Trust
Trustees and Officers
15 Additional Information
16 Sales Charges
Distribution Plans
Investment Manager
Investment Adviser
Principal Underwriter
Additional Information
17 Brokerage
18 The Fund's Objectives and Policies
Declaration of Trust
19 Valuation and Redemption of Securities
Distribution Plans
20 Distributions and Taxes
21 Principal Underwriter
22 Yield Quotations
23 Financial Statements
<PAGE>
KEYSTONE LIQUID TRUST
PART A
PROSPECTUS
<PAGE>
- ------------------------------------------------------------------------------
PROSPECTUS OCTOBER 30, 1995
- ------------------------------------------------------------------------------
KEYSTONE LIQUID TRUST
200 BERKELEY STREET, BOSTON, MASSACHUSETTS 02116-5034
CALL TOLL FREE 1-800-343-2898
- ------------------------------------------------------------------------------
Keystone Liquid Trust (the "Fund") is a money market mutual fund that seeks
high current income from short-term securities while preserving capital and
maintaining liquidity.
Generally, the Fund offers three classes of shares. Information on share
classes and their fee and sales charge structures may be found in the Fund's fee
table, "How to Buy Shares," "Alternative Sales Options," "Contingent Deferred
Sales and Waiver of Sales Charge," "Distribution Plans," and "Fund Shares."
This prospectus sets forth concisely the information about the Fund that
you should know before investing. Please read it and retain it for future
reference.
Additional information about the Fund is contained in a statement of
additional information dated October 30, 1995, which has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
prospectus. For a free copy, or for other information about the Fund, write to
the address or call the toll free telephone number listed above.
WHILE THE FUND INTENDS TO MAINTAIN A NET ASSET VALUE PER SHARE OF $1.00,
THERE IS NO ASSURANCE THAT IT WILL BE ABLE TO DO SO. SHARES OF THE FUND ARE
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------------------------------------
Page Page
<S> <C> <C> <C>
Fee Table ......................................... 2 Contingent Deferred Sales Charge and
Financial Highlights .............................. 3 Waiver of Sales Charge ....................... 14
Fund Description .................................. 6 Distribution Plans ............................ 15
Fund Objective and Policies ....................... 6 How to Redeem Shares .......................... 16
Investment Restrictions ........................... 7 Monthly Distribution Plans .................... 18
Pricing Shares .................................... 8 Shareholder Services .......................... 19
Dividends and Taxes ............................... 9 Performance Data .............................. 20
Fund Management and Expenses ...................... 9 Fund Shares ................................... 20
How to Buy Shares ................................. 11 Additional Information ........................ 21
Alternative Sales Options ......................... 12 Additional Investment Information.............. (i)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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>
FEE TABLE
KEYSTONE LIQUID TRUST
The purpose of this fee table is to assist investors in understanding the
costs and expenses that an investor in each class will bear directly or
indirectly. For more complete descriptions of the various cost and expenses, see
the following sections of this prospectus: "Fund Management and Expenses"; "How
to Buy Shares"; "Alternative Sales Options"; "Contingent Deferred Sale Charge
and Waiver of Sales Charges"; "Distribution Plans"; and "Shareholder Services."
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
NO LOAD BACK END LEVEL LOAD
SHAREHOLDER TRANSACTION EXPENSES OPTION LOAD OPTION<F1> OPTION<F2>
-------------- --------------- --------------
<S> <C> <C> <C>
Sales Charge ...................................... None None None
(as a percentage of offering price)
Contingent Deferred Sales Charge .................. 0.00% 5.00% in the first year 1.00% in the first
(as a percentage of the lesser of cost or declining to 1.00% in year and 0.00%
market value of shares redeemed) the sixth year and 0.00% thereafter
thereafter
Exchange Fee (per exchange)<F3>.................... $10.00 $10.00 $10.00
ANNUAL FUND OPERATING EXPENSES<F4>
(as a percentage of average net assets)
Management Fees ................................... 0.50% 0.50% 0.50%
12b-1 Fees ........................................ 0.09% 1.00%<F5> 1.00%<F5>
Other Expenses .................................... 0.33% 0.34% 0.32%
---- ---- ----
Total Fund Operating Expenses ..................... 0.92% 1.84% 1.82%
==== ==== ====
EXAMPLES<F6>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each period:
Class A ................................................................... $ 9.00 $29.00 $ 51.00 $113.00
Class B ................................................................... $69.00 $88.00 $120.00 n/a
Class C ................................................................... $28.00 $57.00 $ 99.00 $214.00
You would pay the following expenses on a $1,000 investment, assuming no
redemption at the end of each period:
Class A ................................................................... $ 9.00 $29.00 $ 51.00 $113.00
Class B ................................................................... $19.00 $58.00 $100.00 n/a
Class C ................................................................... $18.00 $57.00 $ 99.00 $214.00
AMOUNTS SHOWN IN THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
<FN>
- ----------
<F1>Class B shares purchased on or after June 1, 1995 convert tax free to Class A shares after eight years. See "Class B Shares"
for more information.
<F2>Class C shares are available only through dealers who have entered into special distribution agreements with Keystone
Investment Distributors Company, the Fund's principal underwriter.
<F3>There is no exchange fee for exchange orders received by the Fund from individual investors over the Keystone Automated
Response Line ("KARL"). (For a description of KARL, see "Shareholder Services.")
<F4>Expense ratios are for the Fund's fiscal year ended June 30, 1995.
<F5>Long term shareholders may pay more than the economic equivalent of the maximum front end sales charges otherwise permitted
by the National Association of Securities Dealers, Inc. ("NASD").
<F6>The Securities and Exchange Commission requires use of a 5% annual return figure for purposes of this example. Actual return
for the Fund may be greater or less than 5%.
</FN>
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
KEYSTONE LIQUID TRUST
CLASS A SHARES
(For a share outstanding throughout the year)
The following table contains important financial information with respect
to the Fund and has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. The table has been taken from the Fund's Annual Report
and should be read in conjunction with the Fund's financial statements and
related notes, which also appear, together with the independent auditors'
report, in the Fund's Annual Report. The Fund's financial statements, related
notes, and independent auditors' report are included in the statement of
additional information.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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.................... .0454 .0235 .0230 .0386 .0634 .0760 .0786 .0597 .0524 .0667
Net realized gain (loss) on investments.. -0- -0- (.0001) .0003 -0- -0- .0001 (.0001) -0- (.0002)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations ....... .0454 .0235 .0229 .0389 .0634 .0760 .0787 .0596 .0524 .0665
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from above sources ........... (.0454) (.0235) (.0229) (.0389) (.0634) (.0760) (.0787) (.0596) (.0524) (.0665)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
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 ........................... 4.63% 2.37% 2.31% 3.96% 6.47% 7.81% 8.18% 6.31% 5.35% 6.85%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets:
Net investment income ................ 4.42% 2.50% 2.29% 3.99% 6.51% 7.53% 7.88% 5.99% 5.30% 6.67%
Total expenses ....................... 0.92% 1.02% 1.11% 1.10% 0.92% 1.00% 1.00% 1.00% 1.00% 1.00%
Net assets, end of year (thousands) .... $245,308 $398,617 $189,167 $227,115 $400,597 $406,306 $475,640 $461,032 $375,542 $326,149
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
KEYSTONE LIQUID TRUST
CLASS B SHARES
(For a share outstanding throughout the period)
The following table contains important financial information with respect
to the Fund and has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. The table has been taken from the Fund's Annual Report
and should be read in conjunction with the Fund's financial statements and
related notes, which also appear, together with the independent auditors'
report, in the Fund's Annual Report. The Fund's financial statements, related
notes, and independent auditors' report are included in the statement of
additional information.
FEBRUARY 1, 1993
YEAR ENDED JUNE 30, (DATE OF INITIAL
------------------- PUBLIC OFFERING)
1995 1994 TO JUNE 30, 1993
---- ---- -----------------
NET ASSET VALUE BEGINNING OF PERIOD ... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income ................. .0362 .0142 .0047
Net realized gain (loss)
on investments ....................... -0- -0- (.0001)
------- ------- -------
Total from investment operations ...... .0362 .0142 .0046
------- ------- -------
LESS DISTRIBUTIONS
Dividends from above sources .......... (.0362) (.0142) (.0046)
------- ------- -------
NET ASSET VALUE, END OF PERIOD ........ $ 1.00 $ 1.00 $ 1.00
======= ======= =======
TOTAL RETURN(b) ....................... 3.68% 1.43% 0.46%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets:
Net investment income ............... 3.66% 1.84% 1.08%*(a)
Total expenses ...................... 1.84% 1.85% 2.15%(a)
Net assets, end of period
(thousands) .......................... $ 7,281 $11,198 $ 241
(a) Annualized.
(b) Excluding applicable sales charges.
<PAGE>
FINANCIAL HIGHLIGHTS
KEYSTONE LIQUID TRUST
CLASS C SHARES
(For a share outstanding throughout the period)
The following table contains important financial information with respect
to the Fund and has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. The table has been taken from the Fund's Annual Report
and should be read in conjunction with the Fund's financial statements and
related notes, which also appear, together with the independent auditors'
report, in the Fund's Annual Report. The Fund's financial statements, related
notes, and independent auditors' report are included in the statement of
additional information.
FEBRUARY 1, 1993
YEAR ENDED JUNE 30, (DATE OF INITIAL
------------------- PUBLIC OFFERING)
1995 1994 TO JUNE 30, 1993
---- ---- -----------------
NET ASSET VALUE BEGINNING OF PERIOD ... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income ................. .0362 .0142 .0045
Net realized gain (loss)
on investments ....................... -0- -0- (.0002)
------- ------- -------
Total from investment operations ...... .0362 .0142 .0043
------- ------- -------
LESS DISTRIBUTIONS
Dividends from above sources .......... (.0362) (.0142) (.0043)
------- ------- -------
NET ASSET VALUE, END OF PERIOD ........ $ 1.00 $ 1.00 $ 1.00
======= ======= =======
TOTAL RETURN .......................... 3.68% 1.43% 0.43%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets:
Net investment income ............... 3.52% 1.97% 1.01%(a)
Total expenses ...................... 1.82% 1.86% 2.09%(a)
Net assets, end of period
(thousands) .......................... $ 4,112 $ 6,599 $ 34
(a) Annualized.
<PAGE>
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FUND DESCRIPTION
- ------------------------------------------------------------------------------
The Fund (formerly American Liquid Trust) is an open-end, diversified
management investment company, commonly known as a mutual fund. The Fund has
been operating continuously since May 22, 1975, when it was created under
Massachusetts law as a Massachusetts business trust. The Fund is one of twenty
funds managed by Keystone Management, Inc. ("Keystone Management"), the Fund's
investment manager, and is one of thirty funds managed or advised by Keystone
Investment Management Company (formerly named Keystone Custodian Funds, Inc.)
("Keystone"), the Fund's investment adviser. Keystone and Keystone Management
are, from time to time, also collectively referred to as "Keystone."
- ------------------------------------------------------------------------------
FUND OBJECTIVE AND POLICIES
- ------------------------------------------------------------------------------
The Fund's investment objective is to provide shareholders with high current
income from short-term money market instruments while emphasizing preservation
of capital and maintaining excellent liquidity. The Fund pursues this objective
by investing in money market instruments maturing in 397 days or less. Such
instruments include (1) commercial paper, including master demand notes; (2)
obligations issued or guaranteed by the United States ("U.S.") government or by
any U.S. agency or instrumentality; (3) obligations, including certificates of
deposit and bankers' acceptances of banks or savings and loan associations
having at least $1 billion in assets as of the date of their most recently
published financial statements that are members of the Federal Deposit Insurance
Corporation, including U.S. branches of foreign banks and foreign branches of
U.S. banks; and (4) corporate obligations that at the date of investment are
rated AA or better by Standard & Poor's Corporation ("S&P") or AA or better by
Moody's Investor's Service, Inc. ("Moody's"). The Fund may invest up to 100% of
its assets in U.S. government securities, obligations of domestic branches of
U.S. banks and repurchase agreements of such banks.
The Fund will limit its investments, including repurchase agreements, to those
U.S. dollar-denominated instruments that Keystone determines present minimal
credit risk and are at the time of acquisition eligible securities ("Eligible
Securities") as defined under Rule 2a-7 of the Investment Company Act of 1940
("1940 Act"). Eligible Securities include (1) securities rated by the requisite
rating agencies at the date of investment in one of the two highest short-term
rating categories; (2) securities of issuers receiving such rating with respect
to other short-term debt securities; and (3) comparable unrated securities.
Requisite rating agencies means any two agencies that have issued a rating with
respect to a security or class of debt obligations of an issuer or one rating
agency, if only one agency has issued a rating with respect to such security or
issuer. If the Fund purchases securities that are unrated or that have been
rated by a single rating agency, the purchase must be approved or ratified by
the Fund's Board of Trustees.
The short-term ratings are as follows: A-1 and
A-2, the two highest ratings given by S&P; Prime-1 and Prime-2, the two
highest ratings given by Moody's; and F-1 and F-2, the two highest ratings
given by Fitch Investors Service, Inc. ("Fitch").
While the Fund may purchase single rated or unrated securities, the Fund
anticipates that at least 95% of its assets will be invested in instruments that
at the date of investment are rated or deemed to be of comparable quality to
securities rated in the highest short-term rating categories by any two rating
agencies. The Fund will not invest more than 5% of its assets in securities
issued by any one issuer, except for securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities. The Fund will not invest more
than 5% of its assets in securities rated in the second highest short-term
rating category.
The Fund may invest in restricted securities, including securities eligible
for resale pursuant to Rule 144A under the Securities Act of 1933 (the "1933
Act"). Generally, Rule 144A establishes a safe harbor from the registration
requirements of the 1933 Act for resales by large institutional investors of
securities not publicly traded in the U.S. The Fund may purchase Rule 144A
securities when such securities present an attractive investment opportunity and
otherwise meet the Fund's selection criteria. The Board of Trustees has adopted
guidelines and procedures pursuant to which the liquidity of the Fund's Rule
144A securities is determined by Keystone and monitors Keystone's implementation
of such guidelines and procedures.
At the present time, the Fund cannot accurately predict exactly how the market
for Rule 144A securities will develop. A Rule 144A security that was readily
marketable upon purchase may subsequently become illiquid. In such an event, the
Board of Trustees will consider what action, if any, is appropriate.
The Fund is designed for individuals and institutions, including counselors,
brokers, lawyers, accountants, charitable and religious organizations and others
acting in a fiduciary, advisory, agency, custodial or similar capacity. The Fund
offers a convenient alternative to investing directly in money market
instruments by eliminating the mechanical problems normally associated with
direct investments while, most importantly, providing the opportunity to obtain
the higher yields often available from money market investments made in large
denominations.
Investors should consider that, because interest rates on money market
instruments fluctuate in response to economic factors, the rates on short-term
investments made by the Fund and the daily dividend paid to shareholders will
vary, rising or falling with short-term rates generally, and that yields from
short-term securities may be lower than yields from longer term securities.
Also, the value of the Fund's securities will fluctuate inversely with interest
rates, the amount of outstanding debt and other factors. In addition, the Fund's
investments in certificates of deposit issued by U.S. branches of foreign banks
and foreign branches of U.S. banks involve somewhat more risk, but also more
potential reward (higher interest rates), than investments in comparable
domestic obligations.
The securities in which the Fund may invest may not earn as high a level of
current income as longer term or lower quality securities, which generally have
less liquidity, greater market risk and more price fluctuation.
If and when the Fund invests in zero coupon bonds, the Fund does not expect to
have enough zero coupon bonds to have a material effect on dividends. The Fund
has undertaken to a state securities authority to disclose that zero coupon
securities pay no interest to holders prior to maturity, and the interest on
these securities is reported as income to the Fund and distributed to its
shareholders. These distributions must be made from the Fund's cash assets or,
if necessary, from the proceeds of sales of portfolio securities. The Fund will
not be able to purchase additional income producing securities with cash used to
make such distributions and its current income ultimately may be reduced as a
result.
The Fund may enter into reverse repurchase agreements and purchase and sell
securities on a when issued or delayed delivery basis.
The average weighted maturity of the Fund's investments will not exceed 90
days.
For further information about the types of investments and investment
techniques available to the Fund, including the associated risks, see
"Additional Investment Information" and the statement of additional information.
Of course, there can be no assurance that the Fund will achieve its investment
objective since there is uncertainty in every investment.
- ------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
The Fund has adopted the fundamental restrictions summarized below, which may
not be changed without the vote of a majority of the Fund's outstanding shares
(as defined in the 1940 Act). These restrictions and certain other fundamental
and nonfundamental restrictions are set forth in the statement of additional
information. Unless otherwise stated, all references to the Fund's assets are in
terms of current market value.
Generally, the Fund will not (1) invest more than 5% of its assets in the
securities of any one issuer other than the U.S. government; (2) borrow money,
except that, in an aggregate amount not to exceed one-third of the Fund's
assets, including the amount borrowed, the Fund may borrow money from banks on a
temporary basis or enter into reverse repurchase agreements; (3) pledge more
than 15% of its assets to secure borrowings; and (4) invest more than 10% of its
assets in repurchase agreements maturing in more than seven days.
The Fund intends to follow policies of the Securities and Exchange Commission
as they are adopted from time to time with respect to illiquid securities,
including, at this time, (1) treating as illiquid, securities which may not be
sold or disposed of in the ordinary course of business within seven days at
approximately the value at which the Fund has valued the investment on its books
and (2) limiting its holdings of such securities to less than 10% of net assets.
In order to comply with Securities and Exchange Commission regulations
relating to money market funds, the Fund will apply the 5% limit of assets
invested in the securities of any one issuer, set forth in the first investment
restriction above, to 100% of the Fund's assets.
As a matter of practice, the Fund treats reverse repurchase agreements as
borrowings for purposes of compliance with the limitations of the 1940 Act.
Reverse repurchase agreements will be taken into account along with borrowings
from banks for purposes of the one-third limit set forth in the second
investment restriction above.
In addition, the Fund may, notwithstanding any other investment policy or
restriction, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and restrictions as the Fund. The Fund does not currently
intend to implement this policy and would do so only if the Trustees were to
determine such action to be in the best interest of the Fund and its
shareholders. In the event of such implementation, the Fund will comply with
such requirements as to written notice to shareholders as are then in effect.
- ------------------------------------------------------------------------------
PRICING SHARES
- ------------------------------------------------------------------------------
The net asset value of a Fund share is computed each day on which the New York
Stock Exchange (the "Exchange") is open as of the close of trading on the
Exchange (currently 4:00 p.m. Eastern time for the purpose of pricing Fund
shares) except on days when changes in the value of the Fund's securities do not
affect the current net asset value of its shares. The Exchange is currently
closed on weekends, New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of the Fund is arrived at by determining the value of all of the
Fund's assets, subtracting its liabilities and dividing the result by the number
of its outstanding shares.
Since the net income of the Fund is declared as a dividend each time net
income is determined, the net asset value per share is expected to remain at
$1.00 immediately after each dividend declaration. The Fund expects to have net
income at the time of each dividend determination. If for any reason there is a
net loss, the Fund will first offset such amount pro rata against dividends
accrued during the month in each shareholder account. To the extent that such a
net loss would exceed such accrued dividends, the Fund will reduce the number of
its outstanding shares by having each shareholder contribute to the Fund's
capital his pro rata portion of the total number of shares required to be
cancelled in order to maintain a net asset value of $1.00 per share of the Fund.
EACH SHAREHOLDER WILL BE DEEMED TO HAVE AGREED TO SUCH A CONTRIBUTION IN THESE
CIRCUMSTANCES BY HIS INVESTMENT IN THE FUND.
The Fund values its money market investments as follows: (1) money market
investments maturing in sixty days or less are valued at amortized cost
(original purchase cost as adjusted for amortization of premium or accretion of
discount), which, when combined with accrued interest approximates market; and
(2) money market investments maturing in more than sixty days for which market
quotations are readily available are valued at current market value. All other
investments are valued at market value or, where market quotations are not
readily available, at fair value as determined in good faith by the Fund's Board
of Trustees.
- ------------------------------------------------------------------------------
DIVIDENDS AND TAXES
- ------------------------------------------------------------------------------
The Fund has qualified and intends to qualify in the future as a regulated
investment company under the Internal Revenue Code (the "Code"). The Fund
qualifies if, among other things, it distributes to its shareholders at least
90% of its net investment income for its fiscal year. The Fund also intends to
make timely distributions, if necessary, sufficient in amount to avoid the
nondeductible 4% excise tax imposed on a regulated investment company to the
extent that it fails to distribute, with respect to each calendar year, at least
98% of its ordinary income for such calendar year and 98% of its net capital
gains for the one-year period ending on October 31 of such calendar year. Any
taxable distribution declared in October, November, or December to shareholders
of record in such a month, and paid by the following January 31, will be
includable in the taxable income of shareholders on December 31 of the year in
which such distributions were declared. If the Fund qualifies and if it
distributes substantially all of its net investment income and net capital
gains, if any, to shareholders, it will be relieved of any federal income tax
liability.
The Fund declares dividends daily from its net investment income and net
capital gains, if any, and makes distributions to its shareholders monthly.
Shareholders receive Fund distributions in the form of additional shares of that
class of shares upon which the distribution is based or, at the shareholder's
option, in cash. Fund distributions in the form of additional shares are made at
net asset value without the imposition of a sales charge.
Because Class B and Class C shares bear the costs of distribution of their
shares through a higher annual distribution fee than Class A shares, expenses
attributable to Class B shares and Class C shares will generally be higher, and
income distributions paid by the Fund with respect to Class A shares will
generally be greater, than those paid with respect to Class B and Class C
shares.
For federal income tax purposes, income dividends and net short-term gains
distributions are taxable as ordinary income. Dividends and distributions may
also be subject to state and local taxes. The Fund advises its shareholders
annually as to the federal tax status of all distributions made during the year.
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FUND MANAGEMENT AND EXPENSES
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FUND MANAGEMENT
Subject to the general supervision of the Fund's Board of Trustees, Keystone
Management, located at 200 Berkeley Street, Boston, Massachusetts 02116-5034,
serves as investment manager to the Fund and is responsible for the overall
management of the Fund's business and affairs. Keystone Management, organized in
1989, is a wholly-owned subsidiary of Keystone. Its directors and principal
executive officers have been affiliated with Keystone, a seasoned investment
adviser, for a number of years. Keystone Management also serves as investment
manager to each of the funds in the Keystone Fund Family and to certain other
funds in the Keystone Investments Family of Funds.
The Fund pays Keystone Management a fee for its services at the following
annual rate:
(1) .50 of 1% of the average daily value of the net assets of the Fund on
the first $500,000,000 of such assets; plus
(2) .45 of 1% of the average daily value of the net assets of the Fund that
exceed $500,000,000 and are less than $1,000,000,000; plus
(3) .40 of 1% of the average daily value of the net assets of the Fund
that are $1,000,000,000 or more;
computed and accrued as of the close of each business day.
Pursuant to its Management Agreement with the Fund, Keystone Management has
delegated its investment management functions, except for certain administrative
and management services to be performed by Keystone Management, to Keystone and
has entered into an Advisory Agreement with Keystone under which Keystone
provides investment advisory and management services to the Fund. Services
performed by Keystone Management include (1) performing research and planning
with respect to (a) the Fund's qualification as a regulated investment company
under Subchapter M of the Code, (b) tax treatment of the Fund's portfolio
investments, (c) tax treatment of special corporate actions (such as
reorganizations), (d) state tax matters affecting the Fund, and (e) the Fund's
distributions of income and capital gains; (2) preparing the Fund's federal and
state tax returns; (3) providing services to the Fund's shareholders in
connection with federal and state taxation and distributions of income and
capital gains.
Keystone, located at 200 Berkeley Street, Boston, Massachusetts 02116-5034,
has provided investment advisory and management services to investment companies
and private accounts since it was organized in 1932. Keystone is a wholly-owned
subsidiary of Keystone Investments, Inc. (formerly named Keystone Group, Inc.)
("Keystone Investments"), located at 200 Berkeley Street, Boston, Massachusetts
02116-5034.
Keystone Investments is a corporation predominantly owned by current and
former members of management of Keystone and its affiliates. The shares of
Keystone Investments common stock beneficially owned by management are held in a
number of voting trusts, the trustees of which are George S. Bissell, Albert H.
Elfner, III, Edward F. Godfrey and Ralph J. Spuehler, Jr. Keystone Investments
provides accounting, bookkeeping, legal, personnel and general corporate
services to Keystone Management, Keystone, their affiliates and the Keystone
Investments Family of Funds.
Pursuant to its Advisory Agreement with Keystone Management, Keystone receives
for its services an annual fee representing 85% of the management fee received
by Keystone Management under its Management Agreement with the Fund.
During the fiscal year ended June 30, 1995, the Fund paid or accrued to
Keystone Management investment management fees and administrative service fees
of $1,923,870, which represented 0.50% of the Fund's average net assets. Of such
amount paid to Keystone Management, $1,635,290 was paid to Keystone for its
services to the Fund.
FUND EXPENSES
In addition to the investment advisory and management fees discussed above,
the principal expenses that the Fund is expected to pay include, but are not
limited to, expenses of its transfer agent, its custodian and its independent
auditors; fees of its independent Trustees ("Independent Trustees"); expenses of
shareholders' and Trustees' meetings; fees payable to government agencies,
including registration and qualification fees of the Fund and its shares under
federal and state securities laws; expenses of preparing, printing and mailing
Fund prospectuses, notices, reports and proxy material and certain extraordinary
expenses. In addition, each class will pay all of the expenses attributable to
it. Such expenses are currently limited to Distribution Plan expenses. The Fund
will also pay its brokerage commissions, interest charges and taxes.
During the fiscal year ended June 30, 1995, the Fund paid or accrued $24,777
to Keystone Investments, Inc. as reimbursement for certain accounting and
printing services provided to the Fund, and $866,507 was paid or accrued to
Keystone Investor Resource Center, Inc. ("KIRC") the Fund's transfer and
dividend disbursing agent, for shareholder services. KIRC is a wholly-owned
subsidiary of Keystone.
SECURITIES TRANSACTIONS
Under policies established by the Board of Trustees, Keystone selects
broker-dealers to execute transactions subject to the receipt of best execution.
When selecting broker-dealers to execute portfolio transactions for the Fund,
Keystone may follow a policy of considering as a factor the number of shares of
the Fund sold by such broker-dealers. In addition, broker-dealers may, from time
to time, be affiliated with the Fund, Keystone Management, Keystone, the Fund's
principal underwriter or their affiliates.
PORTFOLIO TURNOVER
The Fund will not trade in securities for short-term profits, but, when
circumstances warrant, securities may be sold without regard to the length of
time held.
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HOW TO BUY SHARES
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Keystone Investment Distributors Company (formerly named Keystone
Distributors, Inc.) (the "Principal Underwriter") serves as the Fund's principal
underwriter. The Principal Underwriter is a wholly-owned subsidiary of Keystone
and is located at 200 Berkeley Street, Boston, Massachusetts 02116-5034.
All classes of Fund shares are sold on a continuing basis without a sales load
at net asset value, which is expected to be $1.00 per share on each day on which
banks in both Boston and New York are open for business. An initial purchase of
Fund shares must be at least $1,000. There is no minimum amount for subsequent
purchases.
Investors may purchase shares by the methods described below.
BY FEDERAL RESERVE OR BANK WIRE (immediate credit for purchase of funds)
Instruct your bank to forward federal funds to:
State Street Bank and Trust Co. -- Boston
ABA #0110-0002-8
Keystone Liquid Trust No. 0127-654-2
Shareholder Account Name (As registered
Shareholder Account Number with the Fund)
Attn: Dept. H.L.
To open a new account, please observe the following procedures:
(1) The wire must (a) carry the account name as it is to be registered and (b)
state that it is a "new account." An account number will be assigned when
the account is opened.
(2) A completed application and order form must be mailed to the Fund at the
address shown at the top of the form. The completed form may be sent after
the wire.
The minimum amount for subsequent wire investments is $2,500. Some banks may
charge for wires.
BY CHECK
Make your check or negotiable bank draft payable to "Keystone Liquid Trust,"
include the check with a completed application and mail to:
Keystone Investor Resource Center, Inc.
P.O. Box 2121
Boston, MA 02106-2121
For subsequent purchases be sure to include the detachable purchase stub from
your account statement.
GENERAL
Brokers, banks and other financial institutions may assist their clients in
effecting transactions in the Fund's shares and may charge a fee for these
services.
Orders for the purchase of Fund shares become effective at the next
transaction time after federal funds or bank wire monies become available to
State Street Bank and Trust Company ("State Street") for a shareholder's
investment. The Fund's transaction time is the close of trading on the Exchange
(currently 4:00 p.m. Eastern time). Investments by wire received before 4:00
p.m. will become effective as of 4:00 p.m. and begin accruing dividends the next
business day. Purchase orders are accepted only on a day on which the Exchange
and State Street are open for business.
Money transmitted by a check drawn on a member of the Federal Reserve System
is converted to federal funds in one or two business days following receipt.
Checks drawn on banks that are not members of the Federal Reserve System may
take longer. Investments by checks that are scheduled for conversion to federal
funds on a given day will become effective as of 4:00 p.m. and receive the
dividend on Fund shares declared as of 4:00 p.m. on the following day. All
payments other than in federal funds (including checks from individual
investors) must be in U.S. dollars.
Your purchase of shares will be confirmed to you and your shares credited to
your account at the net asset value. Share certificates are not issued, except
upon the written request of a shareholder. Certificates are not issued for
fractional shares. Certificate shares are not eligible for the checking,
telephone, or monthly or quarterly redemption procedures. The Fund reserves the
right to reject any purchase order.
If you desire assistance in filling out the application form or have
questions, call KIRC toll free at 1-800-343-2898.
SUB-ACCOUNTING
The Fund offers free "sub-accounting" service to banks, brokers, investment
advisers and others who have multiple accounts. Multiple accounts may be carried
under one master account. Transaction advices and monthly reports are provided
for each sub-account individually, and that information also is included in
summary master account reports. For information concerning sub- accounting, call
KIRC at the telephone number listed above.
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ALTERNATIVE SALES OPTIONS
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Generally, the Fund offers three classes of shares:
CLASS A SHARES -- NO LOAD OPTION
Class A shares are sold without a sales charge at the time of purchase.
CLASS B SHARES -- BACK END LOAD OPTION
Class B shares are sold without a sales charge at the time of purchase, but
are, with certain exceptions, subject to a contingent deferred sales charge if
they are redeemed. Class B shares purchased on or after June 1, 1995 are subject
to a contingent deferred sales charge if redeemed during the 72 month period
commencing with and including the month of purchase. Class B shares purchased
prior to June 1, 1995 are subject to a deferred sales charge upon redemption
during the four calendar years following purchase. Class B shares purchased on
or after June 1, 1995 that have been outstanding for eight years from and
including the month of purchase will automatically convert to Class A shares
without the imposition of a front-end sales charge or exchange fee. Class B
shares purchased prior to June 1, 1995 will retain their existing conversion
rights.
CLASS C SHARES -- LEVEL LOAD OPTION
Class C shares are sold without a sales charge at the time of purchase, but
are subject to a deferred sales charge if they are redeemed within one year
after the date of purchase. Class C shares are available only through dealers
who have entered into special distribution agreements with the Principal
Underwriter.
Each class of shares, pursuant to its Distribution Plan, pays an annual
service fee of 0.25% of the Fund's average daily net assets attributable to that
class. In addition to the 0.25% service fee, the Class B and C Distribution
Plans provide for the payment of an annual distribution fee of up to 0.75% of
the average daily net assets attributable to their respective classes. As a
result, income distributions paid by the Fund with respect to Class B and Class
C shares will generally be less than those paid with respect to Class A shares.
In general, three Fund share classes have been established so that investors
in each class of any Keystone America Fund who wish to take advantage of the
exchange privilege within the Keystone America Fund Family can have a money
market fund exchange option available to them. Investors purchasing shares of
the Fund without regard to the availability of exchanges should consider Class A
shares because there is no distribution fee. (In the event of an exchange for
Class A shares of a Keystone America Fund, the applicable front end sales charge
will be imposed.) Investors who wish to have the ability to exchange their
shares for Class B or Class C shares of other Keystone America Funds should
consider purchasing Class B or Class C shares of the Fund, depending on the
amount and intended length of the investment.
The Fund will not normally accept any purchase of Class B shares in the amount
of $250,000 or more, and will not normally accept any purchase of Class C shares
in the amount of $1,000,000 or more.
CLASS A SHARES
Class A shares are offered at net asset value without an initial sales charge.
CLASS A DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan with respect to its Class A shares
("Class A Distribution Plan") that provides for expenditures, which are
currently limited to 0.25% annually of the average daily net asset value of
Class A shares, to pay expenses associated with the distribution of Class A
shares. Amounts paid by the Fund to the Principal Underwriter under the Class A
Distribution Plan are currently used to pay others, such as dealers, service
fees at an annual rate of up to 0.25% of the average daily net asset value of
Class A shares maintained by such recipients and outstanding on the books of the
Fund for specified periods.
CLASS B SHARES
Class B shares are offered at net asset value, without an initial sales
charge.
With respect to Class B shares purchased on or after June 1, 1995, the Fund,
with certain exceptions, imposes a deferred sales charge in accordance with the
following schedule:
DEFERRED
SALES
CHARGE
REDEMPTION TIMING IMPOSED
- ----------------- -------
First twelve month period .................... 5.00%
Second twelve month period ................... 4.00%
Third twelve month period .................... 3.00%
Fourth twelve month period ................... 3.00%
Fifth twelve month period .................... 2.00%
Sixth twelve month period .................... 1.00%
No deferred sales charge is imposed on amounts redeemed thereafter.
With respect to Class B shares sold prior to June 1, 1995, the Fund, with
certain exceptions, imposes a deferred sales charge of 3.00% on shares redeemed
during the calendar year of purchase and the first calendar year after the year
of purchase; 2.00% on shares redeemed during the second calendar year after the
year of purchase; and 1.00% on shares redeemed during the third calendar year
after the year of purchase. No deferred sales charge is imposed on amounts
redeemed thereafter. If imposed, the deferred sales charge is deducted from the
redemption proceeds otherwise payable to you. The deferred sales charge is
retained by the Principal Underwriter. Amounts received by the Principal
Underwriter under the Class B Distribution Plans are reduced by deferred sales
charges retained by the Principal Underwriter. See "Contingent Deferred Sales
Charge and Waiver of Sales Charges" below.
Class B shares purchased on or after June 1, 1995 that have been outstanding
for eight years from and including the month of purchase will automatically
convert to Class A shares (which are subject to a lower Distribution Plan
charge) without imposition of a front-end sales charge or exchange fee. Class B
shares purchased prior to June 1, 1995 will similarly convert to Class A shares
at the end of seven calendar years after the year of purchase. (Conversion of
Class B shares represented by share certificates will require the return of the
share certificates to KIRC.) The Class B shares so converted will no longer be
subject to the higher expenses borne by Class B shares. Under current law, it is
the Fund's opinion that such a conversion will not constitute a taxable event
under federal income tax law. In the event that this ceases to be the case, the
Board of Trustees will consider what action, if any, is appropriate and in the
best interests of the Class B shareholders.
CLASS B DISTRIBUTION PLANS
The Fund has adopted Distribution Plans with respect to its Class B shares
("Class B Distribution Plans") that provide for expenditures at an annual rate
of up to 1.00% of the average daily net asset value of Class B shares to pay
expenses of the distribution of Class B shares. Payments under the Class B
Distribution Plans are currently made to the Principal Underwriter (which may
reallow all or part to others, such as dealers) (1) as commissions for Class B
shares sold and (2) as shareholder service fees. Amounts paid or accrued to the
Principal Underwriter under (1) and (2) in the aggregate may not exceed the
annual limitation referred to above.
The Principal Underwriter generally reallows to brokers or others a commission
equal to 4.00% of the price paid for each Class B share sold plus the first
year's service fee in advance in the amount of 0.25% of the price paid for each
Class B share sold. Beginning approximately 12 months after the purchase of a
Class B share, the broker or other party will receive service fees at an annual
rate of 0.25% of the average daily net asset value of such Class B share
maintained by the recipient outstanding on the books of the Fund for specified
periods. See "Distribution Plans" below.
CLASS C SHARES
Class C shares are available only through dealers who have entered into
special distribution agreements with the Principal Underwriter. Class C shares
are offered at net asset value without an initial sales charge. With certain
exceptions, the Fund may impose a deferred sales charge of 1.00% on shares
redeemed within one year after the date of purchase. No deferred sales charge is
imposed on amounts redeemed thereafter. If imposed, the deferred sales charge is
deducted from the redemption proceeds otherwise payable to you. The deferred
sales charge is retained by the Principal Underwriter. See "Contingent Deferred
Sales Charge and Waiver of Sales Charges" below.
CLASS C DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan with respect to its Class C shares
("Class C Distribution Plan") that provides for expenditures at an annual rate
of up to 1.00% of the average daily net asset value of Class C shares to pay
expenses of the distribution of Class C shares. Amounts paid by the Fund under
the Class C Distribution Plan are currently used to pay others (dealers) (1) a
payment at the time of purchase normally equal to 1.00% of the value of each
share sold, such payment to consist of a commission in the amount of 0.75% plus
the first year's service fee in advance in the amount of 0.25%; and (2)
beginning approximately fifteen months after purchase, a commission at an annual
rate of 0.75% (subject to NASD rules -- see "Distribution Plans") plus service
fees at an annual rate of 0.25%, respectively, of the average daily net asset
value of each share maintained by such recipients outstanding on the books of
the Fund for specified periods. See "Distribution Plans" below.
CONTINGENT DEFERRED SALES CHARGE AND WAIVER OF SALES CHARGES
Any contingent deferred sales charge imposed upon the redemption of Class B or
Class C shares is a percentage of the lesser of (1) the net asset value of the
shares redeemed or (2) the net asset value at the time of purchase of such
shares. No contingent deferred sales charge is imposed when you redeem amounts
derived from (1) increases in the value of your account above the net cost of
such shares due to increases in the net asset value per share of the Fund; (2)
certain shares with respect to which the Fund did not pay a commission on
issuance, including shares acquired through reinvestment of dividend income and
capital gains distributions; (3) Class C shares held for more than one year from
the date of purchase; or (4) Class B shares held during more than four
consecutive calendar years or more than 72 months after purchase, as the case
may be. Upon request for redemption, shares not subject to the contingent
deferred sales charge will be redeemed first. Thereafter, shares held the
longest will be the first to be redeemed.
The Fund also may sell Class A, Class B or Class C shares at net asset value
without a contingent deferred sales charge to certain Directors, Trustees,
officers and employees of the Fund and Keystone and certain of their affiliates,
to registered representatives of firms with dealer agreements with the Principal
Underwriter and to a bank or trust company acting as a trustee for a single
account.
In addition, no contingent deferred sales charge is imposed on a redemption of
shares of the Fund in the event of (1) death or disability of the shareholder;
(2) a lump-sum distribution from a 401(k) plan or other benefit plan qualified
under the Employee Retirement Income Security Act of 1974 ("ERISA"); (3)
automatic withdrawals from ERISA plans if the shareholder is at least 59 1/2
years old; (4) involuntary redemptions of accounts having an aggregate net asset
value of less than $1,000; (5) automatic withdrawals under an automatic
withdrawal plan of up to 1 1/2% per month of the shareholder's initial account
balance; (6) withdrawals consisting of loan proceeds to a retirement plan
participant; (7) financial hardship withdrawals made by a retirement plan
participant; or (8) withdrawals consisting of returns of excess contributions or
excess deferral amounts made to a retirement plan participant.
ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS
The Principal Underwriter may, from time to time, provide promotional
incentives, including reallowance of up to the entire sales charge, to certain
dealers whose representatives have sold or are expected to sell significant
amounts of Fund shares. In addition, dealers may from time to time receive
additional cash payments. The Principal Underwriter may also provide written
information to dealers with whom it has dealer agreements that relates to sales
incentive campaigns conducted by such dealers for their representatives as well
as financial assistance in connection with pre-approved seminars, conferences
and advertising. No such programs or additional compensation will be offered to
the extent they are prohibited by the laws of any state or any self-regulatory
agency such as the NASD.
The Principal Underwriter may, at its own expense, pay concessions in addition
to those described above to dealers that satisfy certain criteria established
from time to time by the Principal Underwriter. These conditions relate to
increasing sales of shares of the Keystone funds over specified periods and
certain other factors. Such payments may, depending on the dealer's satisfaction
of the required conditions, be periodic and may be up to 0.25% of the value of
shares sold by such dealer.
The Principal Underwriter also may pay banks and other financial services
firms that facilitate transactions in shares of the Fund for their clients a
transaction fee up to the level of the payments made allowable to dealers for
the sale of such shares as described above. The Glass-Steagall Act currently
limits the ability of a depository institution (such as a commercial bank or a
savings and loan association) to become an underwriter or distributor of
securities. In the event the Glass-Steagall Act is deemed to prohibit depository
institutions from accepting payments under the arrangement described above, or
should Congress relax current restrictions on depository institutions, the Board
of Trustees will consider what action, if any, is appropriate.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
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DISTRIBUTION PLANS
- ------------------------------------------------------------------------------
As discussed above, the Fund bears some of the costs of selling its shares
under Distribution Plans adopted with respect to its Class A, Class B and Class
C shares pursuant to Rule 12b-1 under the 1940 Act.
NASD rules limit the amount that a Fund may pay annually in distribution costs
for sale of its shares and shareholder service fees. The NASD limits annual
expenditures to 1% of the aggregate average daily net asset value of its shares,
of which 0.75% may be used to pay such distribution costs and 0.25% may be used
to pay shareholder service fees. NASD rules also limit the aggregate amount
which the Fund may pay for such distribution costs to 6.25% of gross share sales
since the inception of the 12b-1 Distribution Plans, plus interest at the prime
rate plus 1% on such amounts (less any contingent deferred sales charges paid by
shareholders to the Principal Underwriter) remaining unpaid from time to time.
The Principal Underwriter intends, but is not obligated, to continue to pay or
accrue distribution charges incurred in connection with the Class B Distribution
Plans that exceed current annual payments permitted to be received by the
Principal Underwriter from the Fund. The Principal Underwriter intends to seek
full payment of such charges from the Fund (together with annual interest
thereon at the prime rate plus one percent) at such time in the future as, and
to the extent that, payment thereof by the Fund would be within the permitted
limits.
If the Fund's Independent Trustees authorize such payments, the effect would
be to extend the period of time during which the Fund incurs the maximum amount
of costs allowed by a Distribution Plan. If a Distribution Plan is terminated,
the Principal Underwriter will ask the Independent Trustees to take whatever
action they deem appropriate under the circumstances with respect to payment of
such amounts.
In connection with financing its distribution costs, including commission
advances to dealers and others, the Principal Underwriter has sold to a
financial institution substantially all of its 12b-1 fee collection rights and
contingent deferred sales charge collection rights in respect of Class B shares
sold during the two-year period commencing approximately June 1, 1995. The Fund
has agreed not to reduce the rate of payment of 12b-1 fees in respect of such
Class B shares unless it terminates such shares' Distribution Plan completely.
If it terminates such Distribution Plan, the Fund may be subject to possible
adverse distribution consequences.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class.
Unreimbursed distribution expenses at year-end June 30, 1995 for Class B and
Class C shares were $746,584 (10.25% of net assets) and $825,276 (20.07% of net
assets), respectively.
For the year ended June 30, 1995, the Fund paid the Principal Underwriter
$343,747, $119,037 and $70,834 in Distribution Plan fees for Class A, Class B
and Class C shares, respectively, which represent 0.09%, 1.00% and 1.00% of the
average net assets of Class A, B, and C shares, respectively.
Dealers or others may receive different levels of compensation depending on
which class of shares they sell. Payments pursuant to a Distribution Plan are
included in the operating expenses of the class.
- ------------------------------------------------------------------------------
HOW TO REDEEM SHARES
- ------------------------------------------------------------------------------
Shareholders may redeem Fund shares at their net asset value, expected to be a
constant $1.00 per share, next determined after receipt by the Fund of a proper
redemption request as described below. Shareholders may use one or more of the
methods listed below to redeem shares. Shareholders wishing to use a redemption
method other than the mail must complete the appropriate portions of the Fund's
application and may be asked to provide additional documentation as more fully
described under "Applications" below.
If imposed, the deferred sales charge is deducted from the redemption proceeds
otherwise payable to you.
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. In such a case, the Fund may delay the mailing of
a redemption check or the wiring or Electronic Fund Transfer ("EFT") of
redemption proceeds until good payment has been collected for the purchase of
such shares. This may take 15 days. Any delay may be avoided by purchasing
shares either with a certified check or by Federal Reserve or bank wire of funds
or by EFT. Although the mailing of a redemption check or the wiring or EFT of
redemption proceeds may be delayed, the redemption value will be determined and
the redemption processed in the ordinary course of business upon receipt of
proper documentation. In such a case, after the redemption and prior to the
release of the proceeds, no appreciation or depreciation will occur in the value
of the redeemed shares, and no interest will be paid on the redemption proceeds.
If the payment of a redemption has been delayed, the check will be mailed or the
proceeds wired or sent EFT promptly after good payment has been collected.
The Fund computes the amount due you at the close of the Exchange at the end
of the day on which it has received all proper documentation from you. Payment
of the amount due on redemption, less any applicable contingent deferred sales
charge (as described above), will be made within seven days thereafter except as
discussed herein.
When requesting a redemption, a shareholder should state the redemption
amount. The redemption order should also include the account name as registered
with the Fund and the account number.
If a shareholder withdraws the entire amount in his or her account at any time
during the month, all dividends declared but not yet paid on the shareholder's
shares will be paid at the time of such withdrawal. Any former shareholder, when
reinvesting, should indicate his or her former account number on the application
or correspondence.
BY CHECK
If requested, the Fund will establish a checking account for each class of
shares held by the shareholder with State Street. Checks may be drawn for $500
or more payable to anyone. When a check is presented to State Street for
payment, it will cause the Fund to redeem at the net asset value next determined
a sufficient number of the shareholder's shares to cover the check. A
shareholder thereby receives the daily dividends declared on the shares to be
redeemed to cover the check through the day State Street instructs the Fund to
redeem them. There is currently no charge to the shareholder for this checking
account.
BY TELEPHONE
A shareholder may redeem any amount from his or her account by calling
toll-free 1-800-343-2898 or by using the Keystone Automated Response Line
("KARL"). (See the "Shareholder Services" section of this prospectus for a
description of KARL.)
In order to insure that instructions received by KIRC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation of
your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if the
address and bank account of record have been the same for a minimum period of 30
days.
If the redemption proceeds are less than $2,500, they will be mailed by check.
If they are $2,500 or more, they will be mailed or wired to your previously
designated bank account as you direct. If you do not specify how you wish your
redemption proceeds to be sent, they will be mailed by check.
If you cannot reach the Fund by telephone, you should follow the procedures
for redeeming by mail or through a broker as set forth herein.
BY MAIL
A shareholder may withdraw any amount from his or her account at any time by
mail. Written requests for withdrawal, accompanied by properly endorsed
certificates, if issued, should be sent to the Fund, c/o KIRC. Each written
request for redemption and all accompanying certificates must be signed by the
shareholder with SIGNATURES GUARANTEED in the manner prescribed under
"Applications" below. Further documentation may be required from corporations,
fiduciaries, partnerships and other shareholders.
When a written redemption request is received, the Fund redeems the required
amount at the net asset value next determined. Redemption proceeds are normally
mailed by check the next business day. If instructed in the written redemption
request, the Fund will mail the check to a designated account at the
shareholder's bank.
APPLICATIONS
In order to use any of the foregoing redemption methods other than by mail, or
to change the authority of any person to make redemptions under any such method,
a shareholder must sign and complete the appropriate portions of the Fund's
application. Shareholders other than individuals who wish to use any of the
other redemption methods may be required to provide other documentation. An
application accompanies this prospectus. Applications are also available from
the Fund by calling toll-free 1-800-343-2898 or by writing KIRC. When a
shareholder submits an application, the Fund will notify the shareholder of any
additional documents it requires to permit the shareholder to use the redemption
methods the shareholder has designated.
If the designated redemption methods are to be used for the shareholder's
existing account, or if the authority of a person to make redemptions under any
of the redemption methods is being changed (including a change in a signature on
a signature card for a checking account), the shareholder's signature on the
application (or the signature card) must be guaranteed by a member firm of the
New York, American, Boston, Midwest or Pacific Stock Exchanges, by any U.S.
national banking association or by other persons eligible to guarantee
signatures under the Securities Exchange Act of 1934 and KIRC's policies.
SMALL ACCOUNTS
Because of the high cost of maintaining small accounts, the Fund reserves the
right to redeem your account if its value has fallen below $1,000, the current
minimum investment level, as a result of your redemptions (but not as a result
of market action). You will be notified in writing and allowed 60 days to
increase the value of your account to the minimum investment level.
GENERAL
The checking account described in this prospectus will be subject to State
Street's rules and regulations governing checking accounts. If there is an
insufficient number of shares in a shareholder's account when a check is
presented to State Street for payment, the check will be returned. If a
shareholder presents a check on his or her account in person to State Street, it
will be treated as a redemption by mail received that day.
Since the aggregate amount in a shareholder's account changes each day because
of the daily dividend, a shareholder should not attempt to withdraw the full
amount in his or her account by using a check.
For Fund purposes, a business day (during which purchases and redemptions of
Fund shares can become effective and the transmittal of redemption proceeds can
occur) is any day the Exchange is open for trading that is not an official bank
holiday for the Fund's custodian bank. The right of redemption may be suspended
or the date of payment postponed (1) for any period during which the Exchange is
closed, other than customary weekend and holiday closings; (2) when trading on
the Exchange is restricted or an emergency exists, as determined by the
Securities and Exchange Commission; or (3) when the Securities and Exchange
Commission has ordered such a suspension for the protection of shareholders.
Subject to the limitation described above for shares purchased by check,
redemption proceeds are normally wired or mailed either the same or the next
business day, but in no event later than seven days after receipt of a proper
redemption request unless redemptions have been suspended or postponed as
described above.
The value of a shareholder's investment at the time of redemption may be more
or less than his or her cost depending on the market value of the securities
held by the Fund at such time and the income earned.
The Fund reserves the right, at any time, to terminate, suspend or change the
terms of any redemption method described in this prospectus, except redemption
by mail, and to impose fees. State Street reserves the right, at any time, to
terminate, suspend or change the terms of the offered checking account and to
impose fees.
Except as otherwise noted, neither the Fund, KIRC nor the Principal
Underwriter assumes responsibility for the authenticity of any instructions
received by any of them from a shareholder in writing, over KARL or by
telephone. KIRC will employ reasonable procedures to confirm that instructions
received over KARL or by telephone are genuine. Neither the Fund, KIRC nor the
Principal Underwriter will be liable when following instructions received over
KARL or by telephone that KIRC reasonably believes to be genuine.
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MONTHLY DISTRIBUTION PLANS
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Without affecting the shareholder's right to use any of the methods of
redemption described above, a shareholder may also elect to participate in the
plans described below.
AUTOMATIC EXCHANGE PLAN
Subject to the exchange restrictions set forth below and any other applicable
exchange restrictions, you may elect to have a prestated amount automatically
exchanged from your Fund account to any other Keystone fund. This exchange may
be made either monthly or quarterly. There is a $100 minimum for each exchange,
and there may be a minimal charge for each transaction. Upon written notice, you
may change the amount to be exchanged, the frequency or the fund designated to
receive such exchanges.
AUTOMATIC WITHDRAWAL PLAN
Under the Fund's Automatic Withdrawal Plan, shareholders may request that they
receive a monthly check in any specified amount of $100 or more. Upon written
notice, the frequency and amount of such payments may be changed by the
shareholder at any time. Depending upon the amount requested to be paid, the
Fund's yield and the size of the shareholder's account, the specified
distribution may in part include some return of capital. If the return of
capital is continued it may possibly exhaust the shareholder's investment in the
Fund.
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SHAREHOLDER SERVICES
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KEYSTONE AUTOMATED RESPONSE LINE
The Keystone Automated Response Line offers shareholders specific fund account
information and price and yield quotations as well as the ability to effect
account transactions, including investments, exchanges and redemptions.
Shareholders may access KARL by dialing toll free 1-800-346-3858 on any
touch-tone telephone, 24 hours a day, seven days a week.
EXCHANGES
Generally, if you have obtained the appropriate prospectus, you may exchange
Class A shares of the Fund that you purchased directly for shares of any of the
funds in the Keystone Fund Family, Keystone Precious Metals Holdings, Inc.
("KPMH"), Keystone International Fund Inc. ("KIF"), Keystone Tax Exempt Trust
("KTET") or Keystone Tax Free Fund ("KTFF"). This exchange privilege may be
restricted for shareholders wishing to exchange Fund shares that the shareholder
acquired in a prior exchange transaction using shares of any fund in the
Keystone Fund Family, KPMH, KIF, KTET or KTFF.
A Fund shareholder exchanging into any such Keystone fund acquires his or her
shares subject to the sales charges, deferred sales charges or other fees
imposed by the new fund as they may apply.
In addition, you may exchange shares of the Fund for shares of Keystone
America Funds as follows:
Class A shares may be exchanged for Class A shares of certain Keystone
America Funds;
Class B shares except as noted below, may be exchanged for the same type of
Class B shares of certain Keystone America Funds; and
Class C shares may be exchanged for Class C shares of certain Keystone
America Funds.
Class B shares purchased on or after June 1, 1995 cannot be exchanged for
Class B shares of Keystone Capital Preservation and Income Fund during the 24
month period commencing with and including the month of original purchase.
The exchange of Class B shares and Class C shares will not be subject to a
contingent deferred sales charge. However, if the shares being tendered for
exchange are:
(1) Class B shares which have been held for less than 72 months or four years,
as the case may be, or
(2) Class C shares which have been held for less than one year,
and are still subject to a deferred sales charge, such charge will carry over to
the shares being acquired in the exchange transaction.
You may exchange shares by calling toll free 1-800-343-2898, by writing KIRC
or by calling KARL.
Subject to the foregoing restrictions, Fund shares purchased by check may be
exchanged for shares of the named funds, other than KPMH, KTET or KTFF, after 15
days, provided good payment for the purchase of Fund shares has been collected.
In order to exchange Fund shares for shares of KPMH, KTET or KTFF, a shareholder
must have held Fund shares for a period of six months.
You may exchange your shares as described above for another Keystone fund for
a $10 fee by calling or writing to Keystone. The exchange fee is waived for
individual investors who make an exchange using KARL. Shares of the Fund
purchased directly and not by prior exchange into the Fund are not subject to an
exchange fee upon exchange into another fund. The Fund reserves the right to
change the fee charged for any exchange.
Orders for exchanges received by the Fund prior to 4:00 p.m. Eastern time on
any day the funds are open for business will be executed at the respective net
asset values determined as of the close of business that day. Orders for
exchanges received after 4:00 p.m. Eastern time on any business day will be
executed at the respective net asset values determined at the close of the next
business day.
An excessive number of exchanges may be disadvantageous to the Fund.
Therefore, the Fund, in addition to its right to reject any exchange, reserves
the right to terminate the exchange privilege of any shareholder who makes more
than five exchanges of shares of the funds in a year or three in a calendar
quarter.
An exchange order must comply with the requirements for a redemption or
repurchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial purchase requirements of
the fund being acquired. An exchange constitutes a sale for federal income tax
purposes.
The exchange privilege is available only in states where shares of the fund
being acquired may legally be sold.
RETIREMENT PLANS
The Fund has various pension and profit-sharing plans available to investors,
including Individual Retirement Accounts ("IRAs"); Rollover IRAs; Simplified
Employee Pension Plans ("SEPs"); Tax Sheltered Annuity Plans ("TSAs"); 401(k)
Plans; Keogh Plans; Corporate Profit-Sharing Plans, Pension and Target Benefit
Plans; Money Purchase Pension Plans and Salary-Reduction Plans. For details,
including fees and application forms, call toll free 1- 800-247-4075 or write to
KIRC.
AUTOMATIC INVESTMENT PLAN
Shareholders may take advantage of investing on an automatic basis by
establishing an automatic investment plan. Additional investments are drawn on a
shareholder's checking account monthly and used to purchase Fund shares.
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PERFORMANCE DATA
- ------------------------------------------------------------------------------
From time to time the Fund may advertise "yield" and "effective yield." BOTH
YIELD FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE
FUTURE PERFORMANCE. Yields are calculated separately for each class of shares of
the Fund. The "yield" of a class refers to the income generated by an investment
in the Fund over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly, but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. See the SAI for more complete information
concerning performance calculations.
The Fund may also include comparative performance information for each class
of shares in advertising or marketing the Fund's shares, such as data from
Lipper Analytical Services, Inc., Morningstar, Inc., Standard & Poor's
Corporation and Ibbotson Associates or other industry publications.
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FUND SHARES
- ------------------------------------------------------------------------------
Generally, the Fund currently issues three classes of shares that participate
in dividends and distributions and have equal voting, liquidation and other
rights except that (1) expenses related to the distribution of each class of
shares or other expenses that the Board of Trustees may designate as class
expenses from time to time, are borne solely by each class; (2) each class of
shares has exclusive voting rights with respect to its Distribution Plan; (3)
each class has different exchange privileges; and (4) each class generally has a
different designation. When issued and paid for, the shares will be fully paid
and nonassessable by the Fund. Shares may be exchanged as explained under
"Shareholder Services," but will have no other preference, conversion, exchange
or preemptive rights. Shareholders are entitled to one vote for each full share
owned and fractional votes for fractional shares. Shares of the Fund vote
together except when required by law to vote separately by class. Shares are
redeemable, transferable and freely assignable as collateral.
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ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
KIRC, 101 Main Street, Cambridge, Massachusetts 02142-1519, is a wholly-owned
subsidiary of Keystone and serves as the Fund's transfer agent and dividend
disbursing agent.
When the Fund determines from its records that more than one account in the
Fund is registered in the name of a shareholder or shareholders having the same
address, upon written notice to those shareholders, the Fund intends, when an
annual report or semi-annual report of the Fund is required to be furnished, to
mail one copy of such report to that address.
Except as otherwise stated in this prospectus or required by law, the Fund
reserves the right to change the terms of the offer stated in this prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
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ADDITIONAL INVESTMENT INFORMATION
- ------------------------------------------------------------------------------
DESCRIPTION OF CERTAIN INVESTMENTS AND
INVESTMENT TECHNIQUES AVAILABLE TO THE FUND
COMMERCIAL PAPER
The Fund's investments in commercial paper are limited to those rated A-1 by
S&P, Prime-1 by Moody's or F-1 by Fitch. These are the highest ratings assigned
by such rating services.
OBLIGATIONS OF FOREIGN BRANCHES OF UNITED STATES BANKS
The obligations of foreign branches of U.S. banks may be general obligations
of the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by government regulation. Payment of interest
and principal upon these obligations may also be affected by governmental action
in the country of domicile of the branch (generally referred to as sovereign
risk). In addition, evidences of ownership of such securities may be held
outside the U.S., and the Fund may be subject to the risks associated with the
holding of such property overseas. Various provisions of federal law governing
domestic branches do not apply to foreign branches of domestic banks.
OBLIGATIONS OF UNITED STATES BRANCHES OF FOREIGN BANKS
Obligations of U.S. branches of foreign banks may be general obligations of
the parent bank in addition to the issuing branch or may be limited by the terms
of a specific obligation and by federal and state regulation as well as by
governmental action in the country in which the foreign bank has its head
office. In addition, there may be less publicly available information about a
U.S. branch of a foreign bank than about a domestic bank.
MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the investment of
fluctuating amounts by the Fund at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the issuer, as borrower. Master
demand notes may permit daily fluctuations in the interest rate and daily
changes in the amount borrowed. The Fund has the right to increase the amount
under the note at any time up to the full amount provided by the note agreement
or to decrease the amount, and the borrower may repay up to the full amount of
the note without penalty. Notes purchased by the Fund permit the Fund to demand
payment of principal and accrued interest at any time (on not more than seven
days' notice). Notes acquired by the Fund may have maturities of more than one
year, provided that (1) the Fund is entitled to payment of principal and accrued
interest upon not more than seven days' notice, and (2) the rate of interest on
such notes is adjusted automatically at periodic intervals which normally will
not exceed 31 days but may extend up to one year. The notes are deemed to have a
maturity equal to the longer of the period remaining to the next interest rate
adjustment or the demand notice period. Because these types of notes are direct
lending arrangements between the lender and the borrower, such instruments are
not normally traded, and there is no secondary market for these notes, although
they are redeemable and thus repayable by the borrower at face value plus
accrued interest at any time. Accordingly, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. In connection with master demand note arrangements, Keystone considers,
under standards established by the Fund's Board of Trustees, earning power, cash
flow and other liquidity ratios of the borrower and will monitor the ability of
the borrower to pay principal and interest on demand. These notes typically are
not rated by credit rating agencies. Unless rated, the Fund will invest in them
only if the issuer meets the criteria established for commercial paper discussed
in the Statement of Additional Information, which limit such investments to
commercial paper rated A-1 by S&P, Prime-1 by Moody's and F-1 by Fitch.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with member banks of the Federal
Reserve System which have at least $1 billion in assets, primary dealers in U.S.
government securities or other financial institutions believed by Keystone to be
creditworthy. Such persons are required to be registered as U.S. government
securities dealers with an appropriate regulatory organization. Under such
agreements, the bank, primary dealer or other financial institution agrees upon
entering into the contract to repurchase the security at a mutually agreed upon
date and price, thereby determining the yield during the term of the agreement.
This results in a fixed rate of return insulated from market fluctuations during
such period. The seller under a repurchase agreement will be required to
maintain the value of the securities subject to the agreement at not less than
the repurchase price, and such value will be determined on a daily basis by
marking the underlying securities to their market value. Although the securities
subject to the repurchase agreement might bear maturities exceeding a year, the
Fund only intends to enter into repurchase agreements which provide for
settlement within a year and usually within seven days. Securities subject to
repurchase agreements will be held by the Fund's custodian or in the Federal
Reserve book entry system. The Fund does not bear the risk of a decline in the
value of the underlying security unless the seller defaults under its repurchase
obligation. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and losses including (1) possible declines in the value of
the underlying securities during the period while the Fund seeks to enforce its
rights thereto; (2) possible subnormal levels of income and lack of access to
income during this period; and (3) expenses of enforcing its rights. The Board
of Trustees has established procedures to evaluate the creditworthiness of each
party with whom the Fund enters into repurchase agreements by setting guidelines
and standards of review for Keystone and monitoring Keystone's actions with
regard to repurchase agreements.
REVERSE REPURCHASE AGREEMENTS
Under a reverse repurchase agreement, the Fund would sell securities and agree
to repurchase them at a mutually agreed upon date and price. The Fund intends to
enter into reverse repurchase agreements to avoid otherwise having to sell
securities during unfavorable market conditions in order to meet redemptions. At
the time the Fund enters into a reverse repurchase agreement, it will establish
a segregated account with the Fund's custodian containing liquid assets having a
value not less than the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure such value is maintained. Reverse
repurchase agreements involve the risk that the market value of the securities
which the Fund is obligated to repurchase may decline below the repurchase
price. Borrowing and reverse repurchase agreements magnify the potential for
gain or loss on the portfolio securities of the Fund and, therefore, increase
the possibility of fluctuation in the Fund's net asset value. This factor is
known as leverage. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, such buyer or
its trustee or receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities and the Fund's use of
the proceeds of the reverse repurchase agreement may effectively be restricted
pending such determination. The staff of the Securities and Exchange Commission
has taken the position that the 1940 Act treats reverse repurchase agreements as
being included in the percentage limit on borrowings imposed on a Fund.
"WHEN ISSUED" SECURITIES
The Fund may purchase securities on a when issued or delayed delivery basis
and may purchase or sell securities on a forward commitment basis. When issued
or delayed delivery transactions arise when securities are purchased by the Fund
with payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
purchase. A forward commitment transaction is an agreement by the Fund to
purchase or sell securities at a specified future date. When the Fund engages in
when issued and delayed delivery transactions, the Fund relies on the buyer or
seller, as the case may be, to consummate the sale. Failure to do so may result
in the Fund missing the opportunity to obtain a price or yield considered to be
advantageous. When issued and delayed delivery transactions may be expected to
occur a month or more before delivery is due. However, no payment or delivery is
made by the Fund until it receives payment or delivery from the other party to
the transaction. The Securities and Exchange Commission has established certain
requirements to assure that the Fund is able to meet its obligations under these
contracts; for example, a separate account of liquid assets equal to the value
of such purchase commitments may be maintained until payment is made. When
issued and delayed delivery agreements are subject to risks from changes in
value based upon changes in the level of interest rates and other market
factors, both before and after delivery. The Fund does not accrue any income on
such securities or currencies prior to their delivery. To the extent the Fund
engages in when issued and delayed delivery transactions, it will do so for the
purpose of acquiring portfolio securities consistent with its investment
objectives and policies and not for the purpose of investment leverage. The Fund
currently does not intend to invest more than 5% of its assets in when issued or
delayed delivery transactions.
<PAGE>
CERTIFICATE OF RESOLUTIONS
INSTRUCTIONS: Please fill in all information requested. Any change in the
information must be made by a new Certificate of Resolutions.
1. VOTED: That STATE STREET BANK AND TRUST COMPANY, Boston, Massachusetts
("State Street"), its successors or assigns, be and hereby is designated a
depository of this corporation or business trust, and is authorized and
directed to pay and to charge to the account of this corporation or business
trust without limit as to amount and without inquiry as to circumstance of
issue or disposition of the proceeds, even if drawn or endorsed to any
signing or endorsing officer or other officer of this corporation or business
trust or tendered in payment of the individual obligation of any such officer
or for his credit or for deposit to his personal account, any and all checks,
drafts, notes, bills of exchange, or other orders for the payment of money
upon State Street, its successors or assigns, or payable at the office
thereof and signed on behalf of this corporation or business trust by any
------------ of its following officers, to wit (insert titles of officers
rather than their names):
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2. VOTED: That ---------------------------- is hereby authorized from time to
(Title)
time (a) to complete and execute on behalf of this corporation or business
trust one or more applications issued by Keystone Liquid Trust substantially
in the form attached to its current prospectus and (b) to designate the bank
and account referred to under Paragraph F-2, TELEPHONE REDEMPTIONS of such
application.
3. VOTED: That the preceding votes shall remain in full force and effect until
terminated by a subsequent vote and until written notice signed by the
Secretary (Clerk) of this corporation or business trust of such subsequent
vote is delivered in the case of Vote 1 to State Street and in the case of
Vote 2 to Keystone Liquid Trust.
I, ------------------------------, (Secretary) (Clerk) of
-------------------- -------------- , a corporation or business trust
organized under the laws of the State of
--------------------------------------------------------------- , do hereby
certify that the above votes were duly adopted by the Board of Directors or
Trustees of said corporation or business trust on the ----------- day of
-------------------- 19 --------, in conformity with its Charter (or Trust
Agreement) and By-Laws and are in full force and effect.
I further certify that the following persons are authorized to act in
accordance with the foregoing vote, that the signatures set opposite their
names are their true and correct signatures and that they have been duly
elected or appointed to the offices in this corporation or business trust, if
any, set opposite their names:
- ----------------------------- ----------------------- -----------------------
Name Signature Title
- ----------------------------- ----------------------- -----------------------
Name Signature Title
In witness whereof, I hereunto set my hand and the seal of said corporation
or business trust this --------------------------------------------- day of
--------------------------- 19 -------- .
*Confirmed
- --------------------------------------- -------------------------------------
Secretary
Clerk
- ---------------------------------------
(Title)
*If the Secretary, Clerk or other recording officer is authorized to act by the
above resolutions, this certificate must be signed by another officer.
<PAGE>
KEYSTONE
FUND FAMILY
Quality Bond Fund (B-1)
Diversified Bond Fund (B-2)
High Income Bond Fund (B-4)
Balanced Fund (K-1)
Strategic Growth Fund (K-2)
Growth and Income Fund (S-1)
Mid-Cap Growth Fund (S-3)
Small Company Growth Fund (S-4)
International Fund
Precious Metals Holdings
Tax Free Fund
Tax Exempt Trust
Liquid Trust
[LOGO] KEYSTONE
INVESMENTS
Keystone Investment Distributors Company
200 Berkeley Street
Boston, Massachusetts 02116-5034
KLT-P 10/95 [Recycle Logo]
KEYSTONE
LIQUID
TRUST
[LOGO]
PROSPECTUS AND
APPLICATION
<PAGE>
KEYSTONE LIQUID TRUST
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
KEYSTONE LIQUID TRUST
OCTOBER 30, 1995
This statement of additional information is not a prospectus, but
relates to, and should be read in conjunction with, the prospectus of Keystone
Liquid Trust (the "Fund") dated October 30, 1995. A copy of the prospectus may
be obtained from Keystone Investment Distributors Company (formerly named
Keystone Distributors, Inc.) (the "Principal Underwriter"), the Fund's principal
underwriter, 200 Berkeley Street, Boston, MA 02116-5034.
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TABLE OF CONTENTS
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Page
The Fund's Objective and Policies 2
Investment Restrictions 2
Valuation and Redemption of Securities 4
Distributions and Taxes 4
Yield Quotations 5
Sales Charges 6
Distribution Plans 9
Trustees and Officers 12
Declaration of Trust 16
Investment Manager 17
Investment Adviser 20
Principal Underwriter 21
Brokerage 22
Additional Information 24
Appendix A-1
Financial Statements F-1
Independent Auditors' Report F-13
<PAGE>
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THE FUND'S OBJECTIVE AND POLICIES
- -------------------------------------------------------------------------------
The Fund's investment objective is to provide shareholders with high
current income from short-term money market instruments while emphasizing
preservation of capital and maintaining excellent liquidity. The Fund pursues
this objective by investing in securities maturing in 397 days or less. See the
Appendix to this statement of additional information for descriptions of
instruments in which the Fund may invest.
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INVESTMENT RESTRICTIONS
- -------------------------------------------------------------------------------
None of the restrictions enumerated below may be changed without a vote
of the holders of a majority, as defined in the Investment Company Act of 1940
(the "1940 Act"), of the Fund's outstanding shares. The Fund will not do the
following:
(1) invest more than 25% of its assets in the securities of issuers in
any single industry, exclusive of securities issued by banks or securities
issued or guaranteed by the United States ("U.S.") government, its agencies or
instrumentalities;
(2) invest more than 5% of its assets in the securities of any one
issuer, including repurchase agreements with any one bank or dealer, exclusive
of securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;
(3) invest in more than 10% of the outstanding securities of any one
issuer, exclusive of securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities;
(4) borrow money, except that, in an aggregate amount not to exceed
one-third of the Fund's assets, including the amount borrowed, the Fund may (a)
borrow money from banks on a temporary basis; or (b) enter into reverse
repurchase agreements; amounts borrowed shall be used exclusively to facilitate
the orderly maturation and sale of portfolio securities during any periods of
abnormally heavy redemption requests, if they should occur;
(5) pledge, hypothecate or in any manner transfer as security for
indebtedness any securities owned or held by the Fund, except as may be
necessary in connection with any borrowing mentioned above and in an aggregate
amount not to exceed 15% of the Fund's assets;
(6) make loans, provided that the Fund may purchase money market
securities or enter into repurchase agreements;
(7) enter into repurchase agreements if, as a result thereof, more than
10% of the Fund's assets would be subject to repurchase agreements maturing in
more than seven days;
(8) make investments for the purpose of exercising control over any
issuer;
(9) purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
(10) invest in real estate, other than money market securities secured
by real estate or interests therein, or money market securities issued by
companies which invest in real estate or interests therein, commodities or
commodity contracts, interests in oil, gas or other mineral exploration or
development programs; except that the Fund may engage in currency or other
financial futures contracts and related options transactions;
(11) purchase any securities on margin;
(12) make short sales of securities or maintain a short position or
write, purchase or sell puts, calls, straddles, spreads or combinations thereof;
(13) invest in securities of issuers, other than agencies and
instrumentalities of the U.S. Government, having a record, together with
predecessors, of less than three years of continuous operation if more than 5%
of the Fund's assets would be invested in such securities;
(14) purchase or retain securities of an issuer if those officers or
Trustees of the Fund or Keystone who individually own more than 1/2% of the
outstanding securities of such issuer, together own more than 5% of the
securities of such issuer; and
(15) act as an underwriter of securities.
In order to comply with regulations adopted by the Securities and
Exchange Commission relating to money market funds, the Fund will apply the 5%
limit of assets invested in the securities of any one issuer, set forth in the
third investment restriction above, to 100% of the Fund's assets.
The Fund intends to follow policies of the Securities and Exchange
Commission as they are adopted from time to time with respect to illiquid
securities, including, at this time (1) treating as illiquid securities which
may not be sold or disposed of in the ordinary course of business within seven
days at approximately the value at which the Fund has valued such securities on
its books and (2) limiting its holdings of such securities to less than 10% of
net assets.
If a percentage limit is satisfied at the time of investment or
borrowing, a later increase or decrease resulting from a change in the value of
a security or a decrease in Fund assets is not a violation of the limit.
While not a fundamental policy of the Fund, and in order to maintain
its registration in one state, the Fund will not pledge or hypothecate more than
10% of its assets.
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VALUATION AND REDEMPTION OF SECURITIES
- -------------------------------------------------------------------------------
Current value for the Fund's portfolio securities is determined in the
following manner: money market investments maturing in sixty days or less are
valued at amortized cost (original purchase cost as adjusted for amortization of
premium or accretion of discount), which, when combined with accrued interest,
approximates market and money market investments maturing in more than sixty
days for which market quotations are readily available are valued at current
market value. The money market securities in which the Fund invests are traded
primarily in the over-the-counter market and are valued at the mean between most
recent bid and asked prices or yield equivalent as obtained from dealers that
make markets in such securities. Investments for which market quotations are not
readily available, or for which the markets establishing the most recent bid and
asked prices are closed or inactive, are valued at fair value as determined
pursuant to procedures established in good faith by the Fund's Board of
Trustees.
The Fund has obligated itself to redeem for cash all shares presented
for redemption by any one shareholder in any 90-day period up to the lesser of
$250,000 or 1% of the Fund's net assets at the beginning of such period.
- -------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------
Net income of the Fund (net investment income plus realized and
unrealized gain (loss) on investments) is determined as of the close of trading
on the New York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern
time for the purpose of pricing Fund shares) on each day that the Exchange is
open for trading (or at such other times as the Trustees may determine). The net
income so determined is thereupon declared as a dividend. Dividends are
distributed on the last business day of each month in the form of additional,
full and fractional shares at the rate of one share for each $1.00 distributed
or, at the election of the shareholder, in cash.
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YIELD QUOTATIONS
- -------------------------------------------------------------------------------
The current yield of each class of the Fund, as it appears here and as
it may appear from time to time in advertisements, is calculated by determining
the net change exclusive of capital changes (all realized and unrealized gains
and losses) in the value of a hypothetical pre-existing account having a balance
of one share at the beginning of the period, is subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
(365/7) and carrying the resulting current yield figure to the nearest hundredth
of one percent. The determination of net change in account value reflects the
value of additional shares purchased with the dividends from the original share
and dividends declared on both the original share and any such additional shares
and all fees charged to shareholder accounts in proportion to the length of the
base period and the average account size of a class.
If realized and unrealized gains and losses were included in the
calculation of the current yield, the current yield of a class of the Fund might
vary materially from that reported in advertisements. For the seven day period
ended June 30, 1995, the current yields of Class A, Class B and Class C shares
were 4.88%, 3.87% and 3.88%, respectively.
In addition to the current yield of a class, its effective yield may
appear, from time to time, in advertisements. The effective yield will be
calculated by compounding the unannualized base period return by adding 1,
raising the sum to a power equal to 365 divided by 7, subtracting 1 from the
result and carrying the resulting effective yield figure to the nearest
hundredth of one percent.
For the seven day period ended June 30, 1995, the effective yields of
Class A, Class B and Class C shares were 5.00%, 3.94% and 3.96%, respectively.
The current and effective yields, as quoted in such advertisements,
will not be based on information as of a date more than fourteen days prior to
the date of their publication. Each yield will vary depending on market
conditions. Principal is not insured. Each yield also depends on the quality,
maturity and type of instruments held in the Fund and operating expenses. The
advertisements will include, among other things, the length of and the date of
the last day in the base period used in computing the quotation.
The yield of any investment is generally a function of quality and
maturity, type of investment and operating expenses. The current yield of a
class of the Fund will fluctuate from time to time and is not necessarily
representative of future results.
Current yield information is useful in reviewing the Fund's
performance, but because current yield will fluctuate, such information may not
provide a basis for comparison with bank deposits or other investments that pay
a fixed yield for a stated period of time. An investor's principal is not
guaranteed by the Fund.
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SALES CHARGES
- -------------------------------------------------------------------------------
GENERAL
Generally, the Fund offers three classes of shares. Class A shares are
offered at net asset value without a sales charge ("No Load Option"). Class B
shares purchased on or after June 1, 1995 are subject to a contingent deferred
sales charge if redeemed during the 72 month period commencing with and
including the month of purchase. Class B shares purchased prior to June 1, 1995
are subject to a contingent deferred sales charge upon redemption during the
four calendar years following the year of purchase ("Back End Load Option").
Class B shares purchased on or after June 1, 1995 that have been outstanding
eight years from and including the month of purchase will automatically convert
to Class A shares without the imposition of a sales charge or exchange fee.
Class B shares purchased prior to June 1, 1995 that have been outstanding during
seven calendar years will similarly convert to Class A shares. (Conversion of
Class B shares represented by stock certificates will require the return of the
stock certificates to Keystone Investor Resource Center, Inc., the Fund's
transfer and dividend disbursing agent ("KIRC").) Class B shares purchased on or
after June 1, 1995 cannot be exchanged for Keystone Capital Preservation and
Income Fund Class B shares during the 24 month period commencing with and
including the month of purchase. Class C shares are sold subject to a contingent
deferred sales charge payable upon redemption within one year after purchase
("Level Load Option"). Class C shares are available only through dealers who
have entered into special distribution agreements with the Principal
Underwriter. The prospectus contains a general description of how investors may
buy shares of the Fund and a description of applicable contingent deferred
sales charges.
CONTINGENT DEFERRED SALES CHARGE
In order to reimburse the Fund for certain expenses relating to the
sale of its shares, a contingent deferred sales charge is imposed at the time of
redemption of certain Fund shares (other than Class A shares), as follows:
CLASS B SHARES
With respect to Class B shares purchased on or after June 1, 1995, the
Fund, with certain exceptions, will impose a deferred sales charge as a
percentage of the lesser of net asset value or net cost of such Class B shares
redeemed during succeeding twelve-month periods as follows: 5% during the first
twelve month period; 4% during the second twelve month period; 3% during the
third twelve month period; 3% during the fourth twelve month period; 2% during
the fifth twelve month period; and 1% during the sixth twelve month period. No
deferred sales charge is imposed on amounts redeemed thereafter.
With respect to Class B shares sold prior to June 1, 1995, the Fund,
with certain exceptions, will impose a deferred sales charge of 3.00% on shares
redeemed during the calendar year of purchase and during the first calendar year
after purchase; 2.00% on shares redeemed during the second calendar year after
purchase; and 1.00% on shares redeemed during the third calendar year after
purchase. No deferred sales charge is imposed on amounts redeemed thereafter.
When imposed, the deferred sales charge is deducted from the redemption
proceeds otherwise payable to you. The deferred sales charge is retained by the
Principal Underwriter. Amounts received by the Principal Underwriter under the
Class B Distribution Plans are reduced by deferred sales charges retained by the
Principal Underwriter. See "Calculation of Contingent Deferred Sales Charge"
below.
CLASS C SHARES
With certain exceptions, the Fund will impose a deferred sales charge
of 1% on shares redeemed within one year after the date of purchase. No deferred
sales charge is imposed on amounts redeemed thereafter.
When imposed, the deferred sales charge is deducted from the redemption
proceeds otherwise payable to you. The deferred sales charge is retained by the
Principal Underwriter. See "Calculation of Contingent Deferred Sales Charge"
below.
CALCULATION OF CONTINGENT DEFERRED SALES CHARGE
Any contingent deferred sales charge imposed upon the redemption of
Class B or Class C shares is a percentage of the lesser of (1) the net asset
value of the shares redeemed or (2) the net cost of such shares.
No contingent deferred sales charge is imposed when you redeem amounts
derived from (1) increases in the value of your account above the net cost of
such shares; (2) certain shares with respect to which the Fund did not pay a
commission on issuance, including shares acquired through reinvestment of
dividend income and capital gains distributions; (3) Class C shares held during
more than one year from date of purchase; or (4) Class B shares held during more
than four consecutive calendar years or more than 72 months, as the case may be.
Upon request for redemption, shares not subject to the contingent
deferred sales charge will be redeemed first. Thereafter, shares held the
longest will be the first to be redeemed. There is no contingent deferred sales
charge when the shares of a class are exchanged for the shares of the same class
of another Keystone America Fund. Moreover, when shares of one such class of a
fund have been exchanged for shares of another such class of a fund, the
calendar year of the purchase of the shares of the fund exchanged into is
assumed to be the year shares tendered for exchange were originally purchased.
WAIVER OF DEFERRED SALES CHARGE
No contingent deferred sales charge is imposed on a redemption of
shares of the Fund in the event of (1) death or disability of the shareholder;
(2) a lump-sum distribution from a benefit plan qualified under the Employee
Retirement Income Security Act of 1974 ("ERISA"); (3) automatic withdrawals from
ERISA plans if the shareholder is at least 59 1/2 years old; (4) involuntary
redemptions of accounts having an aggregate net asset value of less than $1,000;
(5) automatic withdrawals under an automatic withdrawal plan of up to 1 1/2% per
month of the shareholder's initial account balance; (6) withdrawals consisting
of loan proceeds to a retirement plan participant; (7) financial hardship
withdrawals made by a retirement plan participant; or (8) withdrawals consisting
of returns of excess contributions or excess deferral amounts made to a
retirement plan participant.
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DISTRIBUTION PLANS
- -------------------------------------------------------------------------------
Rule 12b-1 under the 1940 Act permits investment companies, such as the
Fund, to use their assets to bear expenses of distributing their shares if they
comply with various conditions, including adoption of a distribution plan
containing certain provisions set forth in Rule 12b-1. The Fund's Class A, B and
C Distribution Plans have been approved by the Fund's Board of Trustees,
including a majority of the Trustees who were not interested persons of the Fund
as defined in the 1940 Act ("Independent Trustees") and the Trustees who had no
direct or indirect financial interest in the Distribution Plans or any agreement
related thereto (the "Rule 12b-1 Trustees" who are the same as the Independent
Trustees).
The National Association of Securities Dealers, Inc. ("NASD") limits
the amount that the Fund may pay annually in distribution costs for sale of its
shares and shareholder service fees. The rule limits annual expenditures to 1%
of the aggregate average daily net asset value of its shares, of which 0.75% may
be used to pay such distribution costs and 0.25% may be used to pay shareholder
service fees. NASD rules limit the aggregate amount that the Fund may pay for
such distribution costs to 6.25% of gross share sales since the inception of the
12b-1 Plan, plus interest at the prime rate plus 1% on such amounts (less any
contingent deferred sales charges paid by shareholders to the Principal
Underwriter).
CLASS A DISTRIBUTION PLAN
The Class A Distribution Plan provides that the Fund may
expend daily amounts at an annual rate, which is currently limited to up to
0.25% of the Fund's average daily net asset value attributable to Class A
shares, to finance any activity that is primarily intended to result in the sale
of Class A shares, including without limitation, expenditures consisting of
payments to a principal underwriter of the Fund (currently the Principal
Underwriter) to enable the Principal Underwriter to pay or to have paid to
others who sell Class A shares a service or other fee, at such intervals as the
Principal Underwriter may determine, in respect of Class A shares maintained by
such recipients outstanding on the books of the Fund for specified periods.
Amounts paid by the Fund under the Class A Distribution Plan are
currently used to pay others, such as dealers, service fees at an annual rate of
up to 0.25% of the average net asset value of Class A shares maintained by such
recipients outstanding on the books of the Fund for specified periods.
CLASS B DISTRIBUTION PLANS
The Fund has adopted Distribution Plans for its Class B shares that
provide that the Fund may expend daily amounts at an annual rate of up to 1.00%
of the Fund's average daily net asset value attributable to Class B shares to
finance any activity that is primarily intended to result in the sale of Class B
shares, including, without limitation, expenditures consisting of payments to a
principal underwriter of the Fund (currently the Principal Underwriter) (1) to
enable the Principal Underwriter to pay to others (dealers) commissions in
respect of Class B shares since inception of the Distribution Plan; and (2) to
enable the Principal Underwriter to pay or to have paid to others a service fee,
at such intervals as the Principal Underwriter may determine, in respect of
Class B shares previously maintained by such recipients outstanding on the books
of the Fund for specified periods.
The Principal Underwriter generally reallows to brokers or others a
commission equal to 4.00% of the price paid for each Class B share sold plus the
first year's service fee in advance in the amount of 0.25% of the price paid for
each Class B share sold. Beginning approximately 12 months after the purchase of
a Class B share, the broker or other party receives service fees at an annual
rate of 0.25% of the average daily net asset value of such Class B share
maintained by the recipient outstanding on the books of the Fund for specified
periods.
In connection with financing its distribution costs, including
commission advances to dealers and others, the Principal Underwriter has sold to
a financial institution substantially all of its 12b-1 fee collection rights and
contingent deferred sales charge collection rights in respect of Class B shares
sold during the two-year period commencing approximately June 1, 1995. The Fund
has agreed not to reduce the rate of payment of 12b-1 fees in respect of such
Class B shares unless it terminates such shares' Distribution Plan completely.
If it terminates such Distribution Plan, the Fund may be subject to possible
adverse distribution consequences.
The Principal Underwriter intends, but is not obligated, to continue to
pay or accrue distribution charges incurred in connection with each Class B
Distribution Plan that exceed current annual payments permitted to be received
by the Principal Underwriter from the Fund. The Principal Underwriter intends to
seek full payment of such charges from the Fund (together with annual interest
thereon at the prime rate plus one percent) at such time in the future as, and
to the extent that, payment thereof by the Fund would be within the permitted
limits.
If the Fund's Independent Trustees authorize such payments, the effect
would be to extend the period of time during which the Fund incurs the maximum
amount of costs allowed by a Class B Distribution Plan. If a Class B
Distribution Plan is terminated, the Principal Underwriter will ask the
Independent Trustees to take whatever action they deem appropriate under the
circumstances with respect to payment of such amounts.
CLASS C DISTRIBUTION PLAN
The Class C Distribution Plan provides that the Fund may expend daily
amounts at an annual rate of up to 1.00% of the Fund's average daily net asset
value attributable to Class C shares to finance any activity that is primarily
intended to result in the sale of Class C shares, including, without limitation,
expenditures consisting of payments to a principal underwriter of the Fund
(currently the Principal Underwriter) (1) to enable the Principal Underwriter to
pay to others (dealers) commissions in respect of Class C shares since inception
of the Distribution Plan; and (2) to enable the Principal Underwriter to pay or
to have paid to others a service fee, at such intervals as the Principal
Underwriter may determine, in respect of Class C shares maintained by such
recipients outstanding on the books of the Fund for specified periods.
The Principal Underwriter generally reallows to brokers or others a
commission in the amount of 0.75% of the price paid for each Class C share sold
plus the first year's service fee in advance in the amount of 0.25% of the price
paid for each Class C share sold. Beginning approximately fifteen months after
purchase, brokers or others receive a commission at an annual rate of 0.75%
(subject to NASD rules) plus service fees at the annual rate of 0.25% of the
average daily net asset value of each Class C share maintained by the recipients
outstanding on the books of the Fund for specified periods.
DISTRIBUTION PLANS - GENERAL
Each of the Distribution Plans may be terminated at any time by vote of
the Fund's Rule 12b-1 Trustees, or by vote of a majority of the outstanding
voting shares of the respective class of the Fund. Any change in a Distribution
Plan that would materially increase the distribution expenses provided for in
the Distribution Plan requires shareholder approval. Otherwise, the Distribution
Plans may be amended by the Trustees, including the Rule 12b-1 Trustees.
The total amounts paid by the Fund under the foregoing arrangements may
not exceed the maximum Distribution Plan limit specified above, and the amounts
and purposes of expenditures under a Distribution Plan must be reported to the
Rule 12b-1 Trustees quarterly. The Rule 12b-1 Trustees may require or approve
changes in the implementation or operation of a Distribution Plan, and may also
require that total expenditures by the Fund under a Distribution Plan be kept
within limits lower than the maximum amount permitted by a Distribution Plan as
stated above.
During the year ended June 30, 1995, the Fund paid the Principal
Underwriter $343,747, $119,037 and $70,834 in Distribution Plan fees for Class
A, Class B and Class C shares, respectively, which represented 0.09%, 1.00% and
1.00%, respectively, of the average net assets of each Class.
Whether any expenditure under a Distribution Plan is subject to a state
expense limit will depend upon the nature of the expenditure and the terms of
the state law, regulation or order imposing the limit. A portion of the Fund's
Distribution Plan expenses may be includable in the Fund's total operating
expenses for purposes of determining compliance with state expense limits.
While a Distribution Plan is in effect, the Fund will be required to
commit the selection and nomination of candidates for Independent Trustees to
the discretion of the Independent Trustees.
The Independent Trustees of the Fund have determined that the sales of
the Fund's shares resulting from payments under the Distribution Plans have
benefited the Fund.
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TRUSTEES AND OFFICERS
- -------------------------------------------------------------------------------
The Trustees and officers of the Fund, together with their principal
occupations and some of their affiliations over the last five years, are listed
below:
*ALBERT H. ELFNER, III: President, Chief Executive Officer and Trustee of the
Fund; Chairman of the Board, President, Director and Chief Executive
Officer of Keystone Investments, Inc. (formerly named Keystone Group,
Inc.) ("Keystone Investments"); President, Chief Executive Officer and
Trustee or Director of all 30 funds in the Keystone Investments Family
of Funds; Director and Chairman of the Board, Chief Executive Officer
and Vice Chairman of Keystone Investment Management Company (formerly
named Keystone Custodian Funds, Inc.) ("Keystone"); Chairman of the
Board and Director of Keystone Institutional Company, Inc. ("Keystone
Institutional") (formerly named Keystone Investment Management
Corporation), and Keystone Fixed Income Advisors ("KFIA"); Director,
Chairman of the Board, Chief Executive Officer and President of
Keystone Management, Inc. ("Keystone Management"), Keystone Software
Inc. ("Keystone Software"); Director and President of Hartwell Keystone
Advisers, Inc. ("Hartwell Keystone"), Keystone Asset Corporation,
Keystone Capital Corporation, and Keystone Trust Company; Director of
the Principal Underwriter, KIRC, and Fiduciary Investment Company, Inc.
("FICO"); Director and Vice President of Robert Van Partners, Inc.;
Director of Boston Children's Services Association; Trustee of Anatolia
College, Middlesex School, and Middlebury College; Member, Board of
Governors, New England Medical Center; and former Trustee of Neworld
Bank.
FREDERICK AMLING: Trustee of the Fund; Trustee or Director of all other Keystone
Investments Funds; Professor, Finance Department, George Washington
University; President, Amling & Company (investment advice); Member,
Board of Advisers, Credito Emilano (banking); and former Economics and
Financial Consultant, Riggs National Bank.
CHARLES A. AUSTIN III: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Investment Counselor to Appleton Partners,
Inc.; former Managing Director, Seaward Management Corporation
(investment advice) and former Director, Executive Vice President and
Treasurer, State Street Research & Management Company (investment
advice).
*GEORGE S. BISSELL: Chairman of the Board and Trustee of the Fund; Director of
Keystone Investments; Chairman of the Board and Trustee or Director of
all other Keystone Investments Funds; Director and Chairman of the
Board of Hartwell Keystone; Chairman of the Board and Trustee of
Anatolia College; Trustee of University Hospital (and Chairman of its
Investment Committee); former Chairman of the Board and Chief Executive
Officer of Keystone Investments; and former Chief Executive Officer of
the Fund.
EDWIN D. CAMPBELL: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Executive Director, Coalition of Essential
Schools, Brown University; Director and former Executive Vice
President, National Alliance of Business; former Vice President,
Educational Testing Services; and former Dean, School of Business,
Adelphi University.
CHARLES F. CHAPIN: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; former Group Vice President, Textron Corp.;
and former Director, Peoples Bank (Charlotte, N.C).
LEROY KEITH, JR.: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Director of Phoenix Total Return Fund and
Equifax, Inc.; Trustee of Phoenix Series Fund, Phoenix Multi-Portfolio
Fund and The Phoenix Big Edge Series Fund; and former President,
Morehouse College.
K. DUN GIFFORD: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Chairman of the Board, Director and
Executive Vice President, The London Harness Company; Managing Partner,
Roscommon Capital Corp.; Trustee, Cambridge College; Chairman Emeritus
and Director, American Institute of Food and Wine; Chief Executive
Officer, Gifford Gifts of Fine Foods; Chairman, Gifford, Drescher &
Associates (environmental consulting); President, Oldways Preservation
and Exchange Trust (education); and former Director, Keystone
Investments and Keystone.
F. RAY KEYSER, JR.: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Of Counsel, Keyser, Crowley & Meub, P.C.;
Member, Governor's (VT) Council of Economic Advisers; Chairman of the
Board and Director, Central Vermont Public Service Corporation and
Hitchcock Clinic; Director, Vermont Yankee Nuclear Power Corporation,
Vermont Electric Power Company, Inc., Grand Trunk Corporation, Central
Vermont Railway, Inc., S.K.I. Ltd., Sherburne Corporation, Union Mutual
Fire Insurance Company, New England Guaranty Insurance Company, Inc.
and the Investment Company Institute; former Governor of Vermont;
former Director and President, Associated Industries of Vermont; former
Chairman and President, Vermont Marble Company; former Director of
Keystone; and former Director and Chairman of the Board, Green Mountain
Bank.
DAVID M. RICHARDSON: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Executive Vice President, DHR
International, Inc. (executive recruitment); former Senior Vice
President, Boyden International Inc. (executive recruitment); and
Director, Commerce and Industry Association of New Jersey, 411
International, Inc. and J & M Cumming Paper Co.
RICHARD J. SHIMA: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Chairman, Environmental Warranty, Inc., and
Consultant, Drake Beam Morin, Inc. (executive outplacement); Director
of Connecticut Natural Gas Corporation, Trust Company of Connecticut,
Hartford Hospital, Old State House Association and Enhanced Financial
Services, Inc.; Member, Georgetown College Board of Advisors; Chairman,
Board of Trustees, Hartford Graduate Center; Trustee, Kingswood-Oxford
School and Greater Hartford YMCA; former Director, Executive Vice
President and Vice Chairman of The Travelers Corporation; and former
Managing Director of Russell Miller, Inc.
ANDREW J. SIMONS: Trustee of the Fund; Trustee or Director of all other
Keystone Investments Funds; Partner, Farrell, Fritz, Caemmerer, Cleary,
Barnosky & Armentano, P.C.; President, Nassau County Bar Association;
former Associate Dean and Professor of Law, St. John's University
School of Law.
EDWARD F. GODFREY: Senior Vice President of the Fund; Senior Vice President of
all other Keystone Investments Funds; Director, Senior Vice President,
Chief Financial Officer and Treasurer of Keystone Investments, the
Principal Underwriter, Keystone Asset Corporation, Keystone Capital
Corporation, Keystone Trust Company; Treasurer of Keystone
Institutional, Robert Van Partners, Inc., and FICO; Treasurer and
Director of Keystone Management, Keystone Software, and Hartwell
Keystone; Vice President and Treasurer of KFIA; and Director of KIRC.
JAMES R. McCALL: Senior Vice President of the Fund; Senior Vice President of
all other Keystone Investments Funds; and President of Keystone.
KEVIN J. MORRISSEY: Treasurer of the Fund; Treasurer of all other Keystone
Investments Funds; Vice President of Keystone Investments; Assistant
Treasurer of FICO and Keystone; and former Vice President and Treasurer
of KIRC.
CHRISTOPHER P. CONKEY: Vice President of the Fund; Vice President of certain
other Keystone Investments Funds; and Senior Vice President of
Keystone.
ROSEMARY D. VAN ANTWERP: Senior Vice President and Secretary of the Fund; Senior
Vice President and Secretary of all other Keystone Investments Funds;
Senior Vice President, General Counsel and Secretary of Keystone;
Senior Vice President, General Counsel, Secretary and Director of the
Principal Underwriter, Keystone Management and Keystone Software;
Senior Vice President and General Counsel of Keystone Institutional;
Senior Vice President, General Counsel and Director of FICO and KIRC;
Senior Vice President and Secretary of Hartwell Keystone and Robert Van
Partners, Inc.; Vice President and Secretary of KFIA; Senior Vice
President, General Counsel and Secretary of Keystone Investments,
Keystone Asset Corporation, Keystone Capital Corporation and Keystone
Trust Company.
* This Trustee may be considered an "interested person" within the meaning of
the 1940 Act.
Mr. Elfner and Mr. Bissell are "interested persons" by virtue of their
positions as officers and/or Directors of Keystone Investments and several of
its affiliates including Keystone, the Principal Underwriter and KIRC. Mr.
Elfner and Mr. Bissell own shares of Keystone Investments. Mr. Elfner is
Chairman of the Board, Chief Executive Officer and Director of Keystone
Investments. Mr. Bissell is a Director of Keystone Investments.
During the fiscal year ended June 30, 1995, no Trustee affiliated with
Keystone or any officer received any direct remuneration from the Fund. During
this same period the nonaffiliated Trustees received a total of $21,456 in
retainers and fees. For the twelve month period ended June 30, 1995, fees paid
to Independent Trustees on a complex wide basis were approximately $______. As
of July 31, 1995, the Trustees and officers of the Fund beneficially owned less
than 1% of the Fund's then outstanding Class A shares and none of the Fund's
then outstanding Class B and Class C shares.
The address of all Trustees and officers of the Fund and the address of
the Fund is 200 Berkeley Street, Boston, Massachusetts 02116-5034.
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DECLARATION OF TRUST
- -------------------------------------------------------------------------------
The Fund is organized as a Massachusetts business trust established
under a Declaration of Trust dated May 22, 1975, as amended and restated on
December 1, 1985 pursuant to a First Supplemental Declaration of Trust (the
"Declaration of Trust"). The Fund is similar in most respects to a business
corporation. The principal distinction between the Fund and a corporation
relates to the shareholder liability described below. A copy of the Declaration
of Trust is filed as an exhibit to the Registration Statement of which this
statement of additional information is a part. This summary is qualified in its
entirety by reference to the Declaration of Trust.
SHAREHOLDER LIABILITY
Pursuant to certain decisions of the Supreme Judicial Court of
Massachusetts, shareholders of such a trust may, under certain circumstances, be
held personally liable as partners for the obligations of the trust. Even if,
however, the Fund were held to be a partnership, the possibility of the
shareholders incurring financial loss for that reason appears remote because the
Fund's Declaration of Trust contains an express disclaimer of shareholder
liability for obligations of the Fund and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Fund or the Trustees. In addition, the Declaration of Trust
provides for indemnification out of the trust property for any shareholder held
personally liable for the obligations of the Fund.
VOTING RIGHTS
Shareholders elected Trustees at a meeting held on July 27, 1993. No
further meetings of shareholders for the purpose of electing Trustees will be
held, except where required by law, unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders. At
such time, the Trustees then in office will call a shareholders' meeting for
election of Trustees.
Except as set forth above or otherwise required by law, the Trustees
shall continue to hold office, and may appoint successor Trustees. Any Trustee
may be removed from office (1) at any time by two-thirds vote of the Trustees;
(2) by a majority vote of Trustees when a Trustee becomes mentally or physically
incapacitated; and (3) at a special meeting of shareholders by a two-thirds vote
of the outstanding shares. Any Trustee may also voluntarily resign from office.
Voting rights are not cumulative. The holders of more than 50% of the shares
voting in the election of Trustees can, if they choose to do so, elect all of
the Trustees of the Fund, in which event the holders of the remaining shares
will be unable to elect any person as a Trustee.
Under the Declaration of Trust the Fund does not hold annual meetings.
Shares are entitled to one vote per share. Shares generally vote together as one
class on all matters. Classes of shares have equal voting rights except that
each class of shares has exclusive voting rights with respect to its
Distribution Plan. No amendment may be made to the Declaration of Trust,
however, that adversely affects any class of shares without the approval of a
majority of the shares of that class. Shares have non-cumulative voting rights.
LIMITATIONS OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only
for his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, shall not be
liable for any neglect or wrongdoing of any such person; provided, however, that
nothing in the Declaration of Trust shall protect a Trustee against any
liability for his willful misfeasance, bad faith, gross negligence or reckless
disregard of his duties.
- -------------------------------------------------------------------------------
INVESTMENT MANAGER
- -------------------------------------------------------------------------------
Subject to the general supervision of the Fund's Board of Trustees,
Keystone Management, located at 200 Berkeley Street, Boston, Massachusetts
02116-5034, serves as investment manager to the Fund and is responsible for the
overall management of the Fund's business and affairs. Keystone Management,
organized in 1989, is a wholly-owned subsidiary of Keystone, and its directors
and principal executive officers have been affiliated with Keystone, a seasoned
investment adviser, for a number of years. Keystone Management also serves as
investment manager to each of the funds in the Keystone Fund Family and to
certain other funds in the Keystone Investments Family of Funds.
Except as otherwise noted below, pursuant to its Management Agreement
with the Fund and subject to the supervision of the Fund's Board of Trustees,
Keystone Management manages and administers the operation of the Fund, and
manages the investment and reinvestment of the Fund's assets in conformity with
the Fund's investment objectives and restrictions. The Management Agreement
stipulates that Keystone Management shall provide office space, all necessary
office facilities, equipment and personnel in connection with its services under
the Management Agreement and pay or reimburse the Fund for the compensation of
Fund officers and Trustees who are affiliated with the investment manager and
will pay all expenses of Keystone Management incurred in connection with the
provision of its services. All charges and expenses other than those
specifically referred to as being borne by Keystone Management will be paid by
the Fund, including, but not limited to, custodian charges and expenses;
bookkeeping and auditors' charges and expenses; transfer agent charges and
expenses; fees of Independent Trustees; brokerage commissions, brokers' fees and
expenses; issue and transfer taxes; costs and expenses under Distribution Plans;
taxes and trust fees payable to governmental agencies; the cost of share
certificates; fees and expenses of the registration and qualification of the
Fund and its shares with the Securities and Exchange Commission (sometimes
referred to herein as the "SEC" or the "Commission") or under state or other
securities laws; expenses of preparing, printing and mailing prospectuses,
statements of additional information, notices, reports and proxy materials to
shareholders of the Fund; expenses of shareholders' and Trustees' meetings;
charges and expenses of legal counsel for the Fund and for the Trustees of the
Fund on matters relating to the Fund; charges and expenses of filing annual and
other reports with the SEC and other authorities; and all extraordinary charges
and expenses of the Fund.
The Management Agreement permits Keystone Management to enter into an
agreement with Keystone or another investment adviser under which Keystone or
such other investment adviser, as investment adviser, will provide substantially
all the services to be provided by Keystone Management under the Management
Agreement. The Management Agreement also permits Keystone Management to delegate
to Keystone or another investment adviser substantially all of the investment
manager's rights, duties and obligations under the Agreement. Services performed
by Keystone Management include (1) performing research and planning with respect
to (a) the Fund's qualification as a regulated investment company under
Subchapter M of the Code, (b) tax treatment of the Fund's portfolio investments,
(c) tax treatment of special corporate actions (such as reorganizations), (d)
state tax matters affecting the Fund, and (e) the Fund's distributions of income
and capital gains; (2) preparing the Fund's federal and state tax returns; and
(3) providing services to the Fund's shareholders in connection with federal and
state taxation and distributions of income and capital gains.
The Fund pays Keystone Management a fee for its services at the annual
rate of:
(1) 0.50% of the average daily value of the net assets of the Fund on
the first $500,000,000 of such assets; plus
(2) 0.45% of the average daily value of the net assets of the Fund on
such assets which exceed $500,000,000 and are less than $1,000,000,000; plus
(3) 0.40% of the average daily value of the net assets of the Fund on
such assets which are $1,000,000,000 or more.
The fee is calculated on a calendar-day basis, accrued as of the close
of each business day and paid monthly.
As a continuing condition of registration of shares in a state,
Keystone Management has agreed to reimburse the Fund annually for certain
operating expenses incurred by the Fund in excess of certain percentages of the
Fund's average daily net assets. Keystone Management is not required, however,
to make such reimbursement to the extent it would result in the Fund's inability
to qualify as a regulated investment company under provisions of the Internal
Revenue Code. This condition may be modified or eliminated in the future.
The Fund is subject to certain state annual expense limitations, the
most restrictive of which is as follows:
2.5% of the first $30 million of Fund average net assets;
2.0% of the next $70 million of Fund average net assets; and
1.5% of Fund average net assets over $100 million.
Capital charges and certain expenses, including a portion of the Fund's
Distribution Plan expenses, are not included in the calculation of the state
expense limitation. This limitation may be modified or eliminated in the future.
The Management Agreement continues in effect from year to year only if
approved at least annually by the Fund's Board of Trustees or by a vote of a
majority of the outstanding shares, and such renewal has been approved by the
vote of a majority of the Independent Trustees cast in person at a meeting
called for the purpose of voting on such approval. The Management Agreement may
be terminated, without penalty, on 60 days' written notice by the Fund's Board
of Trustees or by a vote of a majority of outstanding shares. The Management
Agreement will terminate automatically upon its "assignment" as that term is
defined in the 1940 Act.
For additional discussion of fees paid to Keystone Management, see
"Investment Adviser" below.
- -------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------
Pursuant to its Management Agreement with the Fund, Keystone Management
has delegated its investment management functions, except for certain
administrative and management services, to Keystone and has entered into an
Advisory Agreement, with Keystone under which Keystone will provide investment
advisory and management services to the Fund.
Keystone, located at 200 Berkeley Street, Boston, Massachusetts
02116-5034, has provided investment advisory and management services to
investment companies and private accounts since it was organized in 1932.
Keystone is a wholly-owned subsidiary of Keystone Investments located at 200
Berkeley Street, Boston, Massachusetts 02116-5034.
Keystone Investments is a corporation predominantly owned by current
and former members of management of Keystone and its affiliates. The shares of
Keystone Investments common stock beneficially owned by management are held in a
number of voting trusts, the trustees of which are George S. Bissell, Albert H.
Elfner, III, Edward F. Godfrey and Ralph J. Spuehler, Jr. Keystone Investments
provides accounting, bookkeeping, legal, personnel and general corporate
services to Keystone Management, Keystone, their affiliates and the Keystone
Investments Family of Funds.
Pursuant to the Advisory Agreement, Keystone will receive for its
services an annual fee representing 85% of the management fee received by
Keystone Management under its Management Agreement with the Fund.
Pursuant to the Advisory Agreement with Keystone Management and subject
to the supervision of the Fund's Board of Trustees, Keystone manages and
administers the operations of the Fund, and manages the investment and
reinvestment of the Fund's assets in conformity with the Fund's investment
objectives and restrictions. The Advisory Agreement stipulates that Keystone
shall provide office space, all necessary office facilities, equipment and
personnel in connection with its services under the Advisory Agreement and pay
or reimburse the Fund for the compensation of Fund officers and Trustees who are
affiliated with the investment manager and will pay all expenses of Keystone
incurred in connection with the provisions of its services. All charges and
expenses other than those specifically referred to as being borne by Keystone
will be paid by the Fund, including, but not limited to, custodian charges and
expenses; bookkeeping and auditors' charges and expenses; transfer agent charges
and expenses; fees of Independent Trustees; brokerage commissions, brokers' fees
and expenses; issue and transfer taxes; costs and expenses under the
Distribution Plans; taxes and trust fees payable to governmental agencies; the
cost of share certificates; fees and expenses of the registration and
qualification of the Fund and its shares with the SEC or under state or other
securities laws; expenses of preparing, printing and mailing prospectuses,
statements of additional information, notices, reports and proxy materials to
shareholders of the Fund; expenses of shareholders' and Trustees' meetings;
charges and expenses of legal counsel for the Fund and for the Trustees of the
Fund on matters relating to the Fund; charges and expenses of filing annual and
other reports with the SEC and other authorities; and all extraordinary charges
and expenses of the Fund.
During the year ended June 30, 1993, the Fund paid or accrued to
Keystone Management investment management and administrative fees of $1,050,015,
which represented 0.50% of the Fund's average net assets. Of such amount,
$892,513 was paid to Keystone for its services to the Fund pursuant to the
Advisory Agreement with Keystone Management.
During the year ended June 30, 1994, the Fund paid or accrued to
Keystone Management investment management and administrative services fees of
$1,407,708, which represented 0.50% of the Fund's average net assets. Of such
amount paid to Keystone Management, $1,196,552 was paid to Keystone for its
services to the Fund.
During the year ended June 30, 1995, the Fund paid or accrued to
Keystone Management investment management and administrative fees of $1,923,870,
which represented 0.50% of the Fund's average net assets. Of such amount,
$1,635,290 was paid to Keystone for its services to the Fund pursuant to the
Advisory Agreement with Keystone Management.
- -------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER
- -------------------------------------------------------------------------------
The Fund has entered into Principal Underwriting Agreements,
("Principal Underwriting Agreements") with the Principal Underwriter, a
wholly-owned subsidiary of Keystone. The Principal Underwriter, as agent, has
agreed to use its best efforts to find purchasers for the shares. The Principal
Underwriter may retain and employ representatives to promote distribution of the
shares and may obtain orders from brokers, dealers and others, acting as
principals, for sales of shares to them. The Principal Underwriting Agreements
provide that the Principal Underwriter will bear the expense of preparing,
printing and distributing advertising and sales literature and prospectuses used
by it. In its capacity as principal underwriter, the Principal Underwriter may
receive payments from the Fund pursuant to the Fund's Distribution Plans.
All subscriptions and sales of shares by the Principal Underwriter are
at the offering price of the shares in accordance with the provisions of the
Declaration of Trust, By-Laws, the current prospectus and statement of
additional information of the Fund. All orders are subject to acceptance by the
Fund and the Fund reserves the right in its sole discretion to reject any order
received. Under the Principal Underwriting Agreements, the Fund is not liable to
anyone for failure to accept any order.
The Principal Underwriter, as agent, currently offers shares of the
Fund to investors in those states in which the shares of the Fund are qualified
and in which the Principal Underwriter is qualified as a broker-dealer. The
Principal Underwriting Agreements provide that the Principal Underwriter may
accept orders for shares of the Fund at net asset value since no sales
commission or load is charged to the investor.
From time to time, if in the Principal Underwriter's judgment it could
benefit sales of Fund shares, the Principal Underwriter may use its discretion
in providing to selected dealers promotional materials and selling aids
including, but not limited to, personal computers, related software and Fund
data files.
The Principal Underwriting Agreements provide that they will remain in
effect as long as their terms and continuance are approved by a majority of the
Fund's Independent Trustees at least annually at a meeting called for that
purpose, and if their continuance is approved annually by vote of a majority of
Trustees, or by vote of a majority of the outstanding shares.
The Principal Underwriting Agreement may be terminated, without
penalty, on 60 days' written notice by the Fund's Board of Trustees or by a vote
of a majority of outstanding shares. The Principal Underwriting Agreement will
terminate automatically upon its "assignment" as that term is defined in the
1940 Act.
- -------------------------------------------------------------------------------
BROKERAGE
- -------------------------------------------------------------------------------
It is the policy of the Fund, in effecting transactions in portfolio
securities, to seek best execution of orders at the most favorable prices. The
determination of what may constitute best execution and price in the execution
of a securities transaction by a broker involves a number of considerations
including, without limitation, the overall direct net economic result to the
Fund, involving both price paid or received and any commissions and other costs
paid, the efficiency with which the transaction is effected, the ability to
effect the transaction at all where a large block is involved, the availability
of the broker to stand ready to execute potentially difficult transactions in
the future and the financial strength and stability of the broker. Management
weighs such considerations in determining the overall reasonableness of
brokerage commissions paid.
Subject to the foregoing, a factor in the selection of brokers is the
receipt of research services, such as analyses and reports concerning issuers,
industries, securities, economic factors and trends and other statistical and
factual information. Any such research and other statistical and factual
information provided by brokers to the Fund or Keystone is considered to be in
addition to and not in lieu of services required to be performed by Keystone
Management under the Management Agreement or Keystone under the Advisory
Agreement with Keystone Management. The cost, value and specific application of
such information are indeterminable and cannot be practically allocated among
the Fund and other clients of Keystone who may indirectly benefit from the
availability of such information. Similarly, the Fund may indirectly benefit
from information made available as a result of transactions effected for such
other clients.
The Fund expects that purchases and sales of money market instruments
usually will be principal transactions. Money market instruments are normally
purchased directly from the issuer or from an underwriter or market maker for
the securities. There usually will be no brokerage commissions paid by the Fund
for such purchases. Purchases from underwriters will include the underwriting
commission or concession, and purchases from dealers serving as market makers
will include the spread between the bid and asked prices. Where transactions are
made in the over-the-counter market, the Fund will deal with primary market
makers unless more favorable prices are otherwise obtainable.
The Fund may participate, if and when practicable, in group bidding for
the purchase directly from an issuer of certain securities for the Fund's
portfolio in order to take advantage of the lower purchase price available to
members of such a group.
Investment decisions for the Fund are made independently by Keystone
Management or Keystone from those of the other funds and investment accounts
managed by Keystone Management or Keystone. It may frequently develop that the
same investment decision is made for more than one fund. Simultaneous
transactions are inevitable when the same security is suitable for the
investment objective of more than one account. When two or more funds or
accounts are engaged in the purchase or sale of the same security, the
transactions are allocated as to amount in accordance with a formula which is
equitable to each fund or account. It is recognized that in some cases this
system could have a detrimental effect on the price or volume of the security as
far as the Fund is concerned. In other cases, however, it is believed that the
ability of the Fund to participate in volume transactions will produce better
executions for the Fund.
The policy of the Fund with respect to brokerage is and will be
reviewed by the Fund's Board of Trustees from time to time. Because of the
possibility of further regulatory developments affecting the securities
exchanges and brokerage practices generally, the foregoing practices may be
changed, modified or eliminated.
In no instance will portfolio securities be purchased from or sold to
Keystone Management, Keystone, the Principal Underwriter or any of their
"affiliated persons", as said term is defined in the 1940 Act and rules and
regulations issued thereunder.
The Fund paid no brokerage commissions during its last three fiscal
years.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the custodian of all securities and cash of the Fund
(the "Custodian"). The Custodian performs no investment management functions for
the Fund, but, in addition to its custodial services, is responsible for
accounting and related recordkeeping on behalf of the Fund.
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110,
Certified Public Accountants, are the independent auditors for the Fund.
KIRC, located at 101 Main Street, Cambridge, Massachusetts 02142-1519,
is a wholly-owned subsidiary of Keystone and acts as transfer agent and dividend
disbursing agent for the Fund.
Except as otherwise stated in its prospectus or required by law, the
Fund reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or change
fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in the Fund's
prospectus, this statement of additional information or in supplemental sales
literature issued by the Fund or the Principal Underwriter, and no person is
entitled to rely on any information or representation not contained therein.
The Fund's prospectus and this statement of additional information omit
certain information contained in the registration statement filed with the SEC,
which may be obtained from the SEC's principal office in Washington, D.C. upon
payment of the fee prescribed by the rules and regulations promulgated by the
SEC.
As of July 31, 1995, there were no shareholders of record owning 5% or
more of the Fund's outstanding Class A shares.
As of July 31, 1995, Granville D. Grimes, Charitable Remainder
Uni-Trust 7-2, P.O. Box 1035, Decatur, AL 35601 owned 11.075% of the outstanding
Class B shares.
As of July 31, 1995, Michael Richer, 16 St. James Place, Palm Beach
Gardens, FL 33418 owned 6.514% of the outstanding Class C shares; Melinda
Frohling, TTEE, U/A DTD 08/02/91, Melinda Frohling Living Trust, 20 Hillsdale
Drive, Newport Beach, CA 92660, owned 5.599% of the outstanding Class C shares;
David Katz and Thomas Doyle TTS, U/A DTD 08/02/76, Western, Wisconsin Urology
SC, PSP Account B, 3203 Stein Blvd., Eau Claire, WI 54701, owned 5.017% of the
outstanding Class C shares.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS
The Fund's investments in commercial paper will consist of issues rated
at the time of investment A-1, by Standard & Poor's Corporation ("S&P"), PRIME-1
OR PRIME-2 by Moody's Investors Service, Inc. ("Moody's") or F-1 OR F-2 by Fitch
Investors Service, Inc. ("Fitch").
COMMERCIAL PAPER RATINGS
STANDARD & POOR'S RATINGS
Commercial paper rated A-1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements. The issuer's long-term
senior debt is rated A or better, although in some cases BBB credits may be
allowed. The issuer has access to at least two additional channels of borrowing.
Basic earnings and cash flow have an upward trend with allowance made for
unusual circumstances. Typically, the issuer's industry is well established and
the issuer has a strong position within the industry.
MOODY'S RATINGS
The rating PRIME-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public
preparations to meet such obligations. Relative strength or weakness of the
above factors determines how the issuer's commercial paper is rated within
various categories.
FITCH'S RATINGS
The rating F-1 is the highest rating assigned by Fitch. Among the
factors considered by Fitch in assigning this rating are: (1) the issuer's
liquidity; (2) its standing in the industry; (3) the size of its debt; (4) its
ability to service its debt; (5) its profitability; (6) its return on equity;
(7) its alternative sources of financing; and (8) its ability to access the
capital markets. Analysis of the relative strength or weakness of these factors
and others determines whether an issuer's commercial paper is rated F-1.
UNITED STATES GOVERNMENT SECURITIES
Securities issued or guaranteed by the United States Government include
a variety of Treasury securities that differ only in their interest rates,
maturities and dates of issuance. Treasury bills have maturities of one year or
less. Treasury notes have maturities of one-to-ten years and Treasury bonds
generally have maturities of greater than ten years at the date of issuance.
Securities issued or guaranteed by the United States Government or its
agencies or instrumentalities include direct obligations of the United States
Treasury and securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
General Services Administration, Central Bank for Cooperatives, Federal Home
Loan Banks, Federal Loan Mortgage Corporation, Federal Intermediate Credit
Banks, Federal Land Banks, Maritime Administration, The Tennessee Valley
Authority, District of Columbia Armory Board and Federal National Mortgage
Association.
Some obligations of United States Government agencies and
instrumentalities, such as Treasury bills and Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the United States; others, such as securities of Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury; still others,
such as bonds issued by the Federal National Mortgage Association, a private
corporation, are supported only by the credit of the instrumentality. Because
the United States Government is not obligated by law to provide support to an
instrumentality it sponsors, the Fund will invest in the securities issued by
such an instrumentality only when Keystone determines that the credit risk with
respect to the instrumentality does not make its securities unsuitable
investments. United States Government securities will not include international
agencies or instrumentalities in which the United States Government, its
agencies or instrumentalities participate, such as the World Bank, the Asian
Development Bank or the InterAmerican Development Bank, or issues insured by the
Federal Deposit Insurance Corporation.
CERTIFICATES OF DEPOSIT
Certificates of deposit are receipts issued by a bank in exchange for
the deposit of funds. The issuer agrees to pay the amount deposited plus
interest to the bearer of the receipt on the date specified on the certificate.
The certificate usually can be traded in the secondary market prior to maturity.
Certificates of deposit will be limited to U.S. dollar-denominated
certificates of U.S. banks, including their branches abroad, and of U.S.
branches of foreign banks, which are members of the Federal Reserve System or
the Federal Deposit Insurance Corporation, and have at least $1 billion in
assets as of the date of their most recently published financial statements.
The Fund will not acquire time deposits or obligations issued by the
International Bank for Reconstruction and Development, the Asian Development
Bank or the Inter-American Development Bank. Additionally, the Fund does not
currently intend to purchase foreign securities (except to the extent that
certificates of deposit of foreign branches of U.S. banks may be deemed foreign
securities) or purchase certificates of deposit, bankers' acceptances or other
similar obligations issued by foreign banks (except certificates of deposit of
certain U.S. branches of foreign banks).
BANKERS' ACCEPTANCES
Bankers' acceptances typically arise from short-term credit
arrangements designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by the bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
Bankers' acceptances acquired by the Fund must have been accepted by U.S.
commercial banks, including foreign branches of U.S. commercial banks, having
total assets at the time of purchase in excess of $1 billion and must be payable
in U.S. dollars.
<PAGE>
Keystone Liquid Trust
SCHEDULE OF INVESTMENTS--June 30, 1995
<TABLE>
<CAPTION>
Maturity Principal Market
Date Amount Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BANKERS' ACCEPTANCES (9.4%)
Bank of New York 07/24/95 $ 5,000,000 $ 4,982,821
First Union National Bank 07/07/95 9,000,000 8,994,120
National Bank of Detroit 07/14/95 5,000,000 4,990,940
Northern Trust Corp. 07/05/95 1,000,000 999,672
Northern Trust Corp. 07/18/95 1,300,000 1,296,783
Republic Bank, New York 08/16/95 3,000,000 2,978,006
- ------------------------------------------------------------------------------------------
TOTAL BANKERS' ACCEPTANCES (COST--$24,242,776) 24,242,342
- ------------------------------------------------------------------------------------------
BANK NOTES (3.9%)
Fifth Third Bank, Cincinnati, Ohio, 6.08% 11/10/95 5,000,000 5,002,231
Wachovia Bank & Trust, 5.76% 09/05/95 5,000,000 4,997,388
- ------------------------------------------------------------------------------------------
TOTAL BANK NOTES (COST--$9,999,408) 9,999,619
- ------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (17.9%)
Algemene Bank Nederland NV, Yankee CD, 6.16% 07/05/95 5,000,000 5,000,023
Bayerische Landesbank, Yankee CD, 6.10% 07/12/95 8,000,000 8,000,058
Commerzbank, Yankee CD, 6.43% 08/07/95 5,000,000 5,001,937
Commerzbank, Yankee CD, 6.19% 09/26/95 5,000,000 5,001,042
First Alabama Bank, CD, 5.95% 08/08/95 10,000,000 9,999,310
Rabobank, Yankee CD, 5.81% 12/29/95 5,000,000 5,000,939
Swiss Bank, New York, Yankee CD, 6.01% 07/21/95 8,000,000 8,000,119
- ------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT (COST--$46,004,382) 46,003,428
- ------------------------------------------------------------------------------------------
COMMERCIAL PAPER (27.2%)
ABN-AMRO North America Finance Co. 10/02/95 3,000,000 2,955,258
Associates Corp. North America 07/19/95 4,000,000 3,989,333
Associates Corp. North America 08/21/95 5,000,000 4,959,711
Bell Atlantic Network Funding 07/13/95 5,000,000 4,991,736
Caisse Nationale des Telecommunications 07/17/95 5,000,000 4,988,411
Coca Cola Co. 08/03/95 5,000,000 4,973,750
Coca Cola Financial Corp. 07/17/95 4,800,000 4,788,893
Emerson Electric Co. 08/16/95 5,000,000 4,963,654
General Electric Capital Corp. 09/11/95 5,000,000 4,943,125
Hewlett Packard Co. 09/28/95 5,000,000 4,928,588
Nestle Capital Corp. 09/05/95 5,000,000 4,947,556
Procter & Gamble Co. 08/02/95 3,600,000 3,581,883
Unilever Capital Corp. (b) 10/05/95 5,000,000 4,924,931
Unilever Capital Corp. (b) 12/11/95 5,000,000 4,874,107
Wal Mart Stores Inc. 07/06/95 5,000,000 4,997,513
- ------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (COST--$69,819,595) 69,808,449
- ------------------------------------------------------------------------------------------
See Notes to Schedule of Investments.
<PAGE>
SCHEDULE OF INVESTMENTS--June 30, 1995
Maturity Principal Market
Date Amount Value
- -------------------------------------------------------------------------------------------
U.S. GOVERNMENT (AND AGENCY) ISSUES (34.3%)
FFCB, 6.02% 08/01/95 $ 8,000,000 $ 7,999,794
FHLB Discount Notes 08/30/95 10,000,000 9,903,000
FHLB Discount Notes 09/05/95 5,000,000 4,948,622
FHLB Discount Notes 11/06/95 5,000,000 4,902,000
FHLMC Discount Notes 07/19/95 5,000,000 4,986,667
FHLMC Discount Notes 08/18/95 10,000,000 9,925,634
FNMA Discount Notes 07/24/95 10,000,000 9,965,933
FNMA Discount Notes 09/14/95 5,000,000 4,941,600
FNMA Discount Notes 10/03/95 6,000,000 5,912,447
FNMA Discount Notes 10/18/95 10,000,000 9,831,772
FNMA Discount Notes 10/20/95 5,000,000 4,914,465
FNMA Discount Notes 11/01/95 5,000,000 4,905,553
U.S. Treasury Bills 11/16/95 5,000,000 4,896,489
- -------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT (AND AGENCY) ISSUES (COST--$88,023,616) 88,033,976
- -------------------------------------------------------------------------------------------
Maturity
Value
- -------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (5.1%)
Paine Webber Inc., 6.10%, purchased 06/29/95
(Collateralized by $10,245,131 FNMA #66243,
6.17%, due 01/01/19) 07/03/95 $10,006,778 10,000,000
Sanwa-BGK Securities Co., 6.25%, purchased
06/30/95 (Collateralized by $2,982,058 FHLMC
#G10134, 7.50%, due 10/01/08) 07/03/95 2,981,552 2,980,000
- -------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (COST--$12,980,000) 12,980,000
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST--$251,069,777) (A) 251,067,814
- -------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--NET (2.2%) 5,633,501
- -------------------------------------------------------------------------------------------
NET ASSETS--(100.0%) $256,701,315
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Schedule of Investments. (continued on next page)
<PAGE>
Keystone Liquid Trust
NOTES TO SCHEDULE OF INVESTMENTS:
(a) The cost of investments for federal income tax purposes is identical.
Gross unrealized appreciation and depreciation of investments, based on
identified tax cost, at June 30, 1995, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $ 16,513
Gross unrealized depreciation (18,476)
----------
Net unrealized appreciation (depreciation) ($ 1,963)
==========
</TABLE>
(b) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to Section 4(2) of the Federal
Securities Act of 1933, as amended. These securities have been determined
to be liquid under guidelines established by the Board of Trustees.
Legend of Portfolio Abbreviations
FFCB--Federal Farm Credit Bank
FHLB--Federal Home Loan Bank
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS--CLASS A SHARES
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .0454 .0235 .0230 .0386 .0634
Net realized gain (loss) on
investments 0 0 (.0001) .0003 0
- -----------------------------------------------------------------------------------------------------------
Total from investment operations .0454 .0235 .0229 .0389 .0634
- -----------------------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0454) (.0235) (.0229) (.0389) (.0634)
- -----------------------------------------------------------------------------------------------------------
Net asset value end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------
Total return 4.63% 2.37% 2.31% 3.96% 6.47%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 4.42% 2.50% 2.29% 3.99% 6.51%
Total expenses 0.92% 1.02% 1.11% 1.10% 0.92%
Net assets, end of year (thousands) $245,308 $398,617 $189,167 $227,115 $400,597
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------------------------
1990 1989 1988 1987 1986
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------
Income from investment
operations
Net investment income .0760 .0786 .0597 .0524 .0667
Net realized gain (loss) on
investments 0 .0001 (.0001) 0 (.0002)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations .0760 .0787 .0596 .0524 .0665
- -----------------------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0760) (.0787) (.0596) (.0524) (.0665)
- -----------------------------------------------------------------------------------------------------------
Net asset value
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------
Total return 7.81% 8.18% 6.31% 5.35% 6.85%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 7.53% 7.88% 5.99% 5.30% 6.67%
Total expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net assets, end of year (thousands) $406,306 $475,640 $461,032 $375,542 $326,149
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
Keystone Liquid Trust
FINANCIAL HIGHLIGHTS--CLASS B SHARES
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
February 1, 1993
Year Ended June 30, (Date of Initial
------------------------ Public Offering) to
1995 1994 June 30, 1993
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value beginning of period $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .0362 .0142 .0047
Net realized gain (loss) on investments 0 0 (.0001)
- --------------------------------------------------------------------------------------------
Total from investment operations .0362 .0142 .0046
- --------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0362) (.0142) (.0046)
- --------------------------------------------------------------------------------------------
Net asset value end of period $ 1.00 $ 1.00 $ 1.00
============================================================================================
Total return (b) 3.68% 1.43% 0.46%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 3.66% 1.84% 1.08% (a)
Total expenses 1.84% 1.85% 2.15% (a)
Net assets, end of period (thousands) $7,281 $11,198 $ 241
- --------------------------------------------------------------------------------------------
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS--CLASS C SHARES
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
February 1, 1993
Year Ended June 30, (Date of Initial
------------------------ Public Offering) to
1995 1994 June 30, 1993
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value beginning of period $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .0362 .0142 .0045
Net realized gain (loss) on investments 0 0 (.0002)
- --------------------------------------------------------------------------------------------
Total from investment operations .0362 .0142 .0043
- --------------------------------------------------------------------------------------------
Less distributions
Dividends from above sources (.0362) (.0142) (.0043)
- --------------------------------------------------------------------------------------------
Net asset value end of period $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------
Total return 3.68% 1.43% 0.43%
Ratios/supplemental data
Ratios to average net assets:
Net investment income 3.52% 1.97% 1.01% (a)
Total expenses 1.82% 1.86% 2.09% (a)
Net assets, end of period (thousands) $4,112 $6,599 $ 34
=============================================================================================
</TABLE>
(a) Annualized.
See Notes to Financial Statements.
<PAGE>
Keystone Liquid Trust
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
<TABLE>
<CAPTION>
<S> <C>
===================================================================
Assets:
Investments at market value
(identified cost--$251,069,777) (Note 1) $251,067,814
Cash 497
Receivable for:
Fund shares sold 6,306,713
Interest 699,359
Prepaid expenses and other assets 61,061
- -------------------------------------------------------------------
Total assets 258,135,444
- -------------------------------------------------------------------
Liabilities (Note 3):
Payable for:
Fund shares redeemed 399,458
Distributions to shareholders 971,569
Due to related parties 16,661
Other accrued expenses 46,441
- -------------------------------------------------------------------
Total liabilities 1,434,129
- -------------------------------------------------------------------
Net assets $256,701,315
- -------------------------------------------------------------------
Net assets represented by paid-in capital (Note 2):
Class A Shares ($1.00 a share on 245,308,083
shares outstanding) $245,308,083
Class B Shares ($1.00 a share on 7,281,559 shares
outstanding) 7,281,559
Class C Shares ($1.00 a share on 4,111,673 shares
outstanding) 4,111,673
- -------------------------------------------------------------------
$256,701,315
- -------------------------------------------------------------------
Net asset value and offering price per share
(Classes A, B, and C) $1.00
- -------------------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
===============================================================
Investment income (Note 1):
Interest $20,575,720
- ---------------------------------------------------------------
Expenses (Notes 2 and 3):
Management fees $1,923,870
Transfer agent fees 866,507
Accounting, auditing and legal
fees 60,878
Custodian fees 89,690
Trustees' fees and expenses 21,456
Printing expenses 18,383
Registration fees 188,229
Distribution Plan expenses 533,618
Insurance expenses 12,814
Miscellaneous 5,926
- ---------------------------------------------------------------
Total expenses 3,721,371
- ---------------------------------------------------------------
Net investment income 16,854,349
- ---------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on
investments (71)
Net change in unrealized
appreciation (depreciation) on
investments (685)
- ---------------------------------------------------------------
Net gain (loss) on investments (756)
- ---------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations $16,853,593
===============================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------
1995 1994
=================================================================================================================
<S> <C> <C>
Operations:
Net investment income $ 16,854,349 $ 6,954,755
Net realized gain (loss) on investments (71) (189)
Net change in unrealized appreciation (depreciation) on investments (685) 6,970
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 16,853,593 6,961,536
- -----------------------------------------------------------------------------------------------------------------
Distributions to shareholders (Note 1):
Class A Shares (16,168,849) (6,849,293)
Class B Shares (435,508) (62,830)
Class C Shares (249,236) (49,413)
- -----------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (16,853,593) (6,961,536)
- -----------------------------------------------------------------------------------------------------------------
Capital share transactions (Note 2):
Proceeds from shares sold:
Class A Shares 725,781,933 905,957,790
Class B Shares 30,267,166 23,326,893
Class C Shares 11,924,336 14,136,918
Payment for shares redeemed:
Class A Shares (892,973,139) (701,655,443)
Class B Shares (34,518,836) (12,406,378)
Class C Shares (14,624,256) (7,601,012)
Net asset value of shares issued in reinvestment of distributions from net
investment income:
Class A Shares 13,882,242 5,148,145
Class B Shares 335,641 36,291
Class C Shares 212,269 29,614
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital share
transactions (159,712,644) 226,972,818
- ----------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (159,712,644) 226,972,818
- ----------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 416,413,959 189,441,141
- ----------------------------------------------------------------------------------------------------------------
End of year $ 256,701,315 $ 416,413,959
================================================================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
Keystone Liquid Trust
NOTES TO FINANCIAL STATEMENTS
(1.) Summary of Accounting Policies
Keystone Liquid Trust (the "Fund") is a no-load, open-end diversified
investment company for which Keystone Management, Inc. ("KMI") is the
Investment Manager and Keystone Investment Management Company (formerly
Keystone Custodian Funds, Inc.) ("Keystone") is the Investment Adviser. The
Fund is registered under the Investment Company Act of 1940.
The Fund currently offers three classes of shares. Class A shares are
offered without an initial sales charge. Class B shares are offered without
an initial sales charge, although a contingent deferred sales charge may be
imposed at the time of redemption which decreases depending on when the
shares were purchased and how long the shares have been held. Class C shares
are offered without an initial sales charge, although a contingent deferred
sales charge may be imposed on redemptions within one year of purchase. Class
C shares are available only through dealers who have entered into special
distribution agreements with Keystone Investment Distributors Company
(formerly Keystone Distributors, Inc.) ("KIDC"), the Fund's underwriter.
Keystone is a wholly-owned subsidiary of Keystone Investments, Inc.
(formerly Keystone Group, Inc.) ("KII"), a Delaware corporation. KII is
privately owned by an investor group consisting of members of current and
former management of Keystone. Keystone Investor Resource Center, Inc.
("KIRC"), a wholly-owned subsidiary of Keystone, is the Fund's transfer
agent.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Valuation of Securities--Money market investments maturing in sixty days
or less are valued at amortized cost (original purchase cost as adjusted for
amortization of premium or accretion of discount) which when combined with
accrued interest approximates market. Money market investments maturing in
more than sixty days for which market quotations are readily available are
valued at current market value. Money market investments maturing in more
than sixty days when purchased which are held on the sixtieth day prior to
maturity are valued at amortized cost (market value on the sixtieth day
adjusted for amortization of premium or accretion of discount) which when
combined with accrued interest approximates market.
Repurchase Agreements--When the Fund enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price) the repurchase price of the
securities will generally equal the amount paid by the Fund plus a negotiated
interest amount. The seller under the repurchase agreement will be required
to provide securities ("collateral") to the Fund whose value will be
maintained at an amount not less than the repurchase price. The Fund monitors
the value of collateral on a daily basis, and if the value of collateral
falls below required levels, the Fund intends to seek additional collateral
from the seller or terminate the repurchase agreement. If the seller
defaults, the Fund would suffer a loss to the extent that the proceeds from
the sale of the underlying securities were less than the repurchase price.
Any such loss would be increased by any cost incurred on disposing of such
securities. If bankruptcy proceedings are commenced against the seller under
the repurchase agreement, the realization on the collateral may be delayed or
limited. Repurchase agreements entered into by the Fund will be limited to
transactions with dealers or domestic banks believed to present minimal
credit
<PAGE>
risks, and the Fund will take constructive receipt of all securities
underlying repurchase agreements until such agreements expire.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with certain other Keystone funds, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury and/or Federal Agency obligations.
Federal Income Taxes--The Fund has qualified, and intends to qualify in
the future, as a regulated investment company under the Internal Revenue Code
of 1986, as amended ("Internal Revenue Code"). Thus, the Fund expects to be
relieved of any federal income tax liability by distributing all of its net
tax basis investment income and net tax basis capital gains, if any, to its
shareholders. The Fund intends to avoid excise tax liability by making the
required distributions under the Internal Revenue Code.
Distributions--The Fund declares dividends daily, pays dividends monthly
and automatically reinvests such dividends in additional shares at net asset
value, unless shareholders request payment in cash. Dividends are declared
from the total of net investment income, plus realized and unrealized gain
(loss) on investments.
Other--Securities transactions are accounted for on the trade date.
Interest income is accrued as earned. Realized gains and losses from
securities transactions are computed on the identified cost basis.
(2.) Shares of Beneficial Interest
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of beneficial interest with a par value of $1.00. Transactions in
shares of the Fund were as follows:
<TABLE>
<CAPTION>
Class A Shares
------------------------------
Year Ended June 30,
1995 1994
- -----------------------------------------------------------
<S> <C> <C>
Shares sold 725,781,933 905,957,790
Shares redeemed (892,973,139) (701,655,443)
Shares issued in
reinvestment of
distributions from
available sources 13,882,242 5,148,145
---------- ------------
Net increase (decrease) (153,308,964) 209,450,492
========== ============
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
----------------------------
Year Ended June 30,
1995 1994
- ---------------------------------------------------------
<S> <C> <C>
Shares sold 30,267,166 23,326,893
Shares redeemed (34,518,836) (12,406,378)
Shares issued in
reinvestment of
distributions from
available sources 335,641 36,291
--------- -----------
Net increase (decrease) (3,916,029) 10,956,806
========= ===========
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
---------------------------
Year Ended June 30,
1995 1994
- --------------------------------------------------------
<S> <C> <C>
Shares sold 11,924,336 14,136,918
Shares redeemed (14,624,256) (7,601,012)
Shares issued in
reinvestment of
distributions from
available sources 212,269 29,614
--------- ----------
Net increase (decrease) (2,487,651) 6,565,520
========= ==========
</TABLE>
<PAGE>
Keystone Liquid Trust
The Fund bears some of the costs of selling its shares under a Distribution
Plan adopted with respect to its Class A, Class B and Class C shares pursuant
to Rule 12b-1 under the Investment Company Act of 1940 ("1940 Act").
The Class A Distribution Plan provides for payments which are currently
limited to 0.25% annually of the average daily net asset value of Class A
shares, to pay expenses of the distribution of Class A shares. Amounts paid
by the Fund to KIDC under the Class A Distribution Plan are currently used to
pay others, such as dealers, service fees at an annual rate of up to 0.25% of
the average daily net asset value of Class A shares maintained by the
recipient and outstanding on the Fund's books for specified periods.
The Class B Distribution Plan provides for payments at an annual rate of
up to 1.00% of the average daily net asset value of Class B shares to pay
expenses of the distribution of Class B shares. Amounts paid by the Fund
under the Class B Distribution Plan are currently used to pay others
(dealers) a commission at the time of purchase normally equal to 4.00% of the
price paid for each Class B share sold plus the first year's service fee in
advance in the amount of 0.25% of the price paid for each Class B share sold.
Beginning approximately 12 months after the purchase of a Class B share, the
broker or other party will receive service fees at an annual rate of 0.25% of
the average daily net asset value of such Class B shares maintained by the
recipient and outstanding on the Fund's books for specified periods. A
contingent deferred sales charge will be imposed, if applicable, on Class B
shares purchased after June 1, 1995 at rates ranging from a maximum of 5% of
amounts redeemed during the first 12 months following the date of purchase to
1% of amounts redeemed during the sixth twelve month period following the
date of purchase. Class B shares purchased on or after June 1, 1995 that have
been outstanding for eight years from the month of purchase will
automatically convert to Class A shares without a front end sales charge or
exchange fee. Class B shares purchased prior to June 1, 1995 will retain
their existing conversion rights.
The Class C Distribution Plan provides for payments at an annual rate of
up to 1.00% of the average daily net asset value of Class C shares to pay
expenses for the distribution of Class C shares. Amounts paid by the Fund
under the Class C Distribution Plan are currently used to pay others
(dealers) a commission at the time of purchase in the amount of 0.75% of the
price paid for each Class C share sold, plus the first year's service fee in
advance in the amount of 0.25% of the price paid for each Class C share, and,
beginning approximately 15 months after purchase, a commission at an annual
rate of 0.75% (subject to applicable limitations imposed by the rules of the
National Association of Securities Dealers, Inc.) ("NASD Rule") plus service
fees at the annual rate of 0.25%, respectively, of the average net asset
value of each Class C share maintained by the recipient and outstanding on
the Fund's books for specified periods.
Each of the Distribution Plans may be terminated at any time by vote of
the Independent Trustees or by vote of a majority of the outstanding voting
shares of the respective class. However, after the termination of any
Distribution Plan, at the discretion of the Board of Trustees, payments to
KIDC may continue as compensation for its services which had been earned
while the Distribution Plan was in effect.
For the year ended June 30, 1995, the Fund paid or accrued Distribution
Plan fees of $343,747, $119,037 and $70,834 for Class A, Class B and Class C,
respectively. These fees, which are charged to the operating expenses of the
Fund, represent 0.09%,
<PAGE>
1.00% and 1.00%, respectively, of the average net assets of each Class.
Under the NASD Rule, the maximum uncollected amounts for which KIDC may
seek payment from the Fund under its Distribution Plans are $746,584 and
$825,276 for Class B and C, respectively, as of June 30, 1995.
(3.) Investment Management and Other Transactions with Affiliates
Under the terms of the Investment Management Agreement between KMI and the
Fund KMI provides investment management and administrative services to the
Fund. In return, KMI is paid a management fee computed daily and payable
monthly calculated by applying percentage rates, starting at 0.50%, and
declining as net assets increase, to 0.40% per annum, to the net asset value
of the Fund. KMI has entered into an Investment Advisory Agreement with
Keystone under which Keystone provides investment advisory and management
services to the Fund and receives for its services an annual fee representing
85% of the management fee received by KMI.
During the year ended June 30, 1995, the Fund paid or accrued to KMI
investment management and administration services fees of $1,923,870, which
represented 0.50% of the Fund's average net assets. Of such amount paid to
KMI, $1,635,290 was paid to Keystone for its services to the Fund.
During the year ended June 30, 1995, the Fund paid or accrued $24,777 to
KII as reimbursement for certain accounting and printing services provided to
the Fund, and $866,507 was paid or accrued to KIRC for transfer agent fees.
(4.) Class Level Expenses
Presently, the Fund's class-specific expenses are limited to expenses
incurred by a class of shares pursuant to its respective Distribution Plan.
For the year ended June 30, 1995, the total amount of expenses incurred by
the Distribution Plan of each respective class is set forth in Note (2.)
"Shares of Beneficial Interest."
<PAGE>
Keystone Liquid Trust
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Keystone Liquid Trust
We have audited the accompanying statement of assets and liabilities of
Keystone Liquid Trust, including the schedule of investments, as of June 30,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
ten-year period then ended for Class A shares, and for each of the years in
the two-year period then ended and the period from February 1, 1993 (date of
initial public offering) to June 30, 1993 for Class B and Class C shares.
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
securities owned as of June 30, 1995, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Keystone Liquid Trust as of June 30, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years or periods specified in the first paragraph above in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
July 28, 1995
<PAGE>
KEYSTONE LIQUID TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Item 24(a). FINANCIAL STATEMENTS
All financial statements listed below are included in Registrant's Statement of
Additional Information.
Schedule of Investments June 30, 1995
Financial Highlights Year ended
June 30, 1995
Statement of Assets and Liabilities June 30, 1995
Statement of Operations Year ended
June 30, 1995
Statements of Changes in Net Assets Two years ended
June 30, 1995
Notes to Financial Statements
Independent Auditors' Report
dated July 28, 1995
<PAGE>
Item 24(b) Exhibits
(1) A copy of Registrant's Declaration of Trust dated December 1, 1985, as
supplemented is filed herewith.
(2) A copy of the Registrant's By-Laws, as amended, is filed herewith.
(3) Not applicable.
(4) A specimen of the security issued by the Fund was filed with
Post-Effective Amendment No. 1 to Registration Statement No.
2-51914/811-2521 as Exhibit 24(b)(4) and is incorporated by reference
herein.
(5)(A) A copy of the Management Agreement between Registrant and Keystone
Management, Inc. is filed herewith.
(B) A copy of the Advisory Agreement between Keystone Management, Inc. and
Keystone Investment Management Company (formerly named Keystone
Custodian Funds, Inc.) is filed herewith.
(6)(A) Copies of the Principal Underwriting Agreements between Registrant and
Keystone Investment Distributors Company (formerly named Keystone
Distributors, Inc.) are filed herewith.
A copy of the form of Dealer Agreement used by Keystone Investment
Distributors Company was filed with Post-Effective Amendment No. 43 to
Registration Statement No. 2-51914/811-2521 as Exhibit 24(b)(6)(A) and
is incorporated by reference herein.
(7) Not applicable.
(8) A copy of the Custodian, Fund Accounting and Recordkeeping Agreements,
as amended between Registrant and State Street Bank and Trust Company
is filed herewith.
(9) Not applicable.
(10) An opinion and consent of counsel as to the legality of securities
registered by the Fund was filed with Registrant's Rule 24f-2 Notice on
August 18, 1995 and is incorporated by reference herein.
(11) Consent as to the use of opinion of the Independent Auditors Report is
filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Copies of Registrant's Distribution Plans adopted pursuant to Rule
12b-1 are filed herewith.
(16) A schedule for computation of the effective and current yields is filed
herewith.
(17) Financial Data Schedules are filed herewith as Exhibit 27.
(18) A copy of the form of Registrant's Multiple Class Plan adopted pursuant
to Rule 18f-3 was filed with Post-Effective No. 49 to Registration
Statement No. 2-51914/811-2521 as Exhibit 24(b)(18) and is incorporated
by reference herein.
(19) Powers of Attorney are filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
Number of Record
Title of Class Holders as of July 31, 1995
-------------- ---------------------------
Shares of Beneficial Class A - 15,103
Interest, without par Class B - 539
value Class C - 258
Item 27. Indemnification
Provisions for the indemnification of the Registrant's Trustees and
officers are contained in Article VIII of Registrant's Declaration of Trust, as
supplemented, a copy of which is filed herewith and incorporated by reference
herein.
Provisions for the indemnification of Keystone Investment Management
Company, Registrant's investment adviser, are contained in Section 4 of the
Advisory Agreement, by and between Keystone Management, Inc. and Keystone
Investment Management Company, a copy of which is filed herewith and
incorporated by reference herein.
Provisions for the indemnification of Keystone Investment Distributors
Company, Registrant's principal underwriter, are contained in Section 9 of the
Principal Underwriting Agreements (for Class B-1 and B-2 Shares) by and between
Registrant and Keystone Investment Distributors Company, copies of which are
filed herewith and incorporated by reference herein.
Item 28. Businesses and Other Connections of Investment Advisers
The following tables list the names of the various officers and
directors of Keystone Management, Inc. and Keystone Investment
Management Company, Registrant's investment manager and adviser,
respectively, and their respective positions. For each named
individual, the tables list, for at least the past two fiscal years,
(i) any other organizations (excluding investment advisory clients)
with which the officer and/or director has had or has substantial
involvement; and (ii) positions held with such organizations.
<PAGE>
LIST OF OFFICERS AND DIRECTORS OF KEYSTONE MANAGEMENT, INC.
Position with
Keystone
Name Management, Inc. Other Business Affiliations
- ---- ------------------ ---------------------------
Albert H. Chairman of Chairman of the Board,
Elfner, III the Board, Chief Executive Officer,
Chief Executive President and Director:
Officer, President Keystone Investments, Inc.
and Director Keystone Investment Distributors
Company
Keystone Software, Inc.
Keystone Asset Corporation
Keystone Capital Corporation
Keystone Investments Family
of Mutual Funds
Chairman of the Board and
Director:
Keystone Investment
Management Corporation
Keystone Fixed Income
Advisers, Inc.
President and Director:
Keystone Trust Company
Director or Trustee:
Fiduciary Investment
Company, Inc.
Keystone Investor
Resource Center, Inc.
Robert Van Partners, Inc.
Boston Children's Services
Association
Associate Fiduciary Investment
Company, Inc.
Middlesex School
Middlebury College
Keystone Investment
Distributors, Inc.
Former Trustee or
Director:
Neworld Bank
Edward F. Treasurer and Director Senior Vice President
Godfrey Chief Financial Officer,
Treasurer and Director:
Keystone Investments, Inc.
Keystone Investment
Management Company
Keystone Investment
Distributors Company
Treasurer:
Keystone Investment
Management Corporation
Keystone Software, Inc.
Fiduciary Investment
Company, Inc.
Treasurer and Director:
Hartwell Keystone
Advisers, Inc.
Senior Vice President:
Keystone Investments
Family of Mutual Funds
Ralph J.
Spuehler, Jr. Director President and Director:
Keystone Investment
Distributors Company
Director:
Keystone Investor
Resource Center, Inc.
Keystone Investment
Management Company
Senior Vice President and
Director:
Keystone Investments,
Inc.
Treasurer:
Hartwell Emerging Growth
Fund
Hartwell Growth Fund
Former President:
Keystone Management,
Inc.
Former Treasurer:
Keystone Investments,
Inc.
The Kent Funds
Keystone Investment
Management Company
Rosemary D. Van Senior Vice Senior Vice President,
Antwerp President, General Counsel and
General Counsel Director:
and Secretary Fiduciary Investment
Company, Inc.
Keystone Investments, Inc.
Keystone Investor
Resource Center, Inc.
Keystone Investment
Distributors Company
Keystone Software, Inc.
Senior Vice President and
General Counsel:
Keystone Investment
Management Corporation
Senior Vice President and
Secretary:
Hartwell Keytone
Advisers, Inc.
Vice President and
Secretary:
Keystone Fixed Income
Advisers, Inc.
Former Assistant
Secretary:
The Kent Funds
Kevin Morrissey Assistant Treasurer Vice President:
Keystone Investments, Inc.
Assistant Treasurer:
Fiduciary Investment
Company, Inc.
Former Assistant
Treasurer:
The Kent Funds
J. Kevin Kenely Vice President and Vice President and Controller:
Controller Keystone Invesments, Inc.
Keystone Investment
Management Company
Keystone Management
Distributors Company
Keystone Investment
Management Corporation
Hartwell Keystone
Advisers, Inc.
Fiduciary Investment
Company, Inc.
Keystone Software, Inc.
Jean Susan Assistant Vice President and Counsel:
Loewenberg Secretary Keystone Investments, Inc.
Vice President and Secretary:
Keystone Trust Company
Secretary:
Keystone Investor Resource
Center, Inc.
Clerk:
Keystone Investment Management
Corporation
Fiduciary Investment Company,
Inc.
Assistant Secretary:
Keystone Asset Corporation
Keystone Capital Corporation
Keystone Fixed Income
Advisers, Inc.
Keystone Investments Family of
Mutual Funds
Hartwell Keystone Advisers,
Inc.
Keystone Software, Inc.
Keystone Investment
Distributors Company
Keystone Investment
Management Company
Michael A. Thomas Vice President Vice President:
Keystone Investments, Inc.
<PAGE>
LIST OF OFFICERS AND DIRECTORS OF
KEYSTONE INVESTMENT MANAGEMENT COMPANY
Position with
Keystone
Investment
Name Management Company Other Business Affiliations
- ---- ------------------ ---------------------------
Albert H. Chairman of Chairman of the Board,
Elfner, III the Board, Chief Executive Officer,
Chief Executive President and Director:
Officer, Vice Keystone Investments, Inc.
Chairman and Keystone Management, Inc.
Director Keystone Software, Inc.
Keystone Asset Corporation
Keystone Capital Corp.
Chairman of the Board and
Director:
Keystone Fixed Income
Advisers, Inc.
Keystone Institutional
Company, Inc.
President and Director:
Keystone Trust Company
Director or Trustee:
Fiduciary Investment
Company, Inc.
Keystone Investment
Distributors Company
Keystone Investor
Resource Center, Inc.
Robert Van Partners, Inc.
Boston Children's
Services Associates
Middlesex School
Middlebury College
Formerly Trustee:
Neworld Bank
Philip M. Byrne Director President and Director:
Keystone Institutional
Company, Inc.
Senior Vice President:
Keystone Investments, Inc.
Herbert L. Senior Vice None
Bishop, Jr. President
Donald C. Dates Senior Vice None
President
Gilman Gunn Senior Vice None
President
Edward F. Director, Director, Senior Vice
Godfrey Senior Vice President
President, Chief Financial Officer and
Treasurer and Treasurer:
Chief Financial Keystone Investments, Inc.
Officer Keystone Investment
Distributors Company
Treasurer:
Keystone Institutional
Company, Inc.
Keystone Management, Inc.
Keystone Software, Inc.
Fiduciary Investment
Company, Inc.
James R. McCall Director and None
President
Ralph J. Director President and Director:
Spuehler, Jr. Keystone Investment
Distributors Company
Senior Vice President and
Director:
Keystone Investments, Inc.
Keystone Investor
Resource Center, Inc.
Keystone Management, Inc.
Formerly President:
Keystone Management, Inc.
Formerly Treasurer:
The Kent Funds
Keystone Investments, Inc.
Keystone Investment
Management Company
Rosemary D. Senior Vice General Counsel, Senior
Van Antwerp President, Vice President and
General Counsel Secretary:
and Secretary Keystone Investments, Inc.
Senior Vice President and
General Counsel:
Keystone Institutional
Company, Inc.
Senior Vice President,
General Counsel and
Director:
Keystone Investor
Resource Center, Inc.
Fiduciary Investment
Company, Inc.
Keystone Investment
Distributors Company
Keystone Management, Inc.
Keystone Software, Inc.
Senior Vice President and
Secretary:
Hartwell Keystone
Advisers, Inc.
Vice President and
Secretary:
Keystone Fixed Income
Advisers, Inc.
Formerly Assistant
Secretary:
The Kent Funds
John Addeo Vice President None
Harry Barr Vice President None
Robert K. Vice President None
Baumback
Betsy A. Blacher Senior Vice None
President
Francis X. Claro Vice President None
Kristine R. Vice President None
Cloyes
Christopher P. Senior Vice None
Conkey President
Richard Cryan Senior Vice None
President
Maureen E. Senior Vice None
Cullinane President
George E. Dlugos Vice President None
Antonio T. Docal Vice President None
Christopher R. Senior Vice None
Ely President
Robert L. Hockett Vice President None
Sami J. Karam Vice President None
Donald M. Keller Senior Vice None
President
George J. Kimball Vice President None
JoAnn L. Lydon Vice President None
John C. Vice President None
Madden, Jr.
Stephen A. Marks Vice President None
Eleanor H. Marsh Vice President None
Walter T. Senior Vice None
McCormick President
Barbara McCue Vice President None
Stanley M. Niksa Vice President None
Robert E. O'Brien Vice President None
Margery C. Parker Vice President None
William H. Vice President None
Parsons
Daniel A. Rabasco Vice President None
David L. Smith Vice President None
Kathy K. Wang Vice President None
Judith A. Warners Vice President None
J. Kevin Kenely Vice President None
Joseph J. Vice President None
Decristofaro
Jean Susan Assistant Vice President and
Loewenberg Secretary Counsel:
Keystone Investments, Inc.
Vice President and
Secretary:
Keystone Trust Company
Secretary:
Keystone Investor
Resource Center, Inc.
Assistant Secretary:
Keystone Asset Corporation
Keystone Capital
Corporation
Keystone Investment
Distributors Company
Keystone Fixed Income
Advisers, Inc.
Keystone Management, Inc.
Keystone Software, Inc.
Hartwell Keystone
Advisers, Inc.
Clerk:
Keystone Institutional
Company, Inc.
Fiduciary Investment
Company, Inc.
Assistant Secretary:
Hartwell Keystone
Advisers, Inc.
Keystone Investment
Distributors Company
Colleen L. Assistant Assistant Secretary:
Mette Secretary Keystone Investment
Distributors Company
Keystone Investments, Inc.
Kevin J. Assistant Vice President:
Morrissey Treasurer Keystone Investments, Inc.
Assistant Treasurer:
Fiduciary Investment
Company, Inc.
Formerly Assistant
Treasurer:
The Kent Funds
Item 29. Principal Underwriter
(a) Keystone Investment Distributors Company, which acts as Registrant's
principal underwriter, also acts as principal underwriter for the
following entities:
Keystone Quality Fund (B-1)
Keystone Diversified Bond Fund (B-2)
Keystone High Income Bond Fund (B-4)
Keystone Balanced Fund (K-1)
Keystone Strategic Growth Fund (K-2)
Keystone Growth and Income Fund (S-1)
Keystone Mid-Cap Growth Fund (S-3)
Keystone Small Company Growth Fund (S-4)
Keystone Capital Preservation and Income Fund
Keystone Fund for Total Return
Keystone Global Opportunities Fund
Keystone Government Securities Fund
Keystone Hartwell Growth Fund
Keystone America Hartwell Emerging Growth Fund, Inc.
Keystone Intermediate Term Bond Fund
Keystone Omega Fund
Keystone Strategic Income Fund
Keystone State Tax Free Fund
Keystone State Tax Free Fund-Series II
Keystone Tax Free Income Fund
Keystone World Bond Fund
Keystone Fund of the Americas
Keystone International Fund
Keystone Precious Metals Holdings, Inc.
Keystone Strategic Development Fund
Keystone Tax Exempt Trust
Keystone Tax Free Fund
(b) For information with respect to each officer and director of
Registrant's acting principal underwriter, see the following pages.
Position with Keystone
Investment
Name Distributors Company Positions with Registrant
- ---- --------------------- -------------------------
Ralph J. Spuehler* Director, President None
Edward F. Godfrey* Director, Senior Vice Senior Vice
President, Treasurer President
and Chief Financial
Officer
Rosemary D. Van Antwerp* Director, Senior Vice Senior Vice
President, General President
Counsel and Secretary and Secretary
Albert H. Elfner, III* Director President
Charles W. Carr* Senior Vice President None
Peter M. Delehanty* Senior Vice President None
J. Kevin Kenely* Vice President and None
Controller
C. Kenneth Molander Divisional Vice None
8 King Edward Drive President
Londenderry, NH 03053
David S. Ashe Regional Manager and None
32415 Beaconsfield Vice President
Birmingham, MI 48025
David E. Achzet Regional Vice None
60 Lawn Avenue President
Greenway 27
Stamford, CT 06902
William L. Carey, Jr. Regional Manager and None
4 Treble Lane Vice President
Malvern, PA 19355
John W. Crites Regional Manager and None
2769 Oakland Circle W. Vice President
Aurora, CO 80014
Richard J. Fish Regional Vice None
309 West 90th Street President
New York, NY 10024
Michael E. Gathings Regional Manager and None
245 Wicklawn Way Vice President
Roswell, GA 30076
Robert G. Holz, Jr. Regional Manager and None
313 Meadowcrest Drive Vice President
Richardson, Texas 75080
Todd L. Kobrin Regional Manager and None
20 Iron Gate Vice President
Metuchen, NJ 08840
Ralph H. Johnson Regional Manager and None
345 Masters Court, #2 Vice President
Walnut Creek, CA 94598
Juliana Perkins Regional Manager and None
2348 West Adrian Street Vice President
Newbury Park, CA 91320
Matthew D. Twomey Regional Manager and None
9627 Sparrow Court Vice President
Ellicott City, MD 21042
Mitchell I. Weiser Regional Manager and None
7031 Ventura Court Vice President
Parkland, FL 33067
Welden L. Evans Regional Banking None
490 Huntcliff Green Officer and Vice
Atlanta, GA 30350 President
Russell A. Haskell* Vice President None
John M. McAllister* Vice President None
Gregg A. Mahalich Vice President None
14952 Richards Drive W.
Minnetonka, MN 55345
Robert J. Matson * Vice President None
Burton Robbins Vice President None
1586 Folkstone Terrace
Westlake Village, CA
91361
Thomas E. Ryan, III* Vice President None
Peter Willis* Vice President None
Raymond P. Ajemian* Manager and Vice None
President
Joan M. Balchunas* Assistant Vice None
President
Thomas J. Gainey* Assistant Vice None
President
Eric S. Jeppson* Assistant Vice None
President
Julie A. Robinson* Assistant Vice None
President
Peter M. Sullivan Assistant Vice None
21445 Southeast 35th Way President
Issaquah, WA 98027
Jean S. Loewenberg* Assistant Secretary Assistant
Secretary
Colleen L. Mette* Assistant Secretary Assistant
Secretary
Dorothy E. Bourassa* Assistant Secretary Assistant
Secretary
*Located at 200 Berkeley Street, Boston, Massachusetts 02116-5034
Item 29(c). - Not applicable
Item 30. Location of Accounts and Records
200 Berkeley Street
Boston, Massachusetts 02116-5034
Keystone Investor Resource Center, Inc.
101 Main Street
Cambridge, Massachusetts 02142-1519
State Street Bank and Trust Company
1776 Heritage Drive
Quincy, Massachusetts 02171
Data Vault, Inc.
331 Sharp Slot Road
Swansea, Massachusetts 02777
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a copy of
the Registrant's prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon request and
without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it has duly caused this
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, in The
Commonwealth of Massachusetts, on the 31st day of August, 1995.
KEYSTONE LIQUID TRUST
By:/s/ George S. Bissell
George S. Bissell*
Chairman of the Board
*By:/s/James M. Wall
James M. Wall**
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registrant's Registration Statement has been signed below by the following
persons in the capacities indicated on the 31st day of August, 1995.
SIGNATURES TITLE
- ---------- -----
/s/ George S. Bissell Chairman of the Board and Trustee
- -------------------------
George S. Bissell*
/s/ Albert H. Elfner, III Chief Executive Officer, President and Trustee
- -------------------------
Albert H. Elfner, III
/s/ Kevin J. Morrissey Treasurer (Principal Financial
- ------------------------- and Accounting Officer)
Kevin J. Morrissey*
*By:/s/ James M. Wall
------------------------------
James M. Wall**
Attorney-in-Fact
<PAGE>
SIGNATURES TITLE
- ---------- ------
/s/ Frederick Amling Trustee
- -------------------------
Frederick Amling*
/s/ Charles A. Austin, III Trustee
- --------------------------
Charles A. Austin, III*
/s/ Edwin D. Campbell Trustee
- --------------------------
Edwin D. Campbell*
/s/ Charles F. Chapin Trustee
- --------------------------
Charles F. Chapin*
/s/ K. Dun Gifford Trustee
- --------------------------
K. Dun Gifford*
/s/ Leroy Keith, Jr. Trustee
- --------------------------
Leroy Keith, Jr.*
/s/ F. Ray Keyser, Jr. Trustee
- --------------------------
F. Ray Keyser, Jr.*
/s/ David M. Richardson Trustee
- --------------------------
David M. Richardson*
/s/ Richard J. Shima Trustee
- --------------------------
Richard J. Shima*
/s/ Andrew J. Simons Trustee
- --------------------------
Andrew J. Simons*
*By:/s/ James M. Wall
--------------------------
James M. Wall**
Attorney-in-Fact
**James M. Wall, by signing his name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to
powers of attorney duly executed by such persons and attached hereto as
Exhibit 24(b)(19).
<PAGE>
INDEX TO EXHIBITS
Page Number
In Sequential
Exhibit Number Exhibit Numbering System
- ------------- --------- ----------------
1 Declaration of Trust,
as supplemented
2 By-Laws, as amended
4 Specimen Stock Certificate(1)
5 (A) Management Agreement
(B) Advisory Agreement
6 (A) Underwriting Agreements,
as amended
Dealers Agreement(2)
8 Custodian Agreement, Fund
Accounting and Recordkeeping
Agreement, as amended
10 Opinion and Consent of Counsel(3)
11 Independent Auditors' Consent
15 Class A, B and C Distribution
Plans
16 Current and Effective Yield
Schedules
17 Financial Data Schedules
18 Multiple Class Plan(4)
19 Powers of Attorney
- -------------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 43 to
Registration Statement No. 2-51914/811-2521.
(2) Incorporated herein by reference to Post-Effective Amendment No. 43 to
Registration Statement No. 2-51914/811-2521.
(3) Incorporated herein by reference to Registrant's August 18, 1995
24f-2 filing.
(4) Incorporated herein by reference to Post-Effective Amendment No. 49 to
Registration Statement No. 2-51914/811-2521.
EXHIBIT 99.24(b)(1)
DECLARATION OF TRUST, AS SUPPLEMENTED
KEYSTONE LIQUID TRUST
FIRST SUPPLEMENTAL DECLARATION OF TRUST
Dated December 1, 1985
FIRST SUPPLEMENTAL DECLARATION OF TRUST, made December 1, 1985 by
George S. Bissell, Everett P. Pope, Peter K. Simonds, Knight Edwards, Philip B.
Harley, Leroy Keith, Jr., David M. Richardson, Andrew J. Simons and Russel R.
Taylor (hereinafter with their successors referred to as "Trustees") as Trustees
of KEYSTONE LIQUID TRUST, a Massachusetts business trust established under a
Declaration of Trust dated May 22, 1975 and Amended and Restated July 14, 1975
(the "Declaration").
WHEREAS, Section 13.1 of Article XIII of the Declaration provides that
if authorized by vote of a majority or other percentage of the Shares as there
specified, a majority of the Trustees may alter or amend the Declaration by
signing a Declaration of Trust Supplemental thereto; and
WHEREAS, the Trustees and the holder of the Shares have duly authorized
further amendment of the declaration as provided in this First Supplemental
Declaration of Trust so as to amend and restate the Declaration in its entirety;
NOW, THEREFORE, the Declaration is amended and restated to read in its
entirety as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. This trust shall hereafter be known as "KEYSTONE
LIQUID TRUST".
Section 2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided
(a) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person" and "Principal Underwriter" shall have the meanings
given them in the 1940 Act;
(b) The "Trust" refers to KEYSTONE LIQUID TRUST;
(c) "Declaration of Trust" means this Supplemental Declaration of
Trust as Amended or restated from time to time;
(d) "Majority Shareholder Vote" means the vote of a majority of
Shares entitled to vote on a matter at a meeting or a special meeting of
shareholders not less than the "vote of a majority" as defined in the 1940
Act;
(e) "Net Asset Value Per Share" means the net asset value per share
of the Trust determined in the manner provided or authorized in Article VI,
Section 5;
(f) "Shareholder" means a record owner of Shares of the Trust:
(g) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to
time or, if more than one class of Shares is authorized by the Trustees, the
equal proportionate units into which each class of Shares shall be divided
from time to time, and includes where appropriate such fractions of a Share
as the Trustees may from time to time authorize as well as a whole Share;
(h) "Trustees" refers to the Trustee or Trustees of the Trust named
or elected in accordance with Article IV and where appropriate means a
majority or other portion of them acting in accordance with this Declaration
of Trust or the By-Laws of the Trust; and
(i) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time.
<PAGE>
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to provide investors a continuous source of
managed investments.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest. The beneficial interest in
the Trust shall at all times be divided into transferable Shares, without par
value, each of which shall represent an outstanding, none having priority or
preference over another, except to the extent modified by the Trustees under the
provisions of this section. The number of Shares which may be issued is
unlimited. The Trustees may from time to time divide or combine the outstanding
Shares into a greater or lesser number without thereby changing the
proportionate beneficial interest in the Trust. Contributions to the Trust may
be accepted for, and Shares shall be redeemed as, whole Shares and/or fractions.
From time to time as they deem appropriate, the Trustees may create
additional classes ("Classes") and/or series ("Series") of instrument ("Original
Series"). References in this Declaration of Trust to Shares of the Trust shall
apply to each such Series of restrictions of a Class) to each such Class of
Shares, except to the extent modified by the Trustees under the provisions of
this Section.
Any additional Series of Shares created hereunder shall represent the
beneficial interest in the assets (and related liabilities) allocated by the
trustees to such series of Shares and acquired by the Trust only after creation
of the respective Series of Shares and only on the account of such Series. If
the Trustees create any additional Series of Shares hereunder, then the Original
Series shall be deemed a separate Series of Shares. Upon creation of each Series
of Shares, the Trustees may designate it appropriately and determine the
investment policies with respect to the assets allocated to such Series of
Shares, redemption rights, dividend policies, conversion rights, liquidation
rights, voting rights, and such other rights and restrictions as the Trustees
deem appropriate, to the extent not inconsistent with the provisions of this
Declaration of Trust.
The Trustees may divide any Series including the Original Series) into
more than one Class of Shares. Upon creation of each additional Class of Shares
the Trustees may designate it appropriately and determine its rights and
restrictions (including redemption rights, dividend rights, conversion rights,
liquidation rights, voting rights, and such other rights and restrictions as the
Trustees deem appropriate).
Section 2. Ownership of Shares. The Ownership of Shares shall be
recorded in the books of the Trust or a transfer agent or a similar agent. The
Trustees may make such rules as they consider appropriate for the transfer of
Shares and similar matters. The record books of the Trust as kept by the Trust
or any transfer agent or similar agent, as the case may be, shall be conclusive
as to who are the holders of shares of each Class or Series and as to the number
of Shares of each Class or Series held from time to time by each.
Section 3. Investments in the Trust. The Trustees shall accept
investments in the Trust from such persons and on such terms and, subject to any
requirements of law, for such consideration as the Trustees from time to time
authorize and may cease offering shares to the public at any time. After such
acceptance, the number of shares of the appropriate Series to represent the
contribution may in the Trustees' discretion be considered as outstanding and
the amount receivable by the Trustees on account of the contribution may be
treated as an asset of the Series.
After the initial investment in the Trust, Shares (including Shares
which may have been redeemed or repurchased by the Trust) may be issued or sold
at a price which will net the Trust, before paying any taxes in connection with
such issue or sale, not less than the Net Asset Value per Share thereof;
provided, however, that the Trustees may in their discretion impose a sales
charge upon investments in the Trust.
Section 4. No Preemptive Rights. Shareholders shall have no preemptive
or other right to subscribe to any additional shares or other securities issued
by the Trust.
Section 5. Provisions Relating to Series of Shares. Whenever no Shares
of Series are outstanding, then the Trustees may abolish such Series (or any
Class of Shares of a Series for which there are no outstanding Shares.) Whenever
more than one Series of Shares is outstanding, then the following provisions
shall apply:
(a) Assets Belonging to Each Series. All consideration received by a
Trust for the issue or sale of Shares of a particular Series, together with
all assets in which such consideration is invested or reinvested, all
income, earnings and proceeds thereof, and any funds derived from any
reinvestment of such proceeds, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors, and shall be so
recorded upon the books of the Trust. In the event there are assets, income,
earnings, and proceeds thereof which are not readily identifiable as
belonging to a particular Series, then the Trustees shall allocate such
items to the various Series then existing, in such manner and on such basis
as they in their sole discretion, deem fair and equitable. The amount of
each such item allocated to a particular Series by the Trustees shall then
belong to that Series, and each such allocation shall be conclusive and
binding upon the Shareholders of all Series for all purposes.
(b) Liabilities belonging to Each Series. The assets belonging to
each particular series shall be charged with the liabilities, expenses,
costs and reserves of the Trust attributable to that Series; and any general
liabilities, expenses, costs and reserves of the Trust which are not readily
identifiable as attributable to a particular Series shall be allocated by
the Trustees to the various Series then existing, in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes.
(c) Series Shares, Dividends and Liquidation. Each share of each
respective Class of a Series shall have the same rights and pro rata
beneficial interest in the assets and liabilities of the Series as any other
such Share. Any dividends paid on the Shares of any Series shall only be
payable from and to the extent of the assets (net of liabilities) belonging
to that Series. In the event of liquidation of a Series, only the assets
(less provision for liabilities) of that Series shall be distributed to the
holders of the Shares of that Series.
(d) Voting by Series. Except as provided in this section or as
limited by the rights and restrictions of any Class, each Share of the Trust
may vote with and in the same manner as any other Share on matters submitted
to a vote of the Shareholders, without differentiation among votes from the
separate Series; provided, however, that (i) as to any matter with respect
to which a separate vote of any Series is required by the 1940 Act or would
be required under the Massachusetts Business Corporation Law if the Trust
were a Massachusetts business corporation, such requirement as to a separate
vote by the Series shall apply in lieu of the voting described above herein;
(ii) in the event that the separate vote requirements referred to in (i)
above apply with respect to one or more Series, then, subject to (iii)
below, the shares of all other Series shall vote without differentiation
among their votes; and (iii) as to any matter which does not affect the
interest of a particular Series, only the holders of Shares of the one or
more affected Series shall be entitled to vote.
Section 6. Limitation of Personal Liability. The Trustees shall have no
power to bind any Shareholder personally or to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
shareholder may at any time personally agree to pay by way of subscription to
any Shares or otherwise. Every note, bond, contract or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust shall include
a recitation limiting the obligation represented thereby to the Trust and its
assets (but the omission of such a recitation shall not operate to bind any
Shareholder).
ARTICLE IV
THE TRUSTEES
Section 1. Election of Trustees. At the Special Meeting in Lieu of
Annual Meeting in 1985, the Shareholders shall elect a Board of Trustees.
Section 2. Term of Office of Trustees. After election, each Trustee
shall hold office during the lifetime of this Trust, or until the election of
his or her successor at a meeting of Shareholders; except (a) that any Trustee
may resign his or her trust by written instrument signed by him or her and
delivered to the other Trustees which shall take effect upon such delivery or
upon such later date as in specified therein; (b) that any Trustee may be
removed at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that no Trustee may continue to serve after he or
she has passed his or her seventieth birthday; (d) that any Trustee who requests
in writing to be retired or who has become mentally or physically incapacitated
may be retired by written instrument signed by a majority of the other Trustees,
specifying the date of his or her retirement; and (e) a Trustee may be removed
at any special meeting of Shareholders of the Trust by a vote of a majority of
the outstanding Shares entitled to vote.
Section 3. Termination of Service and Appointment of Trustees. In case
of the death, resignation, retirement, removal or mental or physical incapacity
of any of the Trustees, or in case a vacancy shall, by reason of an increase in
number, or for any other reason, exist, the remaining Trustees shall fill such
vacancy by appointing for the remaining term of the predecessor Trustee such
other person as they in their discretion shall see fit. Such appointment shall
be effected by the signing of a written instrument by a majority of the Trustees
in office. An appointment of a Trustee may be made by the Trustees then in
office in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that such appointment shall become effective only at or after the
effective date of such retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted this Trust,
the Trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he or she shall
be deemed a Trustee hereunder. Any appointment authorized by this Section 3 is
subject to the provisions of Section 16(a) of the 1940 Act.
Section 4. Number of Trustees. The number of Trustees serving hereunder
at any time shall be determined by the Trustees themselves, but shall not be
less than three (3) or more than fifteen (15).
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is physically or mentally incapacitated, the other Trustee
shall have all the powers hereunder and the certificate signed by a majority of
the other Trustees of such vacancy, absence or incapacity, shall be conclusive,
provided, however, that no vacancy which reduces the number of Trustees below
three (3) shall remain unfilled for a period longer than six calendar months.
Section 5. Effect of Death, Resignation, etc. of a Trustee. The death,
resignation, retirement, removal, or mental or physical incapacity of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Section 6. Management of the Trust. Subject to the provisions of this
Declaration of Trust, the business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that they do
not reserve that right to the shareholders; they may fill vacancies in or add to
their own number and may elect and remove such officers and appoint and
terminate such agents as they consider appropriate; they may appoint from their
own number and terminate any one or more committees; they may employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities, retain a transfer agent or a
Shareholder servicing agent, or both, provide for the distribution of Shares by
the Trust, through one or more principal underwriters or otherwise, set record
dates, and in general delegate such authority as they consider desirable to any
officers of the Trust and committees of the Trustees and to any agent or
employee, custodian or underwriter.
Without limiting the foregoing, the Trustees in addition to all powers
granted by law shall have power and authority:
(a) To invest and reinvest cash, and to hold cash uninvested, without
in any wise being bound or limited by any present or future law or custom in
regard to investments by Trustees.
(b) To sell, exchange, lend, pledge, mortgage, hypothecate or lease
any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such persons or persons such power and
discretion with relation to securities or property as the Trustees shall
deem proper;
(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form; or in its
own name or in the name of a custodian or subcustodian or a nominee or
nominees or otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern any security of which
is held in the Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or concern and to pay calls or
subscriptions with respect to any security held in the Trust;
(g) To join with other security holders in acting through a
committee, depository, voting Trustee or otherwise, and in that connection
to deposit any security with, or transfer any security to, any such
committee, depository or Trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depository or Trustee as the Trustees shall deem proper;
(h) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust for any matter in controversy, including but not
limited to claims for taxes; and
(i) To borrow funds.
The Trustees shall not be required to obtain any court order to deal
with any assets of the Trust or take any other action hereunder.
Section 7. Ownership of Assets of the Trust. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or by any successor
Trustees. All of the assets of the Trust shall at all times by considered as
vested in the Trustees. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or any right of partition or
possession thereof, but each Shareholder shall have a proportionate undivided
beneficial interest in the assets of the Class of Shares of which he is holder.
Section 8. Payment of Expenses. The Trustees shall pay or cause to be
paid out of the principal or income of the Trust, or partly out of principal and
partly out of income, as they deem fair, all expenses, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including but not limited to the Trustees'
compensation and such expenses and charges for the services of the Trust's
investment adviser or manager, administrator, auditor, counsel, custodian,
transfer agent, shareholder servicing agent, and such other agents or
independent contractors and such other expenses and charges as the Trustees may
deem necessary or proper to incur.
Section 9. Investment Management and Other Services. Subject to a
favorable majority Shareholder Vote, the Trustees may enter into a contract with
any person or persons, including any firm, corporation, trust or association in
which any Trustee, shareholder or officer of the Trust may be interested, to act
as investment advisers and/or managers of the Trust and to provide such
investment advice and/or management as the Trustees may from time to time
consider appropriate (the "Adviser"). Any such contract may authorize the
Adviser to determine from time to time what securities shall be acquired, held
or disposed of by the Trust and what portion of assets of the Trust shall be
held uninvested and to take, on behalf of the Trust, actions which the Adviser
deems necessary to implement the investment policies of the Trust, including the
placement of all orders for the purchase, sale or loan of portfolio securities
for the Trust's account with brokers or dealers or others selected by the
Adviser and the giving of instructions to the custodian of the Trust's assets as
to deliveries of securities and payments of cash for the account of the Trust.
Subject to a favorable majority Shareholder Vote, the adviser may enter
into an agreement to retain at its own expense any person in which any Trustee,
shareholder or officer of the Trust may be interested, to provide the Trust
investment advice and/or management and any person or persons so retained may be
granted all authority which has been granted to the Adviser under the contract
which the Adviser entered in to pursuant to the preceding paragraph.
The Trustees may enter into a contract with any person or persons
including any firm, corporation, trust or association in which any Trustee,
Shareholder or officer of the Trust be interested, to act as principal
underwriter for the Shares.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote (i)
for the election or removal of Trustees as provided in Article IV, Section 1,
(ii) with respect to any Adviser or person whom the Adviser may retain to
provide the Trust investment advice and/or management as provided in Article IV,
Section 9, (iii) with respect to any amendment of this Declaration of Trust as
provided in Article IX, Section 7, (iv) to the same extent as the stockholders
of a Massachusetts business corporation, as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, and (v) with respect to such
additional matters relating to the Trust as may be required by law, by this
Declaration of Trust, or the by-Laws of the Trust or any registration of the
Trust with the Commission or any state, or as the Trustees may consider
desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of providing
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
Section 2. Meetings. Meetings of Shareholders shall be held as
specified in Article IV, Section 1 and in the By-Laws at the principal office of
the Trust or such other place as the Trustees may designate. Special meetings of
the Shareholders may be called by the Trustees or such other person or persons
as may be specified in the By-Laws and shall be called by the Trustees upon the
written request of Shareholders owning at least 25% of the outstanding Shares
entitled to vote. Shareholders shall be entitled to at least seven days' notice
of any meeting.
Section 3. Quorum and Required Vote. Except as otherwise provided by
law, to constitute a quorum for the transaction of business at a Shareholders'
meeting there must be present in person or by proxy, holders of one fourth of
the total number of Shares of the Trust then outstanding and entitled to vote at
the meeting, but any lesser number shall be sufficient for adjournment and any
adjourned session or sessions may be held within 90 days after the date set for
the original meeting without the necessity of further notice. Subject to any
applicable requirements of law, a majority of the Shares entitled to vote on a
question shall decide such questions and a plurality of the Shares entitled to
vote thereon shall elect a Trustee, except when a larger vote is required by any
provision of this Declaration of Trust, the By-Laws of the Trust or any
applicable provision of law.
Section 4. Action by Written Consent. Any action required or permitted
to be taken at any meeting may be taken without a meeting, if a consent in
writing, setting forth such action is signed by all the Shareholders entitled to
vote on the subject matter thereof and such consent is filed with the records of
the Trust.
Section 5. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions. The Trustees may, but need not, each year
distribute to the Shareholders of each Series an amount approximately equal to
the Net Income of such Series as defined in Section 2 of Article VI determined
by the Trustees or as they may authorize and as herein provided, and the
Trustees may from time to time distribute such additional amounts as they may
determine to Shareholders. The Trustees shall have full discretion to determine
which items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Distributions of each
year's Net Income may be made in one or more payments, which shall be in Shares,
in cash, or otherwise and on a date or dates and as of a record date or dates
determined by the Trustees. Each distribution pursuant to this Section 1 shall
be made ratably according to the number of Shares of the Series held by the
several Shareholders of such Series on the record date for such distribution.
Section 2. Determination of Net Income. The "Net Income" of each Series
shall consist of all interest income accrued on portfolio assets of that Series
less all actual and accrued expenses and liabilities chargeable (in accordance
with Section 5 of this Article VI) against the income of that Series determined
in accordance with good accounting practices. Interest income shall include
discount earned (including both original issue and market discount) on discount
paper accrued ratably to the date of maturity. Such Net Income shall be
determined as of such time as the Trustees may determine on each business day
(as determined by the Trustees) and all the Net Income of each Series which is a
positive amount, since the last determination of Net Income of that Series,
minus any direct charges to Shareholders approved by the Trustees and of which
the Shareholders have been previously notified, so determined shall be declared
as a dividend. If, for any reason, the Net Income of a Series determined at any
time is a negative amount, the pro-rate share of each Shareholder os such
negative amount shall constitute a liability of such Shareholder of that Series
to the Trust which shall be paid at such times and in such Series to the Trust
which shall be paid at such times and in such manner as the Trustees may
determine out of the accrued dividend account of such Shareholder, by reducing
the number of Shares of such Series in the account of such Shareholder or
otherwise.
As of any time other than the time determined by the Trustees pursuant
to the preceding paragraph, the Trustees may cause the Net Income since the last
determination to be determined in a similar manner and the Trustees may fix the
time when such redetermined or adjusted Net Income shall become effective.
Section 3. Redemptions. Upon offer by any Shareholder of all or part of
the Shares held by the Shareholder for redemption hereunder, in accordance with
such methods, upon such terms and subject to such conditions as the Trustees may
from time to time determine, the Trustees shall redeem the Shares so offered by
distributing to the Shareholder the Net Asset Value per Share thereof next
determined. The Trust shall have the right at its option and at any time to
redeem the Shares of any Shareholder for their Net Asset Value per Share if the
Shareholder owns Shares of a Series having an aggregate net asset value of less
than such minimum amount as the Trustees may from time to time prescribe. With
respect to all Shares, or any Series of Shares, the right to redemption or the
date for payment may, however, be delayed or suspended by the Trustees if there
is an extraordinary closing or restriction of trading on the New York Stock
Exchange as determined under rules and regulations of the Commission, or an
emergency exists as a result of which it is not reasonably practicable for the
Trust to dispose of securities or fairly to determine the value of its net
assets, or as the Commission may permit. The completion of such distribution on
redemption of Shares shall constitute a full discharge of the Trust and Trustees
with respect to such Shares, and the Trustees may require that any certificate
or certificates issued by the Trust to evidence the ownership of the Shares
shall be surrendered to the Trustees for cancellation or notation. Shares so
redeemed shall be cancelled or held by the Trust for reissue, as the Trustees
may from time to time determine.
Section 4. Payment in Kind. Subject to any generally applicable
limitation imposed by the Trustees, any distribution on redemption may, if
authorized by the Trustees, be made wholly or partly in kind, instead of in
cash. Such distribution in kind shall be made by distributing investments
constituting, in the opinion of the Trustees, a fair representation of the
various types of securities then held by the Series of Shares being redeemed
(but not necessarily including a portion of each particular investment) and in
each case having an aggregate value equal to the amount of cash instead of which
such distribution in kind is made.
Section 5. Determination of Net Asset Value per Share. The Net Asset
Value per Share of each Series shall be computed as of the close of trading on
the New York Stock Exchange on each day on which such Exchange is open by
determining the value of all the investments of such Series, adding any other
assets of such Series, subtracting all liabilities of such Series and dividing
the result by the number of Shares of such Series outstanding.
Current value for portfolio securities shall be determined as follows.
Securities that are traded on an established exchange shall be valued on the
basis of the last sales price on the exchange where primarily traded prior to
the time of the valuation. Securities traded in the over-the-counter market and
for which complete quotations are readily available shall be valued at the mean
of the bid and asked prices at the time of valuation. Subject to instructions of
the Board of Trustees, the trust shall value the following at prices deemed in
good faith to be fair: (1) Securities (including restricted securities) for
which complete quotations are not readily available, (2) listed securities if in
the Trustees' opinion the last sales price does not reflect a current market
value or if no sale occurred, and (3) other assets. The fair value for listed
securities will normally be the mean between the closing bid and asked prices on
the exchange or primary market, where available.
Money market or short-term tax free securities for which market
quotations are readily available shall be valued at prices which, in the opinion
of the person making the determination, most nearly represents the market value
of such securities which may, but need not, be the most recent bid price
obtained from one or more of the market markers for such securities. Other
securities and assets shall be valued at fair value as determined by or pursuant
to the direction of the Trustees, which in the case of short-term debt
obligations, commercial paper and repurchase agreements may, but need not be, on
the basis of quoted yields for securities of comparable maturity, quality and
type, or on the basis of amortized cost.
Expenses and liabilities of the trust shall be accrued each day. The
manner of determining the Net Asset Value per Share may from time to time be
altered if necessary or desirable in the trustees' judgment to conform to any
other method prescribed or permitted by any applicable law or regulation.
The Net Asset Value per Share of any Series may be computed as of such
other times as the Trustees may determine and in such event the Net Asset Value
per Share of such Series may, but need not, be determined by adjusting the Net
Asset Value per Share of such Series last determined pursuant to this Section in
such manner (based upon changes in selected security prices determined by the
Trustees to be relevant to the Series or in averages or in other standard and
readily ascertainable market data since the last determination) as is deemed
adequate to reflect a fair approximate estimate of the probable change in Net
Asset Value per Share of such Series which has occurred since such last
determination.
In determination of Net Asset Value per Share and Net Income of any
Series, liabilities may include such reserves for taxes, estimated accrued
expenses and contingencies as the Trustees or their designates may in their sole
discretion deem fair and reasonable and attributable to such Series under the
circumstances. No accruals shall be made in respect of taxes on unrealized
appreciation of securities owned unless the Trustees shall otherwise determine.
Dividends payable by the Trust shall be deducted as at the time of but
immediately prior to the determination of Net Asset Value per Share on the
record date therefor or as the Trustees shall otherwise determine.
Determination of Net Asset Value per Share so made in good faith and
pursuant to the provisions of the 1940 Act shall be binding on all parties
concerned.
Section 6. Constant Net Asset Value; Reduction of Outstanding Shares.
The Trustees shall have the power to determine the Net Income (including
unrealized gains and losses on the portfolio assets) of each Series of the
Trust, which is commonly known as a money market Series, once on each business
day and at each such determination declare such Net Income as dividends of each
Series with the result that Net Asset Value per Share of each Series of the
Trust shall remain at a constant dollar value. The determination of Net Income
and the resultant declaration and payment of dividends shall be set forth in the
Prospectus of the Trust currently effective under the Securities Act of 1933, as
amended. Fluctuations in value will be reflected in the number of outstanding
Shares in each Shareholder's account. If there is a net loss in a Series, the
Trust will first offset such amount against dividends of such Series accrued
during the month in each Shareholder account. To the extent that such a net loss
would exceed such accrued dividends, the Trust will reduce the number of its
outstanding Shares of such Series in an amount equal to the amount by which the
net loss exceeds accrued dividends by having each Shareholder of such Series
contribute to the Trust's capital his pro rata portion of the total number of
Shares of such Series required to be cancelled in order to permit the Net Asset
Value per Shares of such Series of the Trust to be maintained at a constant
dollar value. Each Shareholder of such Series will be deemed to have agreed to
such contribution in these circumstances by his investment in the Trust. The
purpose of the foregoing procedure is to permit the Net Asset Value per Share of
each Series of the Trust to be maintained at a constant dollar value per Share.
The Trustees, by resolution, may discontinue or amend the practice of
maintaining the Net Asset Value per Share of each Series at a constant dollar
amount at any time and such modification shall be evidenced by appropriate
changes in the Prospectus.
Section 7. Automatic Redemption from Small Accounts. The Trustees shall
have the power to redeem shares at a redemption price determined in accordance
with Section 5 of this Article if at any time the total investment in such
account does not have a value of at least $1,000. Before redeeming such Shares,
Shareholders will be notified that the value of their account is less than
$1,000 and be allowed 60 days to make an additional investment to bring the
total value of their account to $1,000 or more.
Section 8. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VI, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the Net
asset Value per Share of each Series of the Trust's Shares or Net Income, or the
declaration and payment of dividends and distributions as they may deem
necessary or desirable to enable the Trust to comply with any provision of the
1940 Act, or any rule or regulation thereunder, including any rule or regulation
adopted pursuant to Section 22 of the 1940 Act by the Commission or any
securities association registered under the Securities Exchange Act of 1934, or
any order of exemption issued by said Commission, all as in effect now or as
hereafter amended or modified.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
Section 1. Compensation. The Trustees shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Section 2. Limitation of Liability. Provided they have exercised
reasonable care in their selection, the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any officer, agent,
employee or Adviser of the Trust nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
Every note, bond, contract, instrument, certificate, share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee shall not be
personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
Section 1. Trustees, Officers, etc. The Trust shall indemnify each of
its Trustees and officers and any persons who serve at the Trust's request as
Directors, officers or Trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter referred to as
a "Covered Person") against all liabilities and expenses, including but not
limited to, amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any such person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such person may be or may have been involved as a
party or otherwise or with which such person may be or may have been threatened,
while in office or thereafter, by reason of being or having been such a Trustee
or officer or Director, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding not to have acted in good faith in the reasonable belief that
such Covered Person's action was in the best interests of the Trust and except
that no person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person shall otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of office. Expenses, including counsel fees so
incurred by any Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), disposition of any such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such Covered Person, secured by an appropriate deposit or a surety bond approved
by independent legal counsel for the Trust, to repay amounts so paid to the
Trust if it is ultimately determined that indemnification of such expenses is
not authorized under this Article.
Except as otherwise provided by law, the Trust shall have power to
purchase and maintain insurance on behalf of a Covered Person against any
liability asserted against him and incurred by him in his capacity as a Covered
Person, or arising out of his status as such, whether or not the Trust would
have the power to indemnify him against the liability under the provisions of
this Section.
Section 2. Compromise Payment. As to any matter disposed of by a
compromise payment by any Covered Person referred to in Section 1 above,
pursuant to a consent decree or otherwise, no such indemnification either for
such payment or for any other expenses shall be provided unless such compromise
shall be approved as in the best interests of the Trust, after notice that it
involved such indemnification, (a) by a disinterested majority of the Trustees
then in office; or (b) by a majority of the disinterested Trustees then in
office; or (c) by any disinterested person or persons to whom the questions may
be referred by the Trustees, provided that in the case of approval pursuant to
clause (b) or (c) there has been obtained an opinion in writing of independent
legal counsel to the effect that such Covered Person appears to have acted in
good faith in the reasonable belief that his action was in the best interests of
the Trust and that such indemnification would not protect such person against
any liability to the Trust to which such person would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of office; or (d) by vote of Shareholders
holding a majority of the Shares entitled to vote thereon, exclusive of any
Shares beneficially owned by any interested Covered Person. Approval by the
Trustees pursuant to clause (a) or (b) or any disinterested person or persons
pursuant to clause (c) of this Section shall not prevent the recovery from any
Covered Person of any amount paid to such person in accordance with either of
such clauses as indemnification is such person is subsequently adjudicated by a
court of competent jurisdiction not to have acted in good faith in the
reasonable belief that such person's action was in the best interests of the
Trust or to have been liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of office.
Section 3. Indemnification Note Exclusive. The rights of
indemnification hereby provided shall not be exclusive or affect any other
rights to which any such Covered Person may be entitled. As used in this Article
VIII, the Term "Covered Person" shall include such person's heirs, executors and
administrators, an "Interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending, and a "Disinterested
Person" is a person against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust other than
Trustees and officers or other persons may be entitled by contract or otherwise
under law.
Section 4. Shareholders. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his being or having
been a Shareholder and not because of his acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust to be held harmless from and indemnified against all
loss and expense arising from such liability.
ARTICLE IX
MISCELLANEOUS
Section 1. Trust Not a Partnership. It is hereby expressly declared
that a trust and not a partnership is created hereby. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally either the Trust's Trustees or officers or any Shareholders.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim, and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which such Trustee
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing,
shall be binding upon everyone interested. Subject to the provisions of Section
1 of this Article IX, a Trustee shall be liable for his own wilful defaults, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and subject
to the provisions of said Section 1 shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is required.
Section 3. Liability of Third Person Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees pursuant hereto
or to see to the application of any payments made or property transferred to the
Trust or upon its order.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but subject to
the provisions of paragraphs (b), (c) and (d) of this Section 4.
(b) Subject to a Majority Shareholder Vote, the Trustees, may merge,
consolidate, or sell and convey the assets of the Trust including its goodwill
to another trust or corporation organized under the laws of any state of the
United States, which is a diversified open-end management investment company as
defined in the 1940 Act, for an adequate consideration which may include the
assumption of all outstanding obligations taxes and other liabilities, accrued
or contingent, of the Trust and which may include shares of beneficial interest
or stock of such trust or corporation. Upon making provision for the payment of
all such liabilities, by such assumption or otherwise, the Trustees shall
distribute the net proceeds of the transaction ratably among the holders of the
Shares of the Trust then outstanding.
(c) Subject to a Majority Shareholder Vote, the Trustees may at any
time sell and convert into money all the assets of the Trust. Either the
Trustees, or the Shareholders of a Series acting by a Majority Shareholder Vote,
may at any time sell and convert into money all the assets of a Series. Upon
making provision for the payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or Series, as the case may abe,
the Trustees shall distribute the remaining assets of the Trust or Series
ratably among the holders of the outstanding Shares or Series, the assets
allocated to Series of Shares to be distributed ratably among the holders of
such Series.
(d) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in paragraphs (b) and (c), the Trust shall
terminate and the Trustees shall be discharged of any and all further
liabilities and duties hereunder and the rights, title and interest of all
parties shall be canceled and discharged.
Section 5. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each Declaration of Trust supplemental hereto or
Amendment hereof shall be kept at the office of the Trust where it may be
inspected by any Shareholders. A copy of this instrument and of each such
Supplemental Declaration of Trust or Amendment shall be filed by the Trust with
the Massachusetts Secretary of State and the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any Supplemental Declaration of Trust or Amendments
have been made, and as to any matters in connection with the Trust hereunder;
and, with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this instrument or of any
such Supplemental Declaration of Trust or Amendment. In this instrument or in
any such amendment or Supplemental Declaration of Trust, references to this
instrument, and all expressions such as "herein," "hereof," and "hereunder,"
shall be deemed to refer to this instrument as amended or affected by any such
Supplemental Declaration of Trust or Amendment. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
instrument, rather than the headings, shall control. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 6. Applicable Law. The Trust set forth in this instrument is
made in the Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of such
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a Trust.
Section 7. Amendments. This Declaration of Trust may be altered or
amended at any time by a instrument in writing signed by a majority of the
Trustees when authorized so to do by vote of shareholders holding a majority of
the Shares entitled to vote or by any larger vote which may be required by
applicable law in any particular case except that Amendments having the purpose
of changing the name of the Trust or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or inconsistent
provision contained herein shall not require authorization by Shareholder vote.
Copies of the Supplemental Declaration of Trust shall be filed as specified in
Section 5 of this Article IX.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereto set their hands and
seals in the City of Boston, Massachusetts, for themselves and their assigns, as
of the day and year first above written.
/S/ George S. Bissell /S/ Leroy Keith, Jr.
- ---------------------------------- ----------------------------------
George S. Bissell Leroy Keith, Jr.
/S/ Everett P. Pope /S/ David M. Richardson
- ---------------------------------- ----------------------------------
Everett P. Pope David M. Richardson
/S/ Peter K. Simonds /S/ Andrew J. Simons
- ---------------------------------- ----------------------------------
Peter K. Simonds Andrew J. Simons
/S/ Knight Edwards /S/ Russel R. Taylor
- ---------------------------------- ----------------------------------
Knight Edwards Russel R. Taylor
/S/ Philip B. Harley
- ----------------------------------
Philip B. Harley
<PAGE>
Exhibit 99.24(b)(2)
BY-LAWS, AS AMENDED
<PAGE>
KEYSTONE LIQUID TRUST
AMENDMENT NUMBER 1 TO BY-LAWS
Article V of the By-Laws of the Trust is hereby amended to include a
Section 5.4 to read as follows:
" Section 5.4 Retirement of Trustees. Effective with the election of
Trustees at the 1983 Annual Meeting of Shareholders of the Trust, no
person shall be eligible for election as a Trustee if at the time of
such election he has passed his seventieth birthday."
In all other respects the By-Laws are unchanged.
DATED: June 17, 1982
#101605D2
<PAGE>
AMERICAN LIQUID TRUST
BY-LAWS
These By-laws are made and adopted pursuant to Section 9.7 of the
Declaration of Trust establishing AMERICAN LIQUID TRUST, dated May 14, 1975, as
from time to time amended, restated or modified (the "Declaration"). All words
and terms capitalized in these By-Laws shall have the meaning or meanings set
forth for such words or terms in the Declaration. If any term or provision of
these By-Laws shall be in conflict with any term or provision of the
Declaration, the terms and provisions of the Declaration shall be controlling.
ARTICLE I
SHAREHOLDERS' MEETING AND RECORD DATES
Section 1.1 General. All meetings of the Shareholders shall be held,
pursuant to written notice, within or without the Commonwealth of Massachusetts
and on such day and at such time as the Trustees shall designate. Notice shall
be given by mail not less than ten (10) nor more than sixty (60) days prior to
the day named for the meeting, and shall be deemed to have been properly given
to a Shareholder when deposited in the United States mail with first class
postage prepaid or in a telegraph office with charges prepaid, directed to his
address as given to a transfer agent to such other officer or agent of the Trust
as shall keep the register for entry thereon. A certificate or affidavit by the
Secretary or an assistant secretary or a transfer agent shall be prima facie
evidence of the giving of any notice required by the Declaration.
Section 1.2 Notice of Adjournments. Upon adjournment of any meeting of
Shareholders, it shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted thereat, other than by announcement
at the meeting at which such adjournment is taken. At any adjourned meeting at
which a quorum shall be present or represented, only such business may be
transacted which might have been transacted at the meeting originally called. If
after the adjournment, the Trustees fix a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Shareholder of
record on the new record date entitled by law to receive such notice.
Section 1.3 Chariman. The Chairman shall act as chairman at all
meetings of the Shareholders; in his absence, the President shall act as
chairman; and in the absence of the Chairman and the President, the Trustee or
Trustees present at each meeting may elect a temporary chairman for the meeting,
who may be one of themselves.
Section 1.4 Proxies; Voting. Shareholders may vote at any meeting, or
by consent in writing without a meetig pursuant to Section 8.8 of the
delcaration, either in person or by proxy. Every proxy shall be executed in
writing by the shareholder, or by his d uly authorized attorney-in-fact, with
each full share represented at the meeting being entitled to one vote and
fractional shares to fractional votes. A proxy unless coupled with an interest,
shall be revocable at will, notwithstanding any other agreement or any provision
in the proxy to the contrary, but the revocation of a proxy shall not be
effective until notice therof has been given to the Secretary, or such othe
officer or agent of the Trust as the Secretary may direct. No proxy shall be
valid after eleven (11) months from the date of its execution, unles a longer
time is expressly stated in such proxy, but in no event shall a proxy, unless
coupled with an interest, be voted on after three (3) years from the date of its
execution. Proxy shall not be revoked by the death or incapacity of the maker
unless, before the vote is counted or the authority is exercised, written notice
of such death or incapacity is given to the Secretary or to such other officer
or agent of the Trust as the Secretary may direct.
Section 1.5 Closing of Transfer Books and Fixing Record Dates. For the
purpose of determining the Shareholders who are entitled to notice of or to vote
or act at any meeting, including any adjournment thereof, or who are entitled to
participate in any dividend or distribution, or for any other proper purpose,
the Trustees may from time to time close the transfer books or fix a record date
in the manner proviced in Section 8.4, or Section 10.1, as appropriate, of the
Declaration. If the Trustees do not prior to any meeting of Shareholders so fix
a record date or close the transfer books, then the record date shall be the
close of business on the day next preceding the date of mailing of notice of the
meeting or, in the case of a dividend or other distribution resolution is
adopted, or on such later day as the Trustees may determine.
Section 1.6 Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of election, who may but need
not be Shareholders, to act at such meeting or any adjournment thereof. If
Inspectors of Election are not so appointed, the Chairman of any such meeting
may, and upon the request of any shareholder or his proxy shall, make such
appointment at the meeting. The number of Inspectors shall be either one (1) or
three (3). If appointed at the meeting on the request of one or more
Shareholders or proxies, a majority of Shares present shall determine whether
one or three Inspectors are to be appointed, but failure to allow such
determination by the Shareholders or proxies shall not affect the validity of
the appointment of Inspectors of Election. In case any person appointed as
Inspector fails to appear or fails or refuses to act, the vacancy may be filled
by appointment made the Trustees in advance of the convening of the meeting, or
at the meeting by the person acting as chairman. The Inspectors of Election
shall determine the number of shares outstanding, the Shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies; shall receive votes, ballots or consents; shall hear and determine all
challenges and questions in any way arising in connection with the right to
vote; shall count and tabulate all votes or consents, determine the results, and
do such other acts as may be proper to conduct the election or vote with
impartiality and fairness to all Shareholders. If there are three Inspectors of
Election, the decision, act or certificate of a majority shall be effective in
all respects as the decision, act or certificate of all. On request of the
chairman of the meeting, or of any Shareholder or his proxy, the Inspectors of
Election shall make a written report of any challenge or question or matter
determined by them and execute a certificate of any fact found by them.
ARTICLE II
TRUSTEES
Section 2.1 Annual Meetings. The Trustees shall hold an annual meeting
for the election of officers and the transaction of other business which may
come before such meeting as soon as practicable after the annual meeting of
Shareholders, at the place where the Shareholders' meeting was held or at such
other place as may be fixed by resolution or the consent in writing of all the
Trustees.
Section 2.2 Regular Meetings. Regular meetings of the Trustees may be
held at such time and place as the Trustees may by resolution from time to time
determine without call or notice. If any day fixed for a regular meeting shall
be a legal holiday in the Commonwealth of Massachusetts or the place designated
for regular meetings, then the meeting shall be held at the same hour and place
on the next secceeding business day.
Section 2.3 Special Meetings. Special Meetings of the Trustees shall be
held upon the call of the Chairman, the President, or the Secretary, or any two
Trustees, at such time, on such day, and at such place, as shall be designated
in the notice of the meeting.
Section 2.4 Notice of Special Meetings. Notice of any special meeting,
specifying the place, day and hour of the meeting, shall be given to a Trustee
either personally or by sending a copy thereof through the mail, with first
class postage prepaid, or by telegram, charges prepaid, to his address appearing
on the books of the Trust or supplied by him to the Trust for the purpose of
notice, at least forty-eight (48) hours, prior to the time named for such
meeting. If the notice is sent by mail or by telegraph, it shal be deemed to
have been given to the person entitled thereto when deposited in the United
States mail, postage prepaid, or with a telegraph office, charges prepaid, for
transmission to such person. Notice by telephone shall constitute personal
delivery for these purposes. Neither the business to be transacted at, nor the
purpose of, any meeting of the Board of Trustees need be stated in the notice or
waiver of notice of such meeting, and no notice need be given of action proposed
to be taken by unanimous consent.
Section 2.5 Waiver of Notice. Whenever any notice is required by the
Declaration or these By-Laws to be given to a Trustees, a waiver thereof in
writing, whether signed by him before or after the meeting, shall be deemed
equivalent to the giving of due notice. Attendance of any Trustee at any meeting
shall constitute a waiver of notice of such meeting except where such Trustee
attends the meeting for the express purpose of objecting to the transaction of
any business becauase the meeting was not lawfully called or convened.
Section 2.6 Adjournment. Adjournment or adjournments of any meeting may
be taken, and it shall not be necessary to give a any notice of the adjdourned
meeting or of the business to be transacted thereat other than by announcement
at the meeting at which such adjournment is taken. At any adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting originally called.
Section 2.7 Executive Committee. Subject to the provisions of section
3.4 hereof, the Trustees may, by resolution adopted by a majority thereof,
designate one or more of their number to constitute an Executive Committee, and
may designate one or more of their number as alternate members of the Executive
Committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in such resolution and
the Declaration, shall have and exercise the authority of the Trustees in the
management of the business and affairs of the Trust and the management and
disposition of Trust Property. Vacancies in the membership of the committee
shall be filled by the Trustees. In the absence or disqualification of any
member of such committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another Trustee to act at the meeting in the place of
any such absent or disqualified member. The Executive Committee shall keep
regular minutes of its proceedings and report the same to the Trustees.
Section 2.8 Chairman; Records. The Chairman shall act as chairman at
all meeting of the Trustees; in his absence the President shall act as chairman;
in the abasence of the chairman and President, the Ttrustees present may elect
one of their number to act as temporary chairman. The results of all actions
taken at ameeting of the Trustees, or by written consent of the Trustees without
a meeting, shall be recorded by the Secretary.
ARTICLE III
OFFICER, AGENTS AND EMPLOYEES
Section 3.1 Officers of the Trust. The officers of the Trust shall be a
Chairman and a President, chosen from among the Trustees, and a Secretary and a
Treasurer, or persons who shall act as such, chosen from among the Trustees or
otherwise, regardless of the name or title by which they may be designated,
elected or appointed. A Vice-Chairman, Executive Vice-President, one or more
Vice-Presidents, Comptroller, one or more Assistant Secretaries and Assistant
Treasurers, and such other officers or agents as the Trustees shall deem
necessary or appropriate to carry out the business of the Trust also may be
elected or appointed. Any two or more offices may be held by the same person,
except those of President and Secretary and provided that no officer shall
execute, acknowledge or verify any instrument in more than one capacity if such
instrument is rquired to be executed, acknowledged or verified by two or more
officers. In addition to the powers and duties perscribed by the Declaration and
these By-Laws, the officers and assistant officers shall have such authority and
shall perform such duties as from time to time shall be prescribed by the
Trustees. The officers and assistant officers of the Trust shall hold office
until their successors are chosen and have equalified, unless their term of
office is sooner terminated, by death, resignation or removal. The Trustees may
amend the title of any officer or assistant officer or create a new office, by
utilizing a word or words descriptive of his powers or the general character of
his duties. If the office of any officer or assistant officer become vacant for
any reason, the vacancy may be filled by the Trustees at any time.
Section 3.2 Removal of Officers, Agents or Employees. Any officer,
assistant officer, agent or employee may be removed or his authority revoked at
any time, with or without cause, by a majority of the Trustees, whenever in
their judgment the best interests of the Trust will be served thereby, but such
removal or revocation shall be without prejudice to the rights, if any, of the
person so removed to receive compensation or other benefits in accordance wth
the terms of existing contracts. Any agent or employee likewise may be removed
by the President or Chairman or, subject to the supervision of the President or
Chairman, by the person having authority with respect to the appointment of such
agent or employee. Any officer may resign at any time by written notice signed
by such officer and delivered or mailed to the Chairman, President, or
Secretary, and such resignation shall take effect upon receipt by the Chairman,
President, or Secretary, or at a later date according to the terms of such
notice.
Section 3.3 Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such amount
and with such sureties as the Trustees may determine.
Section 3.4 Chairman and President; Powers and Duties. The Chairman
shall, if present, preside at all meetings of the shareholders and of the
Trustees. He shall be the chief executive officer of the Trust and shall
exercise and perform such other powers and duties as may from time to time be
assigned to him by the Trustees. Subject to such supervisory powers, if any, as
may be given by the Trustees to the Chairman, the President shall be the chief
operating officer of the Trust and, subject to the control of the Trustees and
the Chairman, shall have general supervision, direction and control of the
business of the Trust and of its employees and shall exercise such general
powers of management as are usually vested in the office of president of a
Massachusetts business corporation. In the absence of the Chairman, the
President shall preside at all meetings of the Shareholders and of the Trustees.
Subject to direction of the Trustees, the Chairman and the President shall each
have power in the name and on behalf of the Trust to execute any and all loan
documents, contracts, agreements, deeds, mortgages, and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the Chairman and the President shall each
have full authority and power, on behalf of all of the Trustees, to attend and
to act and to vote, on behalf of the Trust at any meetings of business
organizations in which the Trust holds an interest, or to confer such powers
upon any other persons, by executing any proxies duly authorizing such persons.
The Chairman and the President shall have such further authorities and duties as
the Trustees shall from time to time determine and shall be, ex officio, members
of the Executive Committee and of all standing committees (if any) appointed by
the Trustees.
Section 3.5 Executive Vice-President; Vice President; Powers and
Duties. The Executive Vice-President, if any, shall in the absence or disability
of the President, perform all the duties of the President, and when so acting
shall have all the powers and be subject to all of the restrictions upon the
President. In the absence or disability of the Executive Vice-President, the
Vice-President shall perform all of the duties of the Executive Vice-President,
and when so acting shall have all the powers of and be subject to all of the
restrictions upon the Executive Vice-President. If there be more than one
Vice-President, their seniority in performing such duties and exercising such
powers shall be in order of their rank as fixed by the Trustees, or, if more
than one and not ranked, then by deterination of the Trustees, or, in the
absence of such determination, by the order in which they were first elected.
Subject to the direction of the Trustees, and of the Chairman and the President,
each Vice-President shall have the power in the name and on behalf of the Trust
to execute any and all loan documents, contracts, agreements, deeds, mortgages
and other instruments in writing, and, in addition, shall have such other duties
and powers as shall be designated from time to time by the Trustees or the
President and as general usage appertain to the office.
Section 3.6 Secretary; Powers and Duties. The Secretary shall keep the
minutes of all meetings of, and record all votes of, Shareholders, Trustees and
the exective or other committees, if any. He shall give, or cause to be given,
as required by the declaration or these By-Laws, notice of meetings of the
Shareholders and of the Trustees, and shall perform such other duties as may be
prescribed by the Trustees, the Chairman, or the President. He shall keep in
safe custody the seal of the Trust, and may affix the same, or, if permitted, a
facsimile thereof, to any instrument executed by the Trust and attest the seal
and the signature or signatures of the officer or officers executing such
instrument on behalf of the Trust. The Secretary shall also perform any other
duties commonly incident to such officer in a Massachusetts business
corporation, and shall have such other authorities and duties as the Trustees,
the Chairman of the President shall from time to time determine.
Section 3.7 Treasurer; Powers and Duties. Except as otherwise directed
by the Trustees, the Treasurer shall have the general supervision of the monies,
funds, securities, notes receivable and other valuable papers and documents of
the Trust, and shall have an exercise under the supervision of the Trustees and
of the Chairman and President all powers and duties normally incident to his
office. He may endorse for deposit or collection all notes, checks and other
instruments payable to the Trust or to its order. He shall deposit all funds of
the Trust in such depositories as the Trustees shall designate. He shall be
responsible for such disbursement of the funds of the Trust as may be ordered by
the Trustees, or the Chairman or the President. He shall keep accurate account
of the books of the Trust's transactions which shall be the property of the
Trust, and which, together with all other property of the Trust in his
possession, shall be subject at all times to the inspection and control of the
Trustees. Unless the Trustees shall otherwise determine, the Treasurer shall be
the principal financial and accounting officer of the Trust. He shall have such
other duties and authorities as the Trustees, the Chairman or the President
shall from time to time determine. Notwithstanding anything to the contrary
herein contained, the Trustees may authorize the Investment Adviser, the
Custodian, or the Transfer Agent to maintain bank accounts and deposit and
disburse funds of the Trust on behalf of the Trust.
Section 3.8 Delegation of Officers' Duties. The Trustees may elect, or
authorize the Chairman to appoint or elect, such other officers and assistant
officers as they shall from time to time determine to be necessary or desirable
in order to conduct the business of the Trust. Assistant officers shall act
generally in the absence of the officer whom they assist, shall assist that
officer in the duties of his office and shall have such other duties and
authority as may be conferred upon them by the Trustees or delegated to them by
the chairman or Prsident. In case of the absence or disability of any officer or
assistant officer of the Trust or for any other reason that the Trustees may
deem sufficient, the Trustees may delegate or authorize the delegation of his
powers or duties, for the time being, to any person.
ARTICLE IV
SHARES
Section 4.1 Share Certificates. Every Shareholder shall, upon written
request to the Secretary of the Trust, be entitled to receive a certificate in
such form as the Trustees shall from time to time approve, specifying the number
of full Shares held by such Shareholder; provided, however, that no certificate
shall be issued for a fractional Share. Every certificate shall bear the
signature of the Chairman or President and of the Secretary or Treasurer, and
shall be sealed with the seal of the Trust. Whenever a certificate is
countersigned by a transfer agent, one or both of the officers' signatures and
the seal may be in facsimile, engrved or printed. In case any officer or
transfer agent who has signed or whose facsimile signature appears on any share
certificate shall have ceased to be such because of death, resignation or
otherwise, before the certificate is issued, it may be issued by the Trust with
the same effect as if he had not ceased to be such prior to or on the date of
its issue. There shall be filed with each transfer agent a copy of the form of
certificate so approved by the Trustees, certified by the Chairman or the
Secretary, and such form shall continue to be used unless and until the Trustees
approve some other form.
Section 4.2 Legend. In furtherance of the provisions of Section 6.7 of
the Declaration, each certificate evidencing Shares shall contain a legend
imiprinted thereon to the following effect, or such other legend as the trustees
may from time to time adopt.
" Provisions Relating to Redemption and Prohibition of Transfer
of Shares.
" If necessary to effect compliance by the Trust with certain
requirements of the Internal Revenue Code, the shares represented by
this certificate are subject to redemption by the Trustees of the Trust
and the transfer thereof may be prohibited under the terms and
conditions set forth in the Declaration. The Shares represented by this
certificate are also subject to redmeption by the Trustees pursuant to
the provisions set forth in the Declaration for the reduction of
outstanding Shares in order to maintain a constant net asset value per
Share. The Trust will furnish a copy of such terms, conditions and
provisions to the registered holder of this certificate upon request
and without charge."
ARTICLE V
MISCELLANEOUS
Section 5.1 Depositories. The funds of the Trust shall be deposited in
such depositories as the Trustees shall designate in accordance with the
provisions of the Declaration, and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents (including the Aviser),
as the Trustees may from time to time authorize.
Section 5.2 Signatures. All contracts and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents, as
provided in the Declaration or these By-Laws or as the Trustees may from time to
time by resolution provide.
Section 5.3 Seal. The seal of the Trust shall have inscribed thereon
the words "American Liquid Trust, a Massachusetts Voluntary Association, Common
Seal, 1975." Such seal may be used by causing it or a facsimile thereof, to be
impressed or affixed or in any manner repoduced and attested as if it had been
impressed and attested manually.
ARTICLE VI
AMENDMENT OF BY-LAWS
Section 6.1 Amendment and Repeal of By-Laws. In accordance with Section
9.7 of the Declaration, the Trustees have the power to alter, amend or repeal
the By-Laws or adopt new By-Laws at any time. Action by the Trustees with
respect to the By-Laws shall be taken by an affirmative vote of a majority of
the Trustees. The Trustees shall in no event adopt By-Laws which are in conflict
with the Declaration, and any apparent inconsistency shall be construed in favor
of the related provisions in the Declaration.
* * * * * *
The Declaration of Trust establishing American Liquid Trust, dated May
14, 1975, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "American Liquid Trust" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of
American Liquid Trust shall be held to any personal liability, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
or otherwise in connection with affairs of said American Liquid Trust but the
Trust Property only shall be liable.
#101605cc
MANAGEMENT AGREEMENT
AGREEMENT made this 19th day of August, 1993 by and between KEYSTONE LIQUID
TRUST, a Massachusetts business trust (the "Fund"), and KEYSTONE MANAGEMENT,
INC., a Nevada corporation (the "Manager").
WITNESSETH:
WHEREAS, the Fund was established in Massachusetts by a Declaration of Trust
filed on May 22, 1975, amended and restated on July 14, 1975, and amended on
January 15, 1979, as further amended and/or restated from time to time (the
"Declaration of Trust");
WHEREAS, the Fund is authorized to issue an unlimited number of shares of
beneficial interest, $.10 par value (the "Shares");
WHEREAS, the Fund has a Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), effective with the Securities and Exchange
Commission covering certain of its Shares to be offered to the public and the
Fund may sell additional securities or otherwise raise additional capital;
WHEREAS, the Fund has qualified as a registered investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and intends to
maintain its qualification as a regulated investment company as defined in
Sections 851 and 852 of the Internal Revenue Code of 1986, as amended (the
"Code"), and to invest its funds in the investments permitted by the Declaration
of Trust;
WHEREAS, the Fund desires to avail itself of the experience, sources of
information, advice and assistance of the Manager and to have the Manager
undertake the duties and responsibilities hereinafter set forth, on behalf of
and subject to the supervision of the Trustees of the Fund, as provided herein;
and
WHEREAS, the Manager is willing to undertake to render such services,
subject to the supervision of the Trustees, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants herein contained, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. DUTIES OF THE MANAGER (a) The Manager agrees, as more fully set forth herein,
to act as the investment adviser to the Fund with respect to the investment of
its assets. Subject to the direction and control of the Board of Trustees of the
Fund, the Manager shall: (i) supervise continuously the investment program of
the Fund and the composition of its portfolio; (ii) determine what securities
shall be purchased or sold by the Fund; and (iii) arrange for the purchase and
sale of securities held in the portfolio of the Fund.
(b) The Manager shall give the Fund the benefit of its judgment and effort
in rendering services hereunder, but the Manager shall not be liable for any
loss sustained by reason of the adoption of any investment policy or the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon its own investigation and research or
upon investigation and research made by any other individual, firm or
corporation, if such purchase, sale or retention shall have been made and such
other individual, firm or corporation shall have been selected with due care and
in good faith. Nothing herein contained shall, however, be construed to protect
the Manager against any liability to the Fund or its security holders 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.
(c) Nothing in this Agreement shall prevent the Manager or any officer or
Director thereof from acting as investment adviser or manager for any other
person, firm or corporation and shall not in any way limit or restrict the
Manager or any of its Directors, officers, stockholders or employees from
buying, selling or trading any securities for its or their own accounts or for
the accounts of others for whom it or they may be acting; provided, however,
that the Manager expressly represents that it will undertake no activities
which, in its judgment, will affect adversely the performance of its obligations
to the Fund under this Agreement. Directors, officers, employees and agents of
the Manager or of affiliated persons of the Manager may serve as Trustees,
officers, employees or agents of the Fund. However, at least a majority of the
Trustees of the Fund shall not be affiliated with the Manager; provided, if at
any time more than 49% of the total number of Trustees shall be affiliates of
the Manager because of the death, resignation, removal or change in affiliation
of a Trustee who is not such an affiliate, such requirement shall not be
applicable for a period of 60 days, during which time a majority of all the
Trustees then in office shall appoint as Trustee such number of persons who are
not affiliates of the Manager as shall be sufficient to comply with the above
requirements. The Fund and the Manager shall at all times endeavor to comply
with such requirements, but failure to do so shall not affect the validity or
effectiveness of any action of the Fund or of the Manager under this Agreement.
(d) Anything in this Agreement to the contrary notwithstanding, the Manager
shall refrain from any action which, in its reasonable judgment or in the
judgment of the Trustees of which the Manager has written notice, would affect
adversely the status of the Fund as a regulated investment company as defined in
the Code, which would violate any law, rule or regulation of any governmental
body or agency having jurisdiction over the Fund or its securities or which
would not be permitted by the Declaration of Trust.
2. ALLOCATION OF EXPENSES (a) The Fund agrees that it will bear all expenses of
its organization, including all costs of its registration under the 1940 Act and
the registration and qualification of the Fund and its Shares in order to offer
and sell the Shares in compliance with federal and state securities laws.
(b) The Manager agrees that it will furnish the Fund, at the Manager's
expense, office space, trading and other facilities, equipment and clerical
personnel for management of the Fund's affairs and will pay all compensation of
employees, officers, and Trustees of the Fund who are affiliated persons of the
Manager or any investment adviser retained by the Manager. The Manager agrees to
bear costs of sales literature and advertising exclusive of expenses of
preparing, printing and mailing prospectuses, reports, notices and proxy
material to shareholders of the Fund. The Fund shall bear all other costs and
expenses including, but not limited to: (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Trustees and officers other than those affiliated with the Manager or any
investment adviser retained by the Manager; (v) legal, audit and accounting
expenses; (vi) fees and expenses of a custodian and transfer agent or
shareholder servicing agent; (vii) expenses incident to the issuance of its
Shares, including issuance on the payment of, or reinvestment of, dividends;
(viii) fees and expenses incident to the registration and qualification of the
Fund and its Shares for distribution under federal and state securities laws;
(ix) expenses of preparing, printing and mailing prospectuses, reports, notices
and proxy material to shareholders of the Fund; (x) all other expenses
incidental to holding meetings of the Fund's shareholders; and (xi) such
nonrecurring expenses as may arise, including litigation affecting the Fund and
the legal obligations with respect to which the Fund may have to indemnify its
officers and Trustees.
3. COMPENSATION OF THE MANAGER The Fund agrees to pay the Manager and the
Manager agrees to accept as full compensation for all services rendered to the
Fund by the Manager pursuant to this Agreement, an annual management fee payable
monthly and computed at the annual rate of
(i) .5 of 1% of the average daily value of the net assets of the Fund
on the first $500,000,000 of such assets; plus
(ii) .45% of 1% of the average daily value of the net assets of the Fund
on such assets which exceed $500,000,000 and are less than $1,000,000,000;
plus
(iii) .4 of 1% of the average daily value of the net assets of the Fund
on such assets which are $1,000,000,000 or more.
The management fee shall be computed and accrued as of the close of each
business day.
4. INVESTMENT ADVISER The Manager may enter into an agreement to retain, at its
own expense, Keystone Custodian Funds, Inc. or any other firm or firms
("Adviser") to provide the Fund all of the services to be provided by the
Manager hereunder, if such agreement is approved as required by law. Such
agreement may delegate to such Adviser all of Manager's rights, obligations and
duties hereunder.
5. DURATION AND TERMINATION (a) This Agreement shall continue in effect until
July 1, 1994 and thereafter as long as such continuance is approved annually in
the manner provided in the 1940 Act.
(b) This Agreement may be terminated by the Manager at any time without
penalty upon giving the Fund sixty (60) days' written notice and may be
terminated by the Fund at any time without penalty upon giving the Manager sixty
(60) days' written notice, provided, that such termination by the Fund shall be
directed or approved by the vote of a majority of its Trustees in office at the
time or by the vote of the holders of a majority (as defined in the 1940 Act) of
the voting securities of the Fund at the time outstanding and entitled to vote.
This Agreement shall terminate automatically in the event of its "assignment"
(as defined in the 1940 Act).
6. AMENDMENT This Agreement shall not be modified or terminated except by an
instrument in writing signed by both parties hereto or their respective
successors.
7. GOVERNING LAW The provisions of this Agreement shall be governed, construed
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
8. TRUSTEES AND SHAREHOLDERS NOT LIABLE This Agreement is made on behalf of the
Fund by an officer or Trustee of the Fund, not individually, but solely as an
officer or Trustee under the Declaration of Trust, and the obligations under
this Agreement are not binding upon, nor shall resort be had to the private
property of any of the Trustees, shareholders, officers, employees or agents of
the Fund personally, but shall bind only the Fund's property.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their seals to be hereunder
affixed, all as of the day and year first above written.
KEYSTONE LIQUID TRUST
By: /s/James R. McCall
--------------------------
Title: Vice President
KEYSTONE MANAGEMENT, INC.
By: /s/Albert H. Elfner, III
--------------------------
Title: President
ADVISORY AGREEMENT
AGREEMENT made this 19th day of August, 1993 by and between KEYSTONE
MANAGEMENT, INC., a Nevada Corporation (the "Manager"), and KEYSTONE CUSTODIAN
FUNDS, INC., a Delaware corporation (the "Adviser").
WITNESSETH:
WHEREAS, KEYSTONE LIQUID TRUST (the "Fund") was established in Massachusetts
by a Declaration of Trust filed on May 22, 1975, amended and restated on July
14, 1975, and amended on January 15, 1979, as further amended and/or restated
from time to time (the "Declaration of Trust");
WHEREAS, the Fund is authorized to issue an unlimited number of shares of
beneficial interest, $.10 par value (the "Shares");
WHEREAS, the Fund has a Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), effective with the Securities and Exchange
Commission covering certain of its Shares to be offered to the public and the
Fund may sell additional securities or otherwise raise additional capital;
WHEREAS, the Fund has qualified as a registered investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and intends to
maintain its qualification as a regulated investment company as defined in
Sections 851 and 852 of the Internal Revenue Code of 1986, as amended (the
"Code"), and to invest its funds in the investments permitted by the Declaration
of Trust;
WHEREAS, the Manager desires to avail the Fund and itself of the experience,
sources of information, advice and assistance of the Adviser and to have the
Adviser undertake the duties and responsibilities hereinafter set forth (with
the exception of certain managerial and administrative services to be provided
by the Manager), on behalf of the Fund and its Trustees and subject to the
supervision of the Trustees of the Fund and the Manager, as provided herein; and
WHEREAS, the Adviser is willing to undertake to render such services,
subject to the supervision of the Trustees, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants herein contained, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. DUTIES OF THE ADVISER (a) The Adviser agrees, as more fully set forth herein,
to act as the investment adviser to the Fund with respect to the investment of
its assets. Subject to the direction and control of the Board of Trustees of the
Fund, and the Manager, the Adviser shall: (i) supervise continuously the
investment program of the Fund and the composition of its portfolio; (ii)
determine what securities shall be purchased or sold by the Fund; and (iii)
arrange for the purchase and sale of securities held in the portfolio of the
Fund.
(b) The Adviser shall give the Fund and the Manager the benefit of its
judgment and effort in rendering services hereunder, but the Adviser shall not
be liable for any loss sustained by reason of the adoption of any investment
policy or the purchase, sale or retention of any security, whether or not such
purchase, sale or retention shall have been based upon its own investigation and
research or upon investigation and research made by any other individual, firm
or corporation, if such purchase, sale or retention shall have been made and
such other individual, firm or corporation shall have been selected with due
care and in good faith. Nothing herein contained shall, however, be construed to
protect the Adviser against any liability to the Fund, its security holders or
the Manager 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.
(c) Nothing in this Agreement shall prevent the Adviser or any officer or
Director thereof from acting as investment adviser or manager for any other
person, firm or corporation and shall not in any way limit or restrict the
Adviser or any of its Directors, officers, stockholders or employees from
buying, selling or trading any securities for its or their own accounts or for
the accounts of others for whom it or they may be acting; provided, however,
that the Adviser expressly represents that it will undertake no activities
which, in its judgment, will affect adversely the performance of its obligations
to the Fund under this Agreement. Directors, officers, employees and agents of
the Adviser or of affiliated persons of the Adviser may serve as Trustees,
officers, employees or agents of the Fund. However, at least a majority of the
Trustees of the Fund shall not be affiliated with the Adviser; provided, if at
any time more than 49% of the total number of Trustees shall be affiliates of
the Adviser because of the death, resignation, removal or change in affiliation
of a Trustee who is not such an affiliate, such requirement shall not be
applicable for a period of 60 days, during which time a majority of all the
Trustees then in office shall appoint as Trustee such number of persons who are
not affiliates of the Adviser as shall be sufficient to comply with the above
requirements. The Fund and the Adviser shall at all times endeavor to comply
with such requirements, but failure to do so shall not affect the validity or
effectiveness of any action of the Fund or of the Adviser under this Agreement.
(d) Anything in this Agreement to the contrary notwithstanding, the Adviser
shall refrain from any action which, in its reasonable judgment or in the
judgment of the Trustees or the Manager of which the Adviser has written notice,
would affect adversely the status of the Fund as a regulated investment company
as defined in the Code, which would violate any law, rule or regulation of any
governmental body or agency having jurisdiction over the Fund or its securities
or which would not be permitted by the Declaration of Trust.
2. ALLOCATION OF EXPENSES (a) The Manager represents and warrants that the Fund
has agreed that it will bear all expenses of its organization, including all
costs of its registration under the 1940 Act and the registration and
qualification of the Fund and its Shares in order to offer and sell the Shares
in compliance with federal and state securities laws.
(b) The Adviser agrees that it will furnish the Fund, at the Adviser's
expense, office space, trading and other facilities, equipment and clerical
personnel for management of the Fund's affairs and will pay all compensation of
employees, officers, and Trustees of the Fund who are affiliated persons of the
Adviser or the Manager. The Adviser agrees to bear costs of sales literature and
advertising exclusive of expenses of preparing, printing and mailing
prospectuses, reports, notices and proxy material to shareholders of the Fund.
The Fund shall bear all other costs and expenses including, but not limited to:
(i) interest and taxes; (ii) brokerage commissions; (iii) insurance premiums;
(iv) compensation and expenses of its Trustees and officers other than those
affiliated with the Adviser or the Manager; (v) legal, audit and accounting
expenses; (vi) fees and expenses of a custodian and transfer agent or
shareholder servicing agent; (vii) expenses incident to the issuance of its
Shares, including issuance on the payment of, or reinvestment of, dividends;
(viii) fees and expenses incident to the registration and qualification of the
Fund and its Shares for distribution under federal and state securities laws;
(ix) expenses of preparing, printing and mailing prospectuses, reports, notices
and proxy material to shareholders of the Fund; (x) all other expenses
incidental to holding meetings of the Fund's shareholders; and (xi) such
nonrecurring expenses as may arise, including litigation affecting the Fund and
the legal obligations with respect to which the Fund may have to indemnify its
officers and Trustees.
3. COMPENSATION OF THE ADVISER (a) For its services (as described in Section 1)
for the preceding month, the Adviser will receive on the first business day of
each month a fee which is 85% of the management fee paid by the Fund to the
Manager for the preceding month.
(b) The management fee shall be computed and accrued as of the close of each
business day. If and when this Agreement terminates, any compensation payable
hereunder for the period ending with the date of such termination shall be
payable upon such termination. Amounts payable hereunder shall be promptly paid
when due.
4. LIABILITY OF THE ADVISER The Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the Manager
in connection with the performance of this Agreement, except a loss resulting
from the Adviser's willful misfeasance, bad faith, gross negligence or from
reckless disregard by it of its obligations and duties under this Agreement. Any
person, even though also an officer, Director, partner, employee, or agent of
the Adviser, who may be or become an officer, Trustee, employee or agent of the
Fund or the Manager, shall be deemed, when rendering services to the Fund or the
Manager or acting on any business of the Fund or the Manager, (other than
services or business in connection with the Adviser's duties hereunder), to be
rendering such services to or acting solely for the Fund or the Manager, as the
case may be, and not as an officer, Director, partner, employee, or agent or one
under the control or direction of the Adviser even though paid by it. The
Manager agrees to indemnify and hold the Adviser harmless from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, and any state and
foreign securities and blue sky laws, as amended from time to time) and
expenses, including (without limitation) attorneys' fees and disbursements,
arising directly or indirectly from any action or thing which the Adviser takes
or does or omits to take or do hereunder provided that the Adviser shall not be
indemnified against any liability to the Fund or to its shareholders (or any
expenses incident to such liability) arising out of a breach of fiduciary duty
with respect to the receipt of compensation for services, willful misfeasance,
bad faith, or gross negligence on the part of the Adviser in the performance of
its duties, or from reckless disregard by it of its obligations and duties under
this Agreement.
5. DURATION AND TERMINATION (a) This Agreement shall continue in effect until
July 1, 1994 and thereafter as long as such continuance is approved annually in
the manner provided in the 1940 Act.
(b) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Fund and the Manager sixty (60) days' written notice and
may be terminated by the Fund or the Manager at any time without penalty upon
giving the Adviser sixty (60) days' written notice, provided, that such
termination by the Fund shall be directed or approved by the vote of a majority
of its Trustees in office at the time or by the vote of the holders of a
majority (as defined in the 1940 Act) of the voting securities of the Fund at
the time outstanding and entitled to vote. This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
6. AMENDMENT This Agreement shall not be modified or terminated except by an
instrument in writing signed by both parties hereto or their respective
successors.
7. GOVERNING LAW The provisions of this Agreement shall be governed, construed
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their corporate seals to be
hereunder affixed, all as of the day and year first above written.
KEYSTONE MANAGEMENT,
INC.
By: /S/ George S. Bissell
----------------------------
Title: Chairman of the Board
KEYSTONE CUSTODIAN
FUNDS, INC.
By: /S/ Albert H. Elfner, III
----------------------------
Title: President
<PAGE>
EXHIBIT 99.24(b)(6)(A)
PRINCIPAL UNDERWRITING AGREEMENT
KEYSTONE LIQUID TRUST
AGREEMENT made this 19th day of August, 1993 by and between Keystone
Liquid Trust (the "Fund"), and Keystone Distributors, Inc., a Delaware
corporation (the "Principal Underwriter").
It is hereby mutually agreed as follows:
1. The Fund hereby appoints Principal Underwriter a Principal
Underwriter pursuant to the terms of the 12b-1 Plan most recently adopted by the
Fund ("12b-1 Plan") and a Principal Underwriter of the shares of beneficial
interest of the Fund (the "Shares") as an independent contractor upon the terms
and conditions hereinafter set forth. Except as the Fund may from time to time
agree, Principal Underwriter will act as agent for the Fund and not as
principal.
2. Principal Underwriter will use its best efforts to find purchasers
for the Shares and in so doing may retain and employ representatives to promote
distribution of the Shares and may obtain orders from brokers, dealers or others
for sales of Shares to them. No such representative, dealer or broker shall have
any authority to act as agent for the Fund; such dealer or broker shall act only
as principal in the sale of Shares.
3. All sales of Shares by Principal Underwriter shall be at the
applicable public offering price determined in the manner set forth in the
prospectus and/or statement of additional information of the Fund current at the
time of the Fund's acceptance of the order for Shares. All orders shall be
subject to acceptance by the Fund and the Fund reserves the right in its sole
discretion to reject any order received. The Fund shall not be liable to anyone
for failure to accept any order.
4. On all sales of Shares, the Fund shall receive the current net asset
value and Principal Underwriter shall be entitled to receive payments in
accordance with the 12b-1 Plan and as set forth in the then current prospectus
and/or statement of additional information of the Fund and to receive the sales
charges, including contingent deferred sales charges, as set forth in the then
current prospectus and/or statement of additional information of the Fund.
Principal Underwriter may reallow all or a part of the 12b-1 payments and the
sales charges to such brokers, dealers or other persons as Principal Underwriter
may determine.
5. Payment for Shares shall be in New York or Boston Clearing House
funds received by Principal Underwriter within ten (10) business days after
notice of acceptance of the purchase order and notice of the amount of the
applicable public offering price has been given to the purchaser. If such
payment is not received within such ten-day period, the Fund reserves the right,
without further notice, forthwith to cancel its acceptance of any such order.
The Fund shall pay such issue taxes as may be required by law in connection with
the issue of the Shares.
6. Principal Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those contained
in the then current prospectus and/or statement of additional information
covering the Shares and in printed information approved by the Fund as
information supplemental to such prospectus and/or statement of additional
information. Copies of the then current prospectus and/or statement of
additional information and any such printed supplemental information will be
supplied by the Fund to Principal Underwriter in reasonable quantities upon
request.
7. Principal Underwriter agrees to comply with the rules of Fair
Practice of the National Association of Securities Dealers, Inc.
8. The Fund appoints Principal Underwriter as its agent to accept
orders for redemptions and repurchases of Shares at values and in the manner
determined in accordance with the then current prospectus and/or statement of
additional information of the Fund.
9. Principal Underwriter covenants and agrees that it will in all
respects duly conform with all state and federal laws and regulations applicable
to the sale of the Shares and will indemnify and hold harmless the Fund and each
person who has been, is or may hereafter be a Trustee or officer of the Fund
against expenses reasonably incurred by any of them in connection with any claim
or in connection with any action, suit or proceeding to which any of them may be
a party, which arises out of or is alleged to arise out of any misrepresentation
or omission to state a material fact on the part of Principal Underwriter or any
other person for whose acts Principal Underwriter is responsible, or is alleged
to be responsible unless such misrepresentation or omission was made in reliance
upon written information furnished by the Fund. The term "expenses" includes
amounts paid in satisfaction of judgments or in settlement. The foregoing right
in indemnification shall be in addition to any other rights to which the Fund or
any such Trustee or officer may be entitled as a matter of law.
10. The Fund agrees to execute such papers and to do such acts and
things as shall from time to time be reasonably requested by Principal
Underwriter for the purpose of qualifying the Shares for sale under the
so-called "blue sky" laws of any state or for registering and maintaining the
registration of the Fund and of the Shares under the Federal Securities Act of
1933, as amended ("1933 Act"), and the Federal Investment Company Act of 1940,
as amended ("1940 Act"). Principal Underwriter shall bear the expense of
preparing, printing and distributing advertising and sales literature and
prospectuses and statements of additional information used by it (but not the
expenses of registering Shares under the 1933 Act and the 1940 Act, qualifying
Shares for sale under the so-called "blue sky" laws of any state and the
preparation and printing of prospectuses and statements of additional
information and reports required to be filed with the Securities and Exchange
Commission by such Acts and the direct expenses of the issue of Shares).
11. The Principal Underwriter shall provide to the Board of Trustees of
the Fund in connection with the 12b-1 Plan, not less than quarterly, a written
report of the amounts expended pursuant to such 12b-1 Plan and the purpose for
which such expenditures were made.
12. Unless sooner terminated or continued as provided below, the term
of this Agreement shall begin on the date hereof and expire after one year. This
Agreement shall continue in effect after such term if its continuance is
specifically approved by a majority of the Trustees of the Fund and a majority
of the 12b-1 Trustees referred to in the 12b-1 Plan of the Fund ("Rule 12b-1
Directors") at least annually in accordance with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of the Rule 12b-1 Directors or by a vote of a
majority of the Fund's outstanding shares on not more than sixty days' written
notice to any other party to the Agreement; and shall terminate automatically in
the event of its assignment (as defined in the 1940 Act).
13. It is expressly agreed that this Agreement is executed on behalf of
the Trustees of the Fund as Trustees and not individually and that the
obligations of this Agreement are not binding upon the Trustees or shareholders
of the Fund individually but only the assets of the Trust are bound.
14. This Agreement shall be construed in accordance with the laws of
The Commonwealth of Massachusetts. All sales hereunder are to be made, and title
to the Shares shall pass, in Boston, Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers therunto duly authorized at Boston,
Massachusetts, on the day and year first written above.
KEYSTONE LIQUID TRUST
By:
---------------------------
Title:
KEYSTONE DISTRIBUTORS, INC.
By:
---------------------------
Title:
#10160191
<PAGE>
FIRST AMENDMENT
TO
PRINCIPAL UNDERWRITING AGREEMENT
OF
KEYSTONE LIQUID TRUST
FIRST AMENDMENT (the "Amendment") made as of the 31st day of May 1995
to AGREEMENT (the "Agreement") made the 19th day of August 1993 by and between
Keystone Liquid Trust, a Massachusetts business trust, ("Fund"), and Keystone
Investment Distributors Company, a Delaware corporation (the "Principal
Underwriter").
1. This Amendment is made by the Fund, individually and/or on behalf of
its series if any, referred to above in the title of this Amendment, to
which series, if any, this Amendment shall relate, as applicable (the
"Fund"). The Fund and the Principal Underwriter mutually agree that
Section 1 of the Agreement is amended as follows:
" 1. The Fund hereby appoints the Principal Underwriter a
principal underwriter of the Class A and Class C shares of
beneficial interest of the Fund ("Shares") as an independent
contractor upon the terms and conditions hereinafter set
forth. Except as the Fund may from time to time agree, the
Principal Underwriter will act as agent for the Fund and not
as principal."
2. In all other respects the Agreement is unchanged.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto duly authorized at Boston,
Massachusetts on the day and year first written above.
KEYSTONE LIQUID TRUST
By:
---------------------------
Title:
KEYSTONE INVESTMENT DISTRIBUTORS
COMPANY
By:
---------------------------
Title:
#100C0222
<PAGE>
PRINCIPAL UNDERWRITING AGREEMENT
FOR CLASS B-1 SHARES
OF
KEYSTONE LIQUID TRUST
AGREEMENT made this 31st day of May 1995 by and between Keystone Liquid
Trust, a Massachusetts business trust, ("Fund"), and Keystone Investment
Distributors Company, a Delaware corporation (the "Principal Underwriter").
The Fund, individually and/or on behalf of its series, if any, referred
to above in the title of this Agreement, to which series, if any, this Agreement
shall relate, as applicable (the "Fund"), may act as the distributor of certain
securities of which it is the issuer pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"). Accordingly, it is hereby mutually agreed
as follows:
1. The Fund hereby appoints the Principal Underwriter a principal
underwriter of the Class B-1 shares of beneficial interest of the Fund ("B-1
Shares") as an independent contractor upon the terms and conditions hereinafter
set forth. The general term "Shares" as used herein has the same meaning as is
provided therefor in Schedule I hereto. Except as the Fund may from time to time
agree, the Principal Underwriter will act as agent for the Fund and not as
principal.
2. The Principal Underwriter will use its best efforts to find
purchasers for the B-1 Shares and to promote distribution of the B-1 Shares and
may obtain orders from brokers, dealers or other persons for sales of B-1 Shares
to them. No such dealer, broker or other person shall have any authority to act
as agent for the Fund; such dealer, broker or other person shall act only as
principal in the sale of B-1 Shares.
3. Sales of B-1 Shares by Principal Underwriter shall be at the public
offering price determined in the manner set forth in the prospectus and/or
statement of additional information of the Fund current at the time of the
Fund's acceptance of the order for B-2 Shares. All orders shall be subject to
acceptance by the Fund and the Fund reserves the right in its sole discretion to
reject any order received. The Fund shall not be liable to anyone for failure to
accept any order.
4. On all sales of B-1 Shares the Fund shall receive the current net
asset value. The Fund shall pay the Principal Underwriter Distribution Fees (as
defined in Section 14 hereof), as commissions for the sale of B-1 Shares and
other Shares, which shall be paid in conjunction with distribution fees paid to
the Principal Underwriter by other classes of Shares of the Fund to the extent
required in order to comply with Section 14 hereof, and shall pay over to the
Principal Underwriter CDSCs (as defined in Section 14 hereof) as set forth in
the Fund's current prospectus and statement of additional information, and as
required by Section 14 hereof. The Principal Underwriter shall also receive
payments consisting of shareholder service fees ("Service Fees") at the rate of
.25% per annum of the average daily net asset value of the Class B-1 Shares. The
Principal Underwriter may allow all or a part of said Distribution Fees and
CDSCs received by it (not paid to others as hereinafter provided) to such
brokers, dealers or other persons as Principal Underwriter may determine.
5. Payment to the Fund for B-1 Shares shall be in New York or Boston
Clearing House funds received by the Principal Underwriter within three business
days after notice of acceptance of the purchase order and the amount of the
applicable public offering price has been given to the purchaser. If such
payment is not received within such period, the Fund reserves the right, without
further notice, forthwith to cancel its acceptance of any such order. The Fund
shall pay such issue taxes as may be required by law in connection with the
issue of the B-1 Shares.
6. The Principal Underwriter shall not make in connection with any sale
or solicitation of a sale of the B-1 Shares any representations concerning the
B-1 Shares except those contained in the then current prospectus and/or
statement of additional information covering the Shares and in printed
information approved by the Fund as information supplemental to such prospectus
and statement of additional information. Copies of the then current prospectus
and statement of additional information and any such printed supplemental
information will be supplied by the Fund to the Principal Underwriter in
reasonable quantities upon request.
7. The Principal Underwriter agrees to comply with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (as defined in
the Purchase and Sale Agreement, dated as of May 31, 1995 (the "Purchase
Agreement"), between the Principal Underwriter, Citibank, N.A. and Citicorp
North America, Inc., as agent (the "Rules of Fair Practice")).
8. The Fund appoints the Principal Underwriter as its agent to accept
orders for redemptions and repurchases of B-1 Shares at values and in the manner
determined in accordance with the then current prospectus and/or statement of
additional information of the Fund.
9. The Fund agrees to indemnify and hold harmless the Principal
Underwriter, its officers and Directors and each person, if any, who controls
the Principal Underwriter within the meaning of Section 15 of the Securities Act
of 1933 ("1933 Act"), against any losses, claims, damages, liabilities and
expenses (including the cost of any legal fees incurred in connection therewith)
which the Principal Underwriter, its officers, Directors or any such controlling
person may incur under the 1933 Act, under any other statute, at common law or
otherwise, arising out of or based upon
a. any untrue statement or alleged untrue statement of a material
fact contained in the Fund's registration statement, prospectus
or statement of additional information (including amendments and
supplements thereto) or
b. any omission or alleged omission to state a material fact
required to be stated in the Fund's registration statement,
prospectus or statement of additional information necessary to
make the statements therein not misleading, provided, however,
that insofar as losses, claims, damages, liabilities or expenses
arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made in reliance
and in conformity with information furnished to the Fund by the
Principal Underwriter for use in the Fund's registration
statement, prospectus or statement of additional information,
such indemnification is not applicable. In no case shall the Fund
indemnify the Principal Underwriter or its controlling person as
to any amounts incurred for any liability arising out of or based
upon any action for which the Principal Underwriter, its officers
and Directors or any controlling person would otherwise be
subject to liability by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its duties or by reason
of the reckless disregard of its obligations and duties under
this Agreement.
10. The Principal Underwriter agrees to indemnify and hold harmless the
Fund, its officers and Trustees and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act against any loss, claims,
damages, liabilities and expenses (including the cost of any legal fees incurred
in connection therewith) which the Fund, its officers, Directors or any such
controlling person may incur under the 1933 Act, under any other statute, at
common law or otherwise arising out of the acquisition of any Shares by any
person which
(a) may be based upon any wrongful act by the Principal Underwriter
or any of its employees or representatives, or
(b) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Fund's
registration statement, prospectus or statement of additional
information (including amendments and supplements thereto), or
any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished or
confirmed in writing to the Fund by the Principal Underwriter.
11. The Fund agrees to execute such papers and to do such acts and
things as shall from time to time be reasonably requested by the Principal
Underwriter for the purpose of qualifying the B-1 Shares for sale under the
so-called "blue sky" laws of any state or for registering B-1 Shares under the
1933 Act or the Fund under the Investment Company Act of 1940 ("1940 Act"). The
Principal Underwriter shall bear the expenses of preparing, printing and
distributing advertising, sales literature, prospectuses, and statements of
additional information to holders of B-1 Shares, and the direct expenses of the
issue of B-1 Shares.
12. The Principal Underwriter shall, at the request of the Fund,
provide to the Board of Trustees or Directors (together herein called the
"Directors") of the Fund in connection with sales of B-1 Shares not less than
quarterly a written report of the amounts received from the Fund therefor and
the purpose for which such expenditures by the Fund were made.
13. The term of this Agreement shall begin on the date hereof and,
unless sooner terminated or continued as provided below, shall expire after one
year. This Agreement shall continue in effect after such term if its continuance
is specifically approved by a majority of the outstanding voting securities of
Class B-1 of the Fund or by a majority of the Directors of the Fund and a
majority of the Directors who are not parties to this Agreement or "interested
persons", as defined in the Investment Company Act of 1940 (the "1940 Act"), of
any such party and who have no direct or indirect financial interest in the
operation of the Fund's Rule 12b-1 plan for Class B-1 Shares or in any
agreements related to the plan at least annually in accordance with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of the Directors of the Fund, or a majority of
such Directors who are not parties to this Agreement or "interested persons", as
defined in the 1940 Act, of any such party and who have no direct or indirect
financial interest in the operation of the Fund's Rule 12b-1 plan for Class B-1
Shares or in any agreement related to the plan or by a vote of a majority of the
outstanding voting securities of Class B-1 on not more than sixty days written
notice to any other party to the agreement; and shall terminate automatically in
the event of its assignment (as defined in the 1940 Act), which shall not
include assignment of the Principal Underwriter's (as hereinafter defined)
provided for hereunder and/or rights related to such Allocable Portions.
14. The provisions of this Section 14 shall be applicable to the extent
necessary to enable the Fund to comply with the obligation of the Fund to pay
the Principal Underwriter its Allocable Portion of Distribution Fees paid in
respect of Shares while the Fund is required to do so pursuant the Principal
Underwriting Agreement, of even date herewith, in respect of Class B-2 Shares,
and shall remain in effect so long as any payments are required to be made by
the Fund pursuant to the irrevocable payment instruction (as defined in the
Purchase Agreement (the "Irrevocable Payment Instruction")).
14.1 The Fund shall pay to the Principal Underwriter the Principal
Underwriter's Allocable Portion (as hereinafter defined) of a fee (the
"Distribution Fee") at the rate of .75% per annum of the average daily net asset
value of the Shares, subject to the limitation on the maximum aggregate amount
of such fees under the Rules of Fair Practice as applicable to such Distribution
Fee on the date hereof.
14.2 The Principal Underwriter's Allocable Portion of Distribution Fees
paid by the Fund in respect of Shares shall be equal to the portion of the Asset
Based Sales Charge allocable to Distributor Shares (as defined in Schedule I
hereto to this Agreement) in accordance with Schedule I hereto. The Fund agrees
to cause its transfer agent to maintain the records and arrange for the payments
on behalf of the Fund at the times and in the amounts and to the accounts
required by Schedule I hereto, as the same may be amended from time to time. It
is acknowledged and agreed that by virtue of the operation of Schedule I hereto
the Principal Underwriter's Allocable Portion of Distribution Fees paid by the
Fund in respect of Shares, may, to the extent provided in Schedule I hereto,
take into account Distribution Fees payable by the Fund in respect of other
existing and future classes and/or sub-classes of shares of the Fund which would
be treated as "Shares" under Schedule I hereto. The Fund will limit amounts paid
to any subsequent principal underwriters of Shares to the portion of the Asset
Based Sales Charge paid in respect of Shares which is allocable to
Post-distributor Shares (as defined in Schedule I hereto) in accordance with
Schedule I hereto. The Fund's payments to the Principal Underwriter in
consideration of its services in connection with the sale of B-1 Shares shall be
the Distribution Fees attributable to B-1 Shares which are Distributor Shares
(as defined in Schedule I hereto) and all other amounts constituting the
Principal Underwriter's Allocable Portion of Distribution Fees shall be the
Distribution Fees related to the sale of other Shares which are Distributor
Shares (as defined in Schedule I hereto).
The Fund shall cause its transfer agent and sub-transfer agents to
withhold from redemption proceeds payable to holders of Shares on redemption
thereof the contingent deferred sales charges payable upon redemption thereof as
set forth in the then current prospectus and/or statement of additional
information of the Fund ("CDSCs") and to pay over to the Principal Underwriter
The Principal Underwriter's Allocable Portion of said CDSCs paid in respect of
Shares which shall be equal to the portion thereof allocable to Distributor
Shares (as defined in Schedule I hereto) in accordance with Schedule I hereto.
14.3 The Principal Underwriter shall be considered to have completely
earned the right to the payment of its Allocable Portion of the Distribution Fee
and the right to payment over to it of its' Allocable Portion of the CDSC in
respect of Shares as provided for hereby upon the completion of the sale of each
Commission Share (as defined in Schedule I hereto) taken into account as a
Distributor Share in computing the Principal Underwriter's Allocable Portion in
accordance with Schedule I hereto.
14.4 Except as provided in Section 14.5 hereof in respect of
Distribution Fees only, the Fund's obligation to pay the Principal Underwriter
the Distribution Fees and to pay over to the Principal Underwriter CDSCs
provided for hereby shall be absolute and unconditional and shall not be subject
to dispute, offset, counterclaim or any defense whatsoever (it being understood
that nothing in this sentence shall be deemed a waiver by the Fund of its right
separately to pursue any claims it may have against the Principal Underwriter
and enforce such claims against any assets (other than the Principal
Underwriter's right to its Allocable Portion of the Distribution Fees and CDSCs
(the "Collection Rights") of the Principal Underwriter).
14.5 Notwithstanding anything in this Agreement to the contrary, the
Fund shall pay to the Principal Underwriter its Allocable Portion of
Distribution Fees provided for hereby notwithstanding its termination as
Principal Underwriter for the Shares or any termination of this Agreement and
such payment of such Distribution Fees, and that obligation and the method of
computing such payment, shall not be changed or terminated except to the extent
required by any change in applicable law, including, without limitation, the
1940 Act, the Rules promulgated thereunder by the Securities and Exchange
Commission and the Rules of Fair Practice, in each case enacted or promulgated
after June 1, 1995, or in connection with a Complete Termination (as hereinafter
defined). For the purposes of this Section 14.5, "Complete Termination" means a
termination of the Fund's Rule 12b-1 plan for B-2 Shares involving the cessation
of payments of the Distribution Fees, and the cessation of payments of
distribution fees pursuant to every other Rule 12b-1 plan of the Fund for every
existing or future B-Class-of-Shares (as hereinafter defined) and the Fund's
discontinuance of the offering of every existing or future B-Class-of-Shares,
which conditions shall be deemed satisfied when they are first complied with
hereafter and so long thereafter as they are complied with prior to the earlier
of (i) the date upon which all of the B-2 Shares which are Distributor Shares
pursuant to Schedule I hereto shall have been redeemed or converted or (ii) June
1, 2005. For purposes of this Section 14.5, the term B-Class-of-Shares means
each of the B-1 Class of Shares of the Fund, the B-2 Class of Shares of the Fund
and each other class of shares of the Fund hereafter issued which would be
treated as Shares under Schedule I hereto or which has substantially similar
economic characteristics to the B-1 or B-2 Classes of Shares taking into account
the total sales charge, CDSC or other similar charges borne directly or
indirectly by the holder of the shares of such class. The parties agree that the
existing C Class of Shares of the Fund does not have substantially similar
economic characteristics to the B-1 or B-2 Classes of Shares taking into account
the total sales charge, CDSC or other similar charges borne directly or
indirectly by the holder of such shares. For purposes of clarity the parties to
this agreement hereby state that they intend that a new installment load class
of shares which may be authorized by amendments to Rule 6(c)-10 under the 1940
Act will be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing B-1 or B-2 Classes of Shares taking into account the total sale charge,
CDSC or other similar charges borne directly or indirectly by the holder of such
shares and will not be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing C Class of shares of the Fund taking into account the total sales
charge, CDSC or other similar charges borne directly or indirectly by the holder
of such shares.
14.6 The Principal Underwriter may assign any part of its Allocable
Portions and obligations of the Fund related thereto (but not the Principal
Underwriter's obligations to the Fund provided for in this Agreement) to any
person (an "Assignee") and any such assignment shall be effective as to the Fund
upon written notice to the Fund by the Principal Underwriter. In connection
therewith the Fund shall pay all or any amounts in respect of its Allocable
Portions directly to the Assignee thereof as directed in a writing by the
Principal Underwriter in the Irrevocable Payment Instruction, as the same may be
amended from time to time with the consent of the Fund, and the Fund shall be
without liability to any person if it pays such amounts when and as so directed,
except for underpayments of amounts actually due, without any amount payable as
consequential or other damages due to such underpayment and without interest
except to the extent that delay in payment of Distribution Fees and CDSCs
results in an increase in the maximum Sales Charge allowable under the Rules of
Fair Practice, which increases daily at a rate of prime plus one percent per
annum.
14.7 The Fund will not, to the extent it may otherwise be empowered to
do so, change or waive any CDSC with respect to B-1 Shares, except as provided
in the Fund's prospectus or statement of additional information without the
Principal Underwriter's or Assignee's consent, as applicable. Notwithstanding
anything to the contrary in this Agreement or any termination of this Agreement
or the Principal Underwriter as principal underwriter for the Shares of the
Fund, the Principal Underwriter shall be entitled to be paid its Allocable
Portion of the CDSCs whether or not the Fund's Rule 12b-1 plan for B-1 Shares is
terminated and whether or not any such termination is a Complete Termination, as
defined above.
15. This Agreement shall be construed in accordance with the laws of
The Commonwealth of Massachusetts. All sales hereunder are to be made, and title
to the Shares shall pass, in Boston, Massachusetts.
16. The Fund is a Massachusetts business trust established under a
Declaration of Trust, as it may be amended from time to time. The obligations of
the Fund are not personally binding upon, nor shall recourse be had against the
private property of any of the Trustees, shareholders, officers, employees or
agents of the Fund, but only the property of the Fund shall be bound.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto duly authorized at Boston,
Massachusetts, on the day and year first written above.
KEYSTONE LIQUID TRUST
By:___________________________
Title:
KEYSTONE INVESTMENT
DISTRIBUTORS, INC.
By:___________________________
Title:
191250.c1
<PAGE>
SCHEDULE I
TO
PRINCIPAL UNDERWRITING AGREEMENT
FOR CLASS B-1 SHARES
OF
KEYSTONE LIQUID TRUST
TRANSFER AGENT PROCEDURES FOR DIFFERENTIATING
AMONG DISTRIBUTOR SHARES AND POST-DISTRIBUTOR SHARES
Amounts (in respect of Asset Based Sales Charges (as hereinafter
defined) and CDSCs (as hereinafter defined) in respect of Shares (as hereinafter
defined) of each Fund (as hereinafter defined) shall be allocated between
Distributor Shares (as hereinafter defined) and Post-distributor Shares (as
hereinafter defined) of such Fund in accordance with the rules set forth in
clauses (B) and (C). Clause (B) sets forth the rules to be followed by the
Transfer Agent for each Fund and the record owner of each Omnibus Account (as
hereinafter defined) in maintaining records relating to Distributor Shares and
Post-distributor Shares. Clause (C) sets forth the rules to be followed by the
Transfer Agent for each Fund and the record owner of each Omnibus Account in
determining what portion of the Asset Based Sales Charge (as hereinafter
defined) payable in respect of each class of Shares of such Fund and what
portion of the CDSC (as hereinafter defined) payable by the holders of Shares of
such Fund is attributable to Distributor Shares and Post-distributor Shares,
respectively.
(A) DEFINITIONS:
Generally, for purposes of this Schedule I, defined terms shall be used
with the meaning assigned to them in the Agreement, except that for purposes of
the following rules the following definitions are also applicable:
"Agreement" shall mean the Principal Underwriting Agreement for Class
B-1 Shares of the Instant Fund dated as of June 1, 1995 between the Instant Fund
and the Distributor.
"Asset Based Sales Charge" shall have the meaning set forth in Section
26(b)(8)(C) of the Rules of Fair Practice it being understood that for purposes
of this Exhibit I such term does not include the Service Fee.
"Business Day" shall mean any day on which the banks and the New York
Stock Exchange are not authorized or required to close in New York City.
"Capital Gain Dividend" shall mean, in respect of any Share of any
Fund, a Dividend in respect of such Share which is designated by such Fund as
being a "capital gain dividend" as such term is defined in Section 852 of the
Internal Revenue Code of 1986, as amended.
"CDSC" shall mean with respect to any Fund, the contingent deferred
sales charge payable, either directly or by withholding from the proceeds of the
redemption of the Shares of such Fund, by the shareholders of such Fund on any
redemption of Shares of such Fund in accordance with the Prospectus relating to
such Fund.
"Commission Share" shall mean, in respect of any Fund, a Share of such
Fund issued under circumstances where a CDSC would be payable upon the
redemption of such Share if such CDSC is not waived or shall have not otherwise
expired.
"Date of Original Purchase" shall mean, in respect of any Commission
Share of any Fund, the date on which such Commission Share was first issued by
such Fund; provided, that if such Share is a Commission Share and such Fund
issued the Commission Share (or portion thereof) in question in connection with
a Free Exchange for a Commission Share (or portion thereof) of another Fund, the
Date of Original Purchase for the Commission Share (or portion thereof) in
question shall be the date on which the Commission Share (or portion thereof) of
the other Fund was first issued by such other Fund (unless such Commission Share
(or portion thereof) was also issued by such other Fund in a Free Exchange, in
which case this proviso shall apply to that Free Exchange and this application
shall be repeated until one reaches a Commission Share (or portion thereof)
which was issued by a Fund other than in a Free Exchange).
"Distributor" shall mean Keystone Investment Distributors Company, its
successors and assigns.
"Distributor's Account" shall mean the account of the Distributor,
account no. 9903-584-2, ABA No. 011 0000 28, entitled "General Account"
maintained with State Street Bank & Trust Company or such other account as the
Distributor may designate in a notice to the Transfer Agent.
"Distributor Inception Date" shall mean, in respect of any Fund, the
date identified as the date Shares of such Fund are first sold by the
Distributor.
"Distributor Last Sale Cut-off Date" shall mean, in respect of any
Fund, the date identified as the last sale of a Commission Share during the
period the Distributor served as principal underwriter under the Agreement.
"Distributor Shares" shall mean, in respect of any Fund, all Shares of
such Fund the Month of Original Purchase of which occurs on or after the
Inception Date for such Fund and on or prior to the Distributor Last Sale
Cut-off Date in respect of such Fund.
"Dividend" shall mean, in respect of any Share of any Fund, any
dividend or other distribution by such Fund in respect of such Share.
"Free Exchange" shall mean any exchange of a Commission Share (or
portion thereof) of one Fund (the "Redeeming Fund") for a Share (or portion
thereof) of another Fund (the "Issuing Fund"), under any arrangement which
defers the exchanging Shareholder's obligation to pay the CDSC in respect of the
Commission Share (or portion thereof) of the Redeeming Fund so exchanged until
the later redemption of the Share (or portion thereof) of the Issuing Fund
received in such exchange.
"Free Share" shall mean, in respect of any Fund, each Share of such
Fund other than a Commission Share, including, without limitation: (i) Shares
issued in connection with the automatic reinvestment of Capital Gain Dividends
or Other Dividends by such Fund, (ii) Special Free Shares issued by such Fund
and (iii) Shares (or portion thereof) issued by such Fund in connection with an
exchange whereby a Free Share (or portion thereof) of another Fund is redeemed
and the Net Asset Value of such redeemed Free Share (or portion thereof) is
invested in such Shares (or portion thereof) of such Fund.
"Fund" shall mean each of the regulated investment companies or series
or portfolios of regulated investment companies identified in Schedule II to the
Irrevocable Payment Instruction, as the same may be amended from time to time in
accordance with the terms thereof.
"Instant Fund" shall mean Keystone Liquid Trust.
"ML Omnibus Account" shall mean, in respect of any Fund, the Omnibus
Account maintained by Merrill Lynch, Pierce, Fenner & Smith as subtransfer
agent.
"Month of Original Purchase" shall mean, in respect of any Share of any
Fund, the calendar month in which such Share was first issued by such Fund;
provided, that if such Share is a Commission Share and such Fund issued the
Commission Share (or portion thereof) in question in connection with a Free
Exchange for a Commission Share (or portion thereof) of another Fund, the Month
of Original Purchase for the Commission Share (or portion thereof) in question
shall be the calendar month in which the Commission Share (or portion thereof)
of the other Fund was first issued by such other Fund (unless such Commission
Share (or portion thereof) was also issued by such other Fund in a Free
Exchange, in which case this proviso shall apply to that Free Exchange and this
application shall be repeated until one reaches a Commission Share (or portion
thereof) which was issued by a Fund other than in a Free Exchange); provided,
further, that if such Share is a Free Share and such Fund issued such Free Share
in connection with the automatic reinvestment of dividends in respect of other
Shares of such Fund, the Month of Original Purchase of such Free Share shall be
deemed to be the Month of Original Purchase of the Share in respect of which
such dividend was paid; provided, further, that if such Share is a Free Share
and such Fund issued such Free Share in connection with an exchange whereby a
Free Share (or portion thereof) of another Fund is redeemed and the Net Asset
Value of such redeemed Free Share (or portion thereof) is invested in a Free
Share (or portion thereof) of such Fund, the Month of Original Issue of such
Free Share shall be the Month of Original Issue of the Free Share of such other
Fund so redeemed (unless such Free Share of such other Fund was also issued by
such other Fund in such an exchange, in which case this proviso shall apply to
that exchange and this application shall be repeated until one reaches a Free
Share which was issued by a Fund other than in such an exchange); and provided,
finally, that for purposes of this Schedule I each of the following periods
shall be treated as one calendar month for purposes of applying the rules of
this Schedule I to any Fund: (i) the period of time from and including the
Distributor Inception Date for such Fund to and including the last day of the
calendar month in which such Distributor Inception Date occurs; (ii) the period
of time commencing with the first day of the calendar month in which the
Distributor Last Sale Cutoff Date in respect of such Fund occurs to and
including such Distributor Last Sale Cutoff Date; and (iii) the period of time
commencing on the day immediately following the Distributor Last Sale Cutoff
Date in respect of such Fund to and including the last day of the calendar month
in which such Distributor Last Sale Cut-off Date occurs.
"Omnibus Account" shall mean any Shareholder Account the record owner
of which is a registered broker-dealer which has agreed with the Transfer Agent
to provide sub-transfer agent functions relating to each Sub-shareholder Account
within such Shareholder Account as contemplated by this Schedule I in respect of
each of the Funds.
"Omnibus Asset Based Sales Charge Settlement Date" shall mean, in
respect of each Omnibus Account, the Business Day next following the twentieth
day of each calendar month for the calendar month immediately preceding such
date so long as the record owner is able to allocate the Asset Based Sales
Charge accruing in respect of Shares of any Fund as contemplated by this
Schedule I no more frequently than monthly; provided, that at such time as the
record owner of such Omnibus Account is able to provide information sufficient
to allocate the Asset Based Sales Charge accruing in respect of such Shares of
such Fund owned of record by such Omnibus Account as contemplated by this
Schedule I on a weekly or daily basis, the Omnibus Asset Based Sales Charge
Settlement Date shall be a weekly date as in the case of the Omnibus CDSC
Settlement Date or a daily date as in the case of Asset Based Sales Charges
accruing in respect of Shareholder Accounts other than Omnibus Accounts, as the
case may be.
"Omnibus CDSC Settlement Date" shall mean, in respect of each Omnibus
Account, the third Business Day of each calendar week for the calendar week
immediately preceding such date so long as the record owner of such Omnibus
Account is able to allocate the CDSCs accruing in respect of any Shares of any
Fund as contemplated by this Schedule I for no more frequently than weekly;
provided, that at such time as the record owner of such Shares of such Fund
owned of record by such Omnibus Account is able to provide information
sufficient to allocate the CDSCs accruing in respect of such Omnibus Account as
contemplated by this Schedule I on a daily basis, the Omnibus CDSC Settlement
Date for such Omnibus Account shall be a daily date as in the case of CDSCs
accruing in respect of Shareholder Accounts other than Omnibus Accounts.
"Original Purchase Amount" shall mean, in respect of any Commission
Share of any Fund, the amount paid (i.e., the Net Asset Value thereof on such
date), on the Date of Original Purchase in respect of such Commission Share, by
such Shareholder Account or Sub-shareholder Account for such Commission Share;
provided, that if such Fund issued the Commission Share (or portion thereof) in
question in connection with a Free Exchange for a Commission Share (or portion
thereof) of another Fund, the Original Purchase Amount for the Commission Share
(or portion thereof) in question shall be the Original Purchase Amount in
respect of such Commission Share (or portion thereof) of such other Fund (unless
such Commission Share (or portion thereof) was also issued by such other Fund in
a Free Exchange, in which case this proviso shall apply to that Free Exchange
and this application shall be repeated until one reaches a Commission Share (or
portion thereof) which was issued by a Fund other than in a Free Exchange).
"Other Dividend" shall mean in respect of any Share, any Dividend paid
in respect of such Share other than a Capital Gain Dividend.
"Post-distributor Shares" shall mean, in respect of any Fund, all
Shares of such Fund the Month of Original Purchase of which occurs after the
Distributor Last Sale Cut-off Date for such Fund.
"Program Agent" shall mean Citicorp North America, Inc., as Program
Agent under the Purchase Agreement, and its successors and assigns in such
capacity.
"Purchase Agreement" shall mean that certain Purchase and Sale
Agreement dated as of May 31, 1995, among Keystone Investment Distributors
Company, as Seller, Citibank, N.A., as Purchaser, and Citicorp North America,
Inc., as Program Agent.
"Share" shall mean in respect of any Fund any share of the classes of
shares specified in Schedule II to the Irrevocable Payment Instruction opposite
the name of such Fund, as the same may be amended from time to time by notice
from the Distributor and the Program Agent to the Fund and the Transfer Agent;
provided, that such term shall include, after the Distributor Last Sale Cut-off
Date, a share of a new class of shares of such Fund: (i) with respect to each
record owner of Shares which is not treated in the records of each Transfer
Agent and Sub-transfer Agent for such Fund as an entirely separate and distinct
class of shares from the classes of shares specified Schedule II to the
Irrevocable Payment Instruction or (ii) the shares of which class may be
exchanged for shares of another Fund of the classes of shares specified on
Schedule II to the Irrevocable Payment Instruction of any class existing on or
prior to the Distributor Last Sale Cut-off Date; or (iii) dividends on which can
be reinvested in shares of the classes specified on Schedule II to the
Irrevocable Payment Instruction under the automatic dividend reinvestment
options; or (iv) which is otherwise treated as though it were of the same class
as the class of shares specified on Schedule II to the Irrevocable Payment
Instruction.
"Shareholder Account" shall have the meaning set forth in clause (B)(1)
hereof.
"Special Free Share" shall mean, in respect of any Fund, a Share (other
than a Commission Share) issued by such Fund other than in connection with the
automatic reinvestment of Dividends and other than in connection with an
exchange whereby a Free Share (or portion thereof) of another Fund is redeemed
and the Net Asset Value of such redeemed Share (or portion thereof) is invested
in a Share (or portion thereof) of such Fund.
"Sub-shareholder Account" shall have the meaning set forth in clause
(B)(1) hereof.
"Sub-transfer Agent" shall mean, in respect of each Omnibus Account,
the record owner thereof.
(B) RECORDS TO BE MAINTAINED BY THE TRANSFER AGENT FOR EACH FUND AND
THE RECORD OWNER OF EACH OMNIBUS ACCOUNT:
The Transfer Agent shall maintain Shareholder Accounts, and shall cause
each record owner of each Omnibus Account to maintain Sub-shareholder Accounts,
each in accordance with the following rules:
(1) SHAREHOLDER ACCOUNTS AND SUB-SHAREHOLDER ACCOUNTS. The Transfer
Agent shall maintain a separate account (a "Shareholder Account") for each
record owner of Shares of each Fund. Each Shareholder Account (other than
Omnibus Accounts) will represent a record owner of Shares of such Fund, the
records of which will be kept in accordance with this Schedule I. In the case of
an Omnibus Account, the Transfer Agent shall require that the record owner of
the Omnibus Account maintain a separate account (a "Sub-shareholder Account")
for each record owner of Shares which are reflected in the Omnibus Account, the
records of which will be kept in accordance with this Schedule I. Each such
Shareholder Account and Sub-shareholder Account shall relate solely to Shares of
such Fund and shall not relate to any other class of shares of such Fund.
(2) COMMISSION SHARES. For each Shareholder Account (other than an
Omnibus Account), the Transfer Agent shall maintain daily records of each
Commission Share of such Fund which records shall identify each Commission Share
of such Fund reflected in such Shareholder Account by the Month of Original
Purchase of such Commission Share.
For each Omnibus Account, the Transfer Agent shall require that the
Sub-transfer Agent in respect thereof maintain daily records of such
Sub-shareholder Account which records shall identify each Commission Share of
such Fund reflected in such Sub-shareholder Account by the Month of Original
Purchase; provided, that until the Sub-transfer Agent in respect of the ML
Omnibus Account develops the data processing capability to conform to the
foregoing requirements, such Sub-transfer Agent shall maintain daily records of
Sub-shareholder Accounts which identify each Commission Share of such Fund
reflected in such Sub-shareholder Account by the Date of Original Purchase. Each
such Commission Share shall be identified as either a Distributor Share or a
Post-distributor Share based upon the Month of Original Purchase of such
Commission Share (or in the case of a Sub-shareholder Account within the ML
Omnibus Account, based upon the Date of Original Purchase).
(3) FREE SHARES. The Transfer Agent shall maintain daily records of
each Shareholder Account (other than an Omnibus Account) in respect of any Fund
so as to identify each Free Share (including each Special Free Share) reflected
in such Shareholder Account by the Month of Original Purchase of such Free
Share. In addition, the Transfer Agent shall require that each Shareholder
Account (other than an Omnibus Account) have in effect separate elections
relating to reinvestment of Capital Gain Dividends and relating to reinvestment
of Other Dividends in respect of any Fund. Either such Shareholder Account shall
have elected to reinvest all Capital Gain Dividends or such Shareholder Account
shall have elected to have all Capital Gain Dividends distributed. Similarly,
either such Shareholder Account shall have elected to reinvest all Other
Dividends or such Shareholder Account shall have elected to have all Other
Dividends distributed.
The Transfer Agent shall require that the Sub-transfer Agent in respect
of each Omnibus Account maintain daily records for each Sub-shareholder Account
in the manner described in the immediately preceding paragraph for Shareholder
Accounts (other than Omnibus Accounts); provided, that until the Sub-transfer
Agent in respect of the ML Omnibus Account develops the data processing
capability to conform to the foregoing requirements, such Sub-transfer Agent
shall not be obligated to conform to the foregoing requirements. Each
Sub-shareholder Account shall also have in effect Dividend reinvestment
elections as described in the immediately preceding paragraph.
The Transfer Agent and each Sub-transfer Agent in respect of an Omnibus
Account shall identify each Free Share as either a Distributor Share or a
Post-distributor Share based upon the Month of Original Purchase of such Free
Share; provided, that until the Sub-transfer Agent in respect of the ML Omnibus
Account develops the data processing capability to conform to the foregoing
requirements, the Transfer Agent shall require such Sub-transfer Agent to
identify each Free Share of a given Fund in the ML Omnibus Account as a
Distributor Share, or Post-distributor Share, as follows:
(a) Free Shares of such Fund which are outstanding on the Distributor Last
Sale Cut-off Date for such Fund shall be identified as Distributor
Shares.
(b) Free Shares of such Fund which are issued (whether or not in connection
with an exchange for a Free Share of another Fund) to the ML Omnibus
Account during any calendar month (or portion thereof) after the
Distributor Last Sale Cut-off Date for such Fund shall be identified as
Distributor Shares in a number computed as follows:
A X (B/C)
where:
A = Free Shares of such Fund issued to the ML Omnibus Account during
such calendar month (or portion thereof)
B = Number of Commission Shares and Free Shares of such Fund in the
ML Omnibus Account identified as Distributor Shares and outstanding
as of the close of business in the last day of the immediately
preceding calendar month (or portion thereof)
C = Total number of Commission Shares and Free Shares of such Fund in
the ML Omnibus Account and outstanding as of the close of business
on the last day of the immediately preceding calendar month (or
portion thereof).
(c) Free Shares of such Fund which are issued (whether or not in connection
with an exchange for a free share of another Fund) to the ML Omnibus
Account during any calendar month (or portion thereof) after the
Distributor Last Sale Cut-off Date for such Fund shall be identified as
Post-distributor Shares in a number computed as follows:
(A X (B/C)
where:
A = Free Shares of such Fund issued to the ML Omnibus Account during
such calendar month (or portion thereof)
B = Number of Commission Shares and Free Shares of such Fund in the
ML Omnibus Account identified as Post-distributor Shares and
outstanding as of the close of business in the last day of the
immediately preceding calendar month (or portion thereof)
C = Total number of Commission Shares and Free Shares of such Fund in
the ML Omnibus Account and outstanding as of the close of business
on the last day of the immediately preceding calendar month (or
portion thereof).
(d) Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a Class A Share of
such Fund) from the ML Omnibus Account in any calendar month (or
portion thereof) after the Distributor Last Sale Cut-off Date for such
Fund shall be identified as Distributor Shares in a number computed as
follows:
A X (B/C)
Where:
A = Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a class A share
of such Fund) from the ML Omnibus Account during such calendar
month (or portion thereof)
B = Free Shares of such Fund in the ML Omnibus Account identified as
Distributor Shares and outstanding as of the close of business on
the last day of the immediately preceding calendar month.
C = Total number of Free Shares of such Fund in the ML Omnibus
Account and outstanding as of the close of business on the last day
of the immediately preceding calendar month.
(e) Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a class A share of
such Fund) from the ML Omnibus Account in any calendar month (or
portion thereof) after the Distributor Last Sale Cut-off Date for such
Fund shall be identified as Post-distributor Shares in a number
computed as follows:
A X (B/C)
where:
A = Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a class A share
of such Fund) from the ML Omnibus Account during such calendar
month (or portion thereof)
B = Free Shares of such Fund in the ML Omnibus Account identified as
Post-distributor Shares and outstanding as of the close of business
on the last day of the immediately preceding calendar month.
C = Total number of Free Shares of such Fund in the ML Omnibus
Account and outstanding as of the close of business on the last day
of the immediately preceding calendar month.
(4) APPRECIATION AMOUNT AND COST ACCUMULATION AMOUNT. The Transfer
Agent shall maintain on a daily basis in respect of each Shareholder Account
(other than Omnibus Accounts) a Cost Accumulation Amount representing the total
of the Original Purchase Amounts paid by such Shareholder Account for all
Commission Shares reflected in such Shareholder Account as of the close of
business on each day. In addition, the Transfer Agent shall maintain on a daily
basis in respect of each Shareholder Account (other than Omnibus Accounts)
sufficient records to enable it to compute, as of the date of any actual or
deemed redemption or Free Exchange of a Commission Share reflected in such
Shareholder Account an amount (such amount an "Appreciation Amount") equal to
the excess, if any, of the Net Asset Value as of the close of business on such
day of the Commission Shares reflected in such Shareholder Account minus the
Cost Accumulation Amount as of the close of business on such day. In the event
that a Commission Share (or portion thereof) reflected in a Shareholder Account
is redeemed or under these rules is deemed to have been redeemed (whether in a
Free Exchange or otherwise), the Appreciation Amount for such Shareholder
Account shall be reduced, to the extent thereof, by the Net Asset Value of the
Commission Share (or portion thereof) redeemed, and if the Net Asset Value of
the Commission Share (or portion thereof) being redeemed equals or exceeds the
Appreciation Amount, the Cost Accumulation Amount will be reduced to the extent
thereof, by such excess. If the Appreciation Amount for such Shareholder Account
immediately prior to any redemption of a Commission Share (or portion thereof)
is equal to or greater than the Net Asset Value of such Commission Share (or
portion thereof) deemed to have been tendered for redemption, no CDSCs will be
payable in respect of such Commission Share (or portion thereof).
The Transfer Agent shall require that the Sub-transfer Agent in respect
of each Omnibus Account maintain on a daily basis in respect of each
Sub-shareholder Account reflected in such Omnibus Account a Cost Accumulation
Amount and sufficient records to enable it to compute, as of the date of any
actual or deemed redemption or Free Exchange of a Commission Share reflected in
such Sub-shareholder Account an Appreciation Amount in accordance with the
preceding paragraph and to apply the same to determine whether a CDSC is payable
(as though such Sub-shareholder Account were a Shareholder Account other than an
Omnibus Account; provided, that until the Sub-transfer Agent in respect of the
ML Omnibus Account develops the data processing capability to conform to the
foregoing requirements, such Sub-transfer Agent shall maintain for each
Sub-shareholder Account a separate Cost Accumulation Amount and a separate
Appreciation Amount for each Date of Original Purchase of any Commission Share
which shall be applied as set forth in the preceding paragraph as if each Date
of Original Purchase were a separate Month of Original Purchase.
(5) NASD CAP. On the date the distribution fees paid in respect of any
class of Shares equals the maximum amount thereon under the Rules of Fair
Practice, in respect of such class, all outstanding Shares of such class of such
Fund shall be converted into Class A shares of such Fund and will be deemed to
have been redeemed for their Net Asset Value for purposes of this Schedule I.
(6) IDENTIFICATION OF REDEEMED SHARES. If a Shareholder Account (other
than an Omnibus Account) tenders a Share of a Fund for redemption (other than in
connection with an exchange of such Share for a Share of another Fund or in
connection with the conversion of such Share pursuant to a Conversion Feature),
such tendered Share will be deemed to be a Free Share if there are any Free
Shares reflected in such Shareholder Account immediately prior to such tender.
If there is more than one Free Share reflected in such Shareholder Account
immediately prior to such tender, such tendered Share will be deemed to be the
Free Share with the earliest Month of Original Purchase. If there are no Free
Shares reflected in such Shareholder Account immediately prior to such tender,
such tendered Share will be deemed to be the Commission Share with the earliest
Month of Original Purchase reflected in such Shareholder Account.
If a Sub-shareholder Account reflected in an Omnibus Account tenders a
Share for redemption (other than in connection with an Exchange of such Share
for a Share of another Fund or in connection with the conversion of such Share
pursuant to a Conversion Feature), the Transfer Agent shall require that the
record owner of each Omnibus Account supply the Transfer Agent sufficient
records to enable the Transfer Agent to apply the rules of the preceding
paragraph to such Sub-shareholder Account (as though such Sub-shareholder
Account were a Shareholder Account other than an Omnibus Account); provided,
that until the Sub-transfer Agent in respect of the ML Omnibus Account develops
the data processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall not be required to conform to the foregoing rules
regarding Free Shares (and the Transfer Agent shall account for such Free Shares
as provided in (3) above) but shall apply the foregoing rules to each Commission
Share with respect to the Date of Original Purchase of any Commission Share as
though each such Date were a separate Month of Original Purchase.
(7) IDENTIFICATION OF EXCHANGED SHARES. When a Shareholder Account
(other than an Omnibus Account) tenders Shares of one Fund (the "Redeeming
Fund") for redemption where the proceeds of such redemption are to be
automatically reinvested in shares of another Fund (the "Issuing Fund") to
effect an exchange (whether or not pursuant to a Free Exchange) into Shares of
the Issuing Fund: (1) such Shareholder Account will be deemed to have tendered
Shares (or portions thereof) of the Redeeming Fund with each Month of Original
Purchase represented by Shares of the Redeeming Fund reflected in such
Shareholder Account immediately prior to such tender in the same proportion that
the number of Shares of the redeeming Fund with such Month of Original Purchase
reflected in such Shareholder immediately prior to such tender bore to the total
number of Shares of the Redeeming Fund reflected in such Shareholder Account
immediately prior to such tender, and on that basis the tendered Shares of the
Redeeming Fund will be identified as Distributor Shares or Post-distributor
Shares; (2) such Shareholder Account will be deemed to have tendered Commission
Shares (or portions thereof) and Free Shares (or portions thereof) of the
Redeeming Fund of each category (i.e., Distributor Shares or Post-distributor
Shares) in the same proportion that the number of Commission Shares or Free
Shares (as the case may be) of the Redeeming Fund in such category reflected in
such Shareholder Account bore to the total number of Shares of the Redeeming
Fund in such category reflected in such Shareholder Account immediately prior to
such tender, (3) the Shares (or portions thereof) of the Issuing Fund issued in
connection with such exchange will be deemed to have the same Months of Original
Purchase as the Shares (or portions thereof) of the Redeeming Fund so tendered
and will be categorized as Distributor Shares and Post-distributor Shares
accordingly, and (4) the Shares (or portions thereof) of each Category of the
Issuing Fund issued in connection with such exchange will be deemed to be
Commission Shares and Free Shares in the same proportion that the Shares of such
Category of the Redeeming Fund were Commission Shares and Free Shares.
The Transfer Agent shall require that each record owner of an Omnibus
Account maintain records relating to each Sub-shareholder Account in such
Omnibus Account sufficient to apply the foregoing rules to each such
Sub-shareholder Account (as though such Sub-shareholder Account were a
Shareholder Account other than an Omnibus Account); provided, that until the
Sub-transfer Agent in respect of the ML Omnibus Account develops the data
processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall not be required to conform to the foregoing rules
relating to Free Shares (and the Sub-transfer Agent shall account for such Free
Shares as provided in (3) above) and shall apply a first-in-first-out procedure
(based upon the Date of Original Purchase) to determine which Commission Shares
(or portions thereof) of a Redeeming Fund were redeemed in connection with an
exchange.
(8) IDENTIFICATION OF CONVERTED SHARES. The Transfer Agent records
maintained for each Shareholder Account (other than an Omnibus Account) will
treat each Commission Share of a Fund as though it were redeemed at its Net
Asset Value on the date such Commission Share converts into a class A share of
such Fund in accordance with an applicable Conversion Feature applied with
reference to its Month of Original Purchase and will treat each Free Share of
such Fund with a given Month of Original Purchase as though it were redeemed at
its Net Asset Value when it is simultaneously converted to a class A share at
the time the Commission Shares of such Fund with such Month of Original Purchase
are so converted.
The Transfer Agent shall require that each record owner of an Omnibus
Account maintain records relating to each Sub-shareholder Account in such
Omnibus Account sufficient to apply the foregoing rules to each such
Sub-shareholder Account (as though such Sub-shareholder Account were a
Shareholder Account other than an Omnibus Account) ; provided, that until the
Sub-transfer Agent in respect of the ML Omnibus Account develops the data
processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall apply the foregoing rules to Commission Shares with
reference to the Date of Original Issue of each Commission Share (as though each
such date were a separate Month of Original Issue) and shall not be required to
apply the foregoing rules to Free Shares (and the Sub-transfer Agent shall
account for such Free Shares as provided in (3) above).
(C) ALLOCATIONS OF ASSET BASED SALE CHARGES AND CDSCS AMONG DISTRIBUTOR
SHARES AND POST-DISTRIBUTOR SHARES:
The Transfer Agent shall use the following rules to allocate the
amounts of Asset Based Sales Charges and CDSCs payable by each Fund in respect
of Shares between Distributor Shares and Post-distributor Shares:
(1) RECEIVABLES CONSTITUTING CDSCS: CDSCs will be treated as relating
to Distributor Shares or Post-distributor Shares depending upon the Month of
Original Purchase of the Commission Share the redemption of which gives rise to
the payment of a CDSC by a Shareholder Account.
The Transfer Agent shall cause each Sub-transfer Agent to apply the
foregoing rule to each Sub-shareholder Account based on the records maintained
by such Sub-transfer Agent; provided, that until the Sub-transfer Agent in
respect of the ML Omnibus Account develops the data processing capability to
conform to the foregoing requirements, such Sub-transfer Agent shall apply the
foregoing rules to each Sub-shareholder Account with respect to the Date of
Original Purchase of any Commission Share as though each such date were a
separate Month of Original Purchase.
(2) RECEIVABLES CONSTITUTING ASSET BASED SALES CHARGES:
The Asset Based Sales Charges accruing in respect of each Shareholder
Account (other than an Omnibus Account) shall be allocated to each Share
reflected in such Shareholder Account as of the close of business on such day on
an equal per share basis. For example, the Asset Based Sales Charges
attributable to Distributor Shares on any day shall be computed and allocated as
follows:
A X (B/C)
where:
A. = Total amount of Asset Based Sales Charge accrued in respect of
such Shareholder Account (other than an Omnibus Account) on such
day.
B. = Number of Distributor Shares reflected in such Shareholder
Account (other than an Omnibus Account) on the close of business
on such day
C. = Total number of Distributor Shares and Post-Distributor Shares
reflected in such Shareholder Account (other than an Omnibus
Account) and outstanding as of the close of business on such day.
The Portion of the Asset Based Sales Charges of such Fund accruing in respect of
such Shareholder Account for such day allocated to Post-distributor Shares will
be obtained using the same formula but substituting for "B" the number of
Post-distributor Shares, as the case may be, reflected in such Shareholder
Account and outstanding on the close of business on such day. The foregoing
allocation formula may be adjusted from time to time by notice to the Fund and
the transfer agent for the Fund from the Seller and the Program Agent pursuant
to Section 8.18 of the Purchase Agreement.
The Transfer Agent shall, based on the records maintained by the record
owner of such Omnibus Account, allocate the Asset Based Sales Charge accruing in
respect of each Omnibus Account on each day among all Sub-shareholder Accounts
reflected in such Omnibus Account on an equal per share basis based upon the
total number of Distributor Shares and Post-distributor Shares reflected in each
such Sub-shareholder Account as of the close of business on such day. In
addition, the Transfer Agent shall apply the foregoing rules to each
Sub-shareholder Account (as though it were a Shareholder Account other than an
Omnibus Account), based on the records maintained by the record owner, to
allocate the Asset Based Sales Charge so allocated to any Sub-shareholder
Account among the Distributor Shares and Post-distributor Shares reflected in
each such Sub-shareholder Account in accordance with the rules set forth in the
preceding paragraph; provided, that until the Sub-transfer Agent in respect of
the ML Omnibus Account develops the data processing capacity to apply the rules
of this Schedule I as applicable to Sub-shareholder Accounts other than ML
Omnibus Accounts, the Transfer Agent shall allocate the Asset Based Sales Charge
accruing in respect of Shares of any Fund in the ML Omnibus Account during any
calendar month (or portion thereof) among Distributor Shares and
Post-distributor Shares as follows:
(a) The portion of such Asset Based Sales Charge allocable to Distributor
Shares shall be computed as follows:
A X ((B + C)/2)
-----------
((D + E)/2)
where:
A = Total amount of Asset Based Sales Charge accrued during such
calendar month (or portion thereof) in respect of Shares of such
Fund in the ML Omnibus Account
B = Shares of such Fund in the ML Omnibus Account and identified as
Distributor Shares and outstanding as of the close of business on
the last day of the immediately preceding calendar month (or
portion thereof), times Net Asset Value per Share as of such time
C = Shares of such Fund in the ML Omnibus Account and identified as
Distributor Shares and outstanding as of the close of business on
the last day of such calendar month (or portion thereof), times Net
Asset Value per Share as of such time
D = Total number of Shares of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last day of the
immediately preceding calendar month (or portion thereof), times
Net Asset Value per Share as of such time.
E = Total number of Shares of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last day of such
calendar month (or portion thereof), times Net Asset Value per
Share as of such time.
(b) The portion of such Asset Based Sales Charge allocable to
Post-distributor Shares shall be computed as follows:
A X ((B + C)/2)
-----------
((D + E)/2)
where:
A = Total amount of Asset Based Sales Charge accrued during such
calendar month (or portion thereof) in respect of Shares of such
Fund in the ML Omnibus Account
B = Shares of such Fund in the ML Omnibus Account and identified as
Post-distributor Shares and outstanding as of the close of business
on the last day of the immediately preceding calendar month (or
portion thereof), times Net Asset Value per Share as of such time
C = Shares of such Fund in the ML Omnibus Account and identified as
Post-distributor Shares and outstanding as of the close of business
on the last day of such calendar month (or portion thereof), times
Net Asset Value per Share as of such time
D = Total number of Shares of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last day of the
immediately preceding calendar month (or portion thereof), times
Net Asset Value per Share as of such time.
E = Total number of Shares of such Fund in the ML Omnibus Account
outstanding as of the close of business on the last day of such
calendar month, times Net Asset Value per Share as of such time.
(3) PAYMENTS ON BEHALF OF EACH FUND.
On the close of business on each day the Transfer Agent shall cause payment to
be made of the amount of the Asset Based Sales Charge and CDSCs accruing on such
day in respect of the Shares of such Fund owned of record by Shareholder
Accounts (other than Omnibus Accounts) by two separate wire transfers, directly
from accounts of such Fund as follows:
1. The Asset Based Sales Charge and CDSCs accruing in respect of
Shareholder Accounts other than Omnibus Accounts and allocable to
Distributor Shares in accordance with the preceding rules shall be paid
to the Distributor's Account, unless the Distributor otherwise
instructs the Fund in any irrevocable payment instruction; and
2. The Asset Based Sales Charges and CDSCs accruing in respect of
Shareholder Accounts other than Omnibus Accounts and allocable to
Post-distributor Shares in accordance with the preceding rules shall be
paid in accordance with direction received from any future distributor
of Shares of the Instant Fund.
On each Omnibus CDSC Settlement Date, the Transfer Agent for each Fund
shall cause the applicable Sub-transfer Agent to cause payment to be made of the
amount of the CDSCs accruing during the period to which such Omnibus CDSC
Settlement Date relates in respect of the Shares of such Fund owned of record by
each Omnibus Account by two separate wire transfers directly from the account of
such Fund maintained by such Transfer Agent, as follows:
1. The CDSCs accruing in respect of such Omnibus Account and allocable
to Distributor Shares in accordance with the preceding rules shall be
paid to the Distributor's Account, unless the Distributor otherwise
instructs the Fund in any irrevocable payment instruction; and
2. The CDSCs accruing in respect of such Omnibus Account and allocable
to Post-distributor Shares in accordance with the preceding rules shall
be paid in accordance with direction received from any future
distributor of Shares of the Instant Fund.
On each Omnibus Asset Based Sales Charge Settlement Date the Transfer
Agent for each Fund shall cause payment to be made of the amount of the Asset
Based Sales Charge accruing for the period to which such Omnibus Asset Based
Sales Charge Settlement Date relates in respect of the Shares of such Fund owned
of record by each Omnibus Account by two separate wire transfers directly from
accounts of such Fund as follows:
1. The Asset Based Sales Charge accruing in respect of such Omnibus
Account and allocable to Distributor Shares shall be paid to the
Distributor's Collection Account, unless the Distributor otherwise
instructs the Fund in any irrevocable payment instruction; and
2. The Asset Based Sales Charge accruing in respect of such Omnibus
Account and allocable to Post-Distributor Shares shall be paid in
accordance with direction received from any future distributor of
Shares of the Instant Fund.
191281.c1
<PAGE>
PRINCIPAL UNDERWRITING AGREEMENT
FOR CLASS B-2 SHARES
OF
KEYSTONE LIQUID TRUST
AGREEMENT made this 31st day of May 1995 by and between Keystone liquid
Trust, a Massachusetts business trust, ("Fund"), and Keystone Investment
Distributors Company, a Delaware corporation (the "Principal Underwriter").
The Fund, individually and/or on behalf of its series, if any, referred
to above in the title of this Agreement, to which series, if any, this Agreement
shall relate, as applicable (the "Fund"), may act as the distributor of certain
securities of which it is the issuer pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"). Accordingly, it is hereby mutually agreed
as follows:
1. The Fund hereby appoints the Principal Underwriter a principal
underwriter of the Class B-2 shares of beneficial interest of the Fund ("B-2
Shares") as an independent contractor upon the terms and conditions hereinafter
set forth. The general term "Shares" as used herein has the same meaning as is
provided therefor in Schedule I hereto. Except as the Fund may from time to time
agree, the Principal Underwriter will act as agent for the Fund and not as
principal.
2. The Principal Underwriter will use its best efforts to find
purchasers for the B-2 Shares and to promote distribution of the B-2 Shares and
may obtain orders from brokers, dealers or other persons for sales of B-2 Shares
to them. No such dealer, broker or other person shall have any authority to act
as agent for the Fund; such dealer, broker or other person shall act only as
principal in the sale of B-2 Shares.
3. Sales of B-2 Shares by Principal Underwriter shall be at the public
offering price determined in the manner set forth in the prospectus and/or
statement of additional information of the Fund current at the time of the
Fund's acceptance of the order for B-2 Shares. All orders shall be subject to
acceptance by the Fund and the Fund reserves the right in its sole discretion to
reject any order received. The Fund shall not be liable to anyone for failure to
accept any order.
4. On all sales of B-2 Shares the Fund shall receive the current net
asset value. The Fund shall pay the Principal Underwriter Distribution Fees (as
defined in Section 14 hereof), as commissions for the sale of B-2 Shares and
other Shares, which shall be paid in conjunction with distribution fees paid to
the Principal Underwriter by other classes of Shares of the Fund to the extent
required in order to comply with Section 14 hereof, and shall pay over to the
Principal Underwriter CDSCs (as defined in Section 14 hereof) as set forth in
the Fund's current prospectus and statement of additional information, and as
required by Section 14 hereof. The Principal Underwriter shall also receive
payments consisting of shareholder service fees ("Service Fees") at the rate of
.25% per annum of the average daily net asset value of the Class B-2 Shares. The
Principal Underwriter may allow all or a part of said Distribution Fees and
CDSCs received by it (not paid to others as hereinafter provided) to such
brokers, dealers or other persons as Principal Underwriter may determine.
5. Payment to the Fund for B-2 Shares shall be in New York or Boston
Clearing House funds received by the Principal Underwriter within three business
days after notice of acceptance of the purchase order and the amount of the
applicable public offering price has been given to the purchaser. If such
payment is not received within such period, the Fund reserves the right, without
further notice, forthwith to cancel its acceptance of any such order. The Fund
shall pay such issue taxes as may be required by law in connection with the
issue of the B-2 Shares.
6. The Principal Underwriter shall not make in connection with any sale
or solicitation of a sale of the B-2 Shares any representations concerning the
B-2 Shares except those contained in the then current prospectus and/or
statement of additional information covering the Shares and in printed
information approved by the Fund as information supplemental to such prospectus
and statement of additional information. Copies of the then current prospectus
and statement of additional information and any such printed supplemental
information will be supplied by the Fund to the Principal Underwriter in
reasonable quantities upon request.
7. The Principal Underwriter agrees to comply with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (as defined in
the Purchase and Sale Agreement, dated as of May 31, 1995 (the "Purchase
Agreement"), between the Principal Underwriter, Citibank, N.A. and Citicorp
North America, Inc., as agent (the "Rules of Fair Practice")).
8. The Fund appoints the Principal Underwriter as its agent to accept
orders for redemptions and repurchases of B-2 Shares at values and in the manner
determined in accordance with the then current prospectus and/or statement of
additional information of the Fund.
9. The Fund agrees to indemnify and hold harmless the Principal
Underwriter, its officers and Directors and each person, if any, who controls
the Principal Underwriter within the meaning of Section 15 of the Securities Act
of 1933 ("1933 Act"), against any losses, claims, damages, liabilities and
expenses (including the cost of any legal fees incurred in connection therewith)
which the Principal Underwriter, its officers, Directors or any such controlling
person may incur under the 1933 Act, under any other statute, at common law or
otherwise, arising out of or based upon
a. any untrue statement or alleged untrue statement of a material
fact contained in the Fund's registration statement, prospectus
or statement of additional information (including amendments and
supplements thereto) or
b. any omission or alleged omission to state a material fact
required to be stated in the Fund's registration statement,
prospectus or statement of additional information necessary to
make the statements therein not misleading, provided, however,
that insofar as losses, claims, damages, liabilities or expenses
arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made in
reliance and in conformity with information furnished to the
Fund by the Principal Underwriter for use in the Fund's
registration statement, prospectus or statement of additional
information, such indemnification is not applicable. In no case
shall the Fund indemnify the Principal Underwriter or its
controlling person as to any amounts incurred for any liability
arising out of or based upon any action for which the Principal
Underwriter, its officers and Directors or any controlling
person would otherwise be subject to liability by reason of
willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of the reckless disregard
of its obligations and duties under this Agreement.
10. The Principal Underwriter agrees to indemnify and hold harmless the
Fund, its officers and Trustees and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act against any loss, claims,
damages, liabilities and expenses (including the cost of any legal fees incurred
in connection therewith) which the Fund, its officers, Directors or any such
controlling person may incur under the 1933 Act, under any other statute, at
common law or otherwise arising out of the acquisition of any Shares by any
person which
(a) may be based upon any wrongful act by the Principal Underwriter
or any of its employees or representatives, or
(b) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Fund's
registration statement, prospectus or statement of additional
information (including amendments and supplements thereto), or
any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission
was made in reliance upon information furnished or confirmed in
writing to the Fund by the Principal Underwriter.
11. The Fund agrees to execute such papers and to do such acts and
things as shall from time to time be reasonably requested by the Principal
Underwriter for the purpose of qualifying the B-2 Shares for sale under the
so-called "blue sky" laws of any state or for registering B-2 Shares under the
1933 Act or the Fund under the Investment Company Act of 1940 ("1940 Act"). The
Principal Underwriter shall bear the expenses of preparing, printing and
distributing advertising, sales literature, prospectuses, and statements of
additional information. The Fund shall bear the expense of registering B-2
Shares under the 1933 Act and the Fund under the 1940 Act, qualifying B-2 Shares
for sale under the so-called "blue sky" laws of any state, the preparation and
printing of prospectuses, statements of additional information and reports
required to be filed with the Securities and Exchange Commission and other
authorities, the preparation, printing and mailing of prospectuses and
statements of additional information to holders of B-2 Shares, and the direct
expenses of the issue of B-2 Shares.
12. The Principal Underwriter shall, at the request of the Fund,
provide to the Board of Trustees or Directors (together herein called the
Directors) of the Fund in connection with sales of B-2 Shares not less than
quarterly a written report of the amounts received from the Fund therefor and
the purpose for which such expenditures by the Fund were made.
13. The term of this Agreement shall begin on the date hereof and,
unless sooner terminated or continued as provided below, shall expire after one
year. This Agreement shall continue in effect after such term if its continuance
is specifically approved by a majority of the outstanding voting securities of
Class B-2 of the Fund or by a majority of the Directors of the Fund and a
majority of the Directors who are not parties to this Agreement or "interested
persons", as defined in the Investment Company Act of 1940 (the "1940 Act"), of
any such party and who have no direct or indirect financial interest in the
operation of the Fund's Rule 12b-1 plan for Class B-2 Shares or in any
agreements related to the plan at least annually in accordance with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of the Directors of the Fund, or a majority of
such Directors who are not parties to this Agreement or "interested persons", as
defined in the 1940 Act, of any such party and who have no direct or indirect
financial interest in the operation of the Fund's Rule 12b-1 plan for Class B-2
Shares or in any agreement related to the plan or by a vote of a majority of the
outstanding voting securities of Class B-2 on not more than sixty days written
notice to any other party to the agreement; and shall terminate automatically in
the event of its assignment (as defined in the 1940 Act), which shall not
include assignment of the Principal Underwriter's (as hereinafter defined)
provided for hereunder and/or rights related to such Allocable Portions.
14. The provisions of this Section 14 shall be applicable to the extent
necessary to enable the Fund to comply with the obligation of the Fund to pay
the Principal Underwriter its Allocable Portion of Distribution Fees paid in
respect of Shares while the Fund is required to do so pursuant the Principal
Underwriting Agreement, of even date herewith, in respect of Class B-2 Shares,
and shall remain in effect so long as any payments are required to be made by
the Fund pursuant to the irrevocable payment instruction (as defined in the
Purchase Agreement (the "Irrevocable Payment Instruction")).
14.1 The Fund shall pay to the Principal Underwriter the Principal
Underwriter's Allocable Portion (as hereinafter defined) of a fee (the
"Distribution Fee") at the rate of .75% per annum of the average daily net asset
value of the Shares, subject to the limitation on the maximum aggregate amount
of such fees under the Rules of Fair Practice as applicable to such Distribution
Fee on the date hereof.
14.2 The Principal Underwriter's Allocable Portion of Distribution Fees
paid by the Fund in respect of Shares shall be equal to the portion of the Asset
Based Sales Charge allocable to Distributor Shares (as defined in Schedule I
hereto to this Agreement) in accordance with Schedule I hereto. The Fund agrees
to cause its transfer agent to maintain the records and arrange for the payments
on behalf of the Fund at the times and in the amounts and to the accounts
required by Schedule I hereto, as the same may be amended from time to time. It
is acknowledged and agreed that by virtue of the operation of Schedule I hereto
the Principal Underwriter's Allocable Portion of Distribution Fees paid by the
Fund in respect of Shares, may, to the extent provided in Schedule I hereto,
take into account Distribution Fees payable by the Fund in respect of other
existing and future classes and/or sub-classes of shares of the Fund which would
be treated as "Shares" under Schedule I hereto. The Fund will limit amounts paid
to any subsequent principal underwriters of Shares to the portion of the Asset
Based Sales Charge paid in respect of Shares which is allocable to
Post-distributor Shares (as defined in Schedule I hereto) in accordance with
Schedule I hereto. The Fund's payments to the Principal Underwriter in
consideration of its services in connection with the sale of B-2 Shares shall be
the Distribution Fees attributable to B-2 Shares which are Distributor Shares
(as defined in Schedule I hereto) and all other amounts constituting the
Principal Underwriter's Allocable Portion of Distribution Fees shall be the
Distribution Fees related to the sale of other Shares which are Distributor
Shares (as defined in Schedule I hereto).
The Fund shall cause its transfer agent and sub-transfer agents to
withhold from redemption proceeds payable to holders of Shares on redemption
thereof the contingent deferred sales charges payable upon redemption thereof as
set forth in the then current prospectus and/or statement of additional
information of the Fund ("CDSCs") and to pay over to the Principal Underwriter
The Principal Underwriter's Allocable Portion of said CDSCs paid in respect of
Shares which shall be equal to the portion thereof allocable to Distributor
Shares (as defined in Schedule I hereto) in accordance with Schedule I hereto.
14.3 The Principal Underwriter shall be considered to have completely
earned the right to the payment of its Allocable Portion of the Distribution Fee
and the right to payment over to it of its' Allocable Portion of the CDSC in
respect of Shares as provided for hereby upon the completion of the sale of each
Commission Share (as defined in Schedule I hereto) taken into account as a
Distributor Share in computing the Principal Underwriter's Allocable Portion in
accordance with Schedule I hereto.
14.4 Except as provided in Section 14.5 hereof in respect of
Distribution Fees only, the Fund's obligation to pay the Principal Underwriter
the Distribution Fees and to pay over to the Principal Underwriter CDSCs
provided for hereby shall be absolute and unconditional and shall not be subject
to dispute, offset, counterclaim or any defense whatsoever (it being understood
that nothing in this sentence shall be deemed a waiver by the Fund of its right
separately to pursue any claims it may have against the Principal Underwriter
and enforce such claims against any assets (other than the Principal
Underwriter's right to its Allocable Portion of the Distribution Fees and CDSCs
(the "Collection Rights") of the Principal Underwriter).
14.5 Notwithstanding anything in this Agreement to the contrary, the
Fund shall pay to the Principal Underwriter its Allocable Portion of
Distribution Fees provided for hereby notwithstanding its termination as
Principal Underwriter for the Shares or any termination of this Agreement and
such payment of such Distribution Fees, and that obligation and the method of
computing such payment, shall not be changed or terminated except to the extent
required by any change in applicable law, including, without limitation, the
1940 Act, the Rules promulgated thereunder by the Securities and Exchange
Commission and the Rules of Fair Practice, in each case enacted or promulgated
after May 31, 1995, or in connection with a Complete Termination (as hereinafter
defined). For the purposes of this Section 14.5, "Complete Termination" means a
termination of the Fund's Rule 12b-1 plan for B-2 Shares involving the cessation
of payments of the Distribution Fees, and the cessation of payments of
distribution fees pursuant to every other Rule 12b-1 plan of the Fund for every
existing or future B-Class-of-Shares (as hereinafter defined) and the Fund's
discontinuance of the offering of every existing or future B-Class-of-Shares,
which conditions shall be deemed satisfied when they are first complied with
hereafter and so long thereafter as they are complied with prior to the earlier
of (i) the date upon which all of the B-2 Shares which are Distributor Shares
pursuant to Schedule I hereto shall have been redeemed or converted or (ii) June
1, 2005. For purposes of this Section 14.5, the term B-Class-of-Shares means
each of the B-1 Class of Shares of the Fund, the B-2 Class of Shares of the Fund
and each other class of shares of the Fund hereafter issued which would be
treated as Shares under Schedule I hereto or which has substantially similar
economic characteristics to the B-1 or B-2 Classes of Shares taking into account
the total sales charge, CDSC or other similar charges borne directly or
indirectly by the holder of the shares of such class. The parties agree that the
existing C Class of Shares of the Fund does not have substantially similar
economic characteristics to the B-1 or B-2 Classes of Shares taking into account
the total sales charge, CDSC or other similar charges borne directly or
indirectly by the holder of such shares. For purposes of clarity the parties to
this agreement hereby state that they intend that a new installment load class
of shares which may be authorized by amendments to Rule 6(c)-10 under the 1940
Act will be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing B-1 or B-2 Classes of Shares taking into account the total sale charge,
CDSC or other similar charges borne directly or indirectly by the holder of such
shares and will not be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing C Class of shares of the Fund taking into account the total sales
charge, CDSC or other similar charges borne directly or indirectly by the holder
of such shares.
14.6 The Principal Underwriter may assign any part of its Allocable
Portions and obligations of the Fund related thereto (but not the Principal
Underwriter's obligations to the Fund provided for in this Agreement) to any
person (an "Assignee") and any such assignment shall be effective as to the Fund
upon written notice to the Fund by the Principal Underwriter. In connection
therewith the Fund shall pay all or any amounts in respect of its Allocable
Portions directly to the Assignee thereof as directed in a writing by the
Principal Underwriter in the Irrevocable Payment Instruction, as the same may be
amended from time to time with the consent of the Fund, and the Fund shall be
without liability to any person if it pays such amounts when and as so directed,
except for underpayments of amounts actually due, without any amount payable as
consequential or other damages due to such underpayment and without interest
except to the extent that delay in payment of Distribution Fees and CDSCs
results in an increase in the maximum Sales Charge allowable under the Rules of
Fair Practice, which increases daily at a rate of prime plus one percent per
annum.
14.7 The Fund will not, to the extent it may otherwise be empowered to
do so, change or waive any CDSC with respect to B-2 Shares, except as provided
in the Fund's prospectus or statement of additional information without the
Principal Underwriter's or Assignee's consent, as applicable. Notwithstanding
anything to the contrary in this Agreement or any termination of this Agreement
or the Principal Underwriter as principal underwriter for the Shares of the
Fund, the Principal Underwriter shall be entitled to be paid its Allocable
Portion of the CDSCs whether or not the Fund's Rule 12b-1 plan for B-2 Shares is
terminated and whether or not any such termination is a Complete Termination, as
defined above.
15. This Agreement shall be construed in accordance with the laws of
The Commonwealth of Massachusetts. All sales hereunder are to be made, and title
to the Shares shall pass, in Boston, Massachusetts.
16. The Fund is a Massachusetts business trust established under a
Declaration of Trust, as it may be amended from time to time. The obligations of
the Fund are not personally binding upon, nor shall recourse be had against the
private property of any of the Trustees, shareholders, officers, employees or
agents of the Fund, but only the property of the Fund shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto duly authorized at Boston,
Massachusetts, on the day and year first written above.
KEYSTONE LIQUID TRUST
By:_______________________
Title:
KEYSTONE INVESTMENT
DISTRIBUTORS, INC.
By:_______________________
Title:
191251.c1
<PAGE>
SCHEDULE I
TO
PRINCIPAL UNDERWRITING AGREEMENT
FOR CLASS B-2 SHARES
OF
KEYSTONE LIQUID TRUST
TRANSFER AGENT PROCEDURES FOR DIFFERENTIATING
AMONG DISTRIBUTOR SHARES AND POST-DISTRIBUTOR SHARES
Amounts (in respect of Asset Based Sales Charges (as hereinafter
defined) and CDSCs (as hereinafter defined) in respect of Shares (as hereinafter
defined) of each Fund (as hereinafter defined) shall be allocated between
Distributor Shares (as hereinafter defined) and Post-distributor Shares (as
hereinafter defined) of such Fund in accordance with the rules set forth in
clauses (B) and (C). Clause (B) sets forth the rules to be followed by the
Transfer Agent for each Fund and the record owner of each Omnibus Account (as
hereinafter defined) in maintaining records relating to Distributor Shares and
Post-distributor Shares. Clause (C) sets forth the rules to be followed by the
Transfer Agent for each Fund and the record owner of each Omnibus Account in
determining what portion of the Asset Based Sales Charge (as hereinafter
defined) payable in respect of each class of Shares of such Fund and what
portion of the CDSC (as hereinafter defined) payable by the holders of Shares of
such Fund is attributable to Distributor Shares and Post-distributor Shares,
respectively.
(A) DEFINITIONS:
Generally, for purposes of this Schedule I, defined terms shall be used
with the meaning assigned to them in the Agreement, except that for purposes of
the following rules the following definitions are also applicable:
"Agreement" shall mean the Principal Underwriting Agreement for Class
B-2 Shares of the Instant Fund dated as of June 1, 1995 between the Instant Fund
and the Distributor.
"Asset Based Sales Charge" shall have the meaning set forth in Section
26(b)(8)(C) of the Rules of Fair Practice it being understood that for purposes
of this Exhibit I such term does not include the Service Fee.
"Business Day" shall mean any day on which the banks and the New York
Stock Exchange are not authorized or required to close in New York City.
"Capital Gain Dividend" shall mean, in respect of any Share of any
Fund, a Dividend in respect of such Share which is designated by such Fund as
being a "capital gain dividend" as such term is defined in Section 852 of the
Internal Revenue Code of 1986, as amended.
"CDSC" shall mean with respect to any Fund, the contingent deferred
sales charge payable, either directly or by withholding from the proceeds of the
redemption of the Shares of such Fund, by the shareholders of such Fund on any
redemption of Shares of such Fund in accordance with the Prospectus relating to
such Fund.
"Commission Share" shall mean, in respect of any Fund, a Share of such
Fund issued under circumstances where a CDSC would be payable upon the
redemption of such Share if such CDSC is not waived or shall have not otherwise
expired.
"Date of Original Purchase" shall mean, in respect of any Commission
Share of any Fund, the date on which such Commission Share was first issued by
such Fund; provided, that if such Share is a Commission Share and such Fund
issued the Commission Share (or portion thereof) in question in connection with
a Free Exchange for a Commission Share (or portion thereof) of another Fund, the
Date of Original Purchase for the Commission Share (or portion thereof) in
question shall be the date on which the Commission Share (or portion thereof) of
the other Fund was first issued by such other Fund (unless such Commission Share
(or portion thereof) was also issued by such other Fund in a Free Exchange, in
which case this proviso shall apply to that Free Exchange and this application
shall be repeated until one reaches a Commission Share (or portion thereof)
which was issued by a Fund other than in a Free Exchange).
"Distributor" shall mean Keystone Investment Distributors Company, its
successors and assigns.
"Distributor's Account" shall mean the account of the Distributor,
account no. 9903-584-2, ABA No. 011 0000 28, entitled "General Account"
maintained with State Street Bank & Trust Company or such other account as the
Distributor may designate in a notice to the Transfer Agent.
"Distributor Inception Date" shall mean, in respect of any Fund, the
date identified as the date Shares of such Fund are first sold by the
Distributor.
"Distributor Last Sale Cut-off Date" shall mean, in respect of any
Fund, the date identified as the last sale of a Commission Share during the
period the Distributor served as principal underwriter under the Agreement.
"Distributor Shares" shall mean, in respect of any Fund, all Shares of
such Fund the Month of Original Purchase of which occurs on or after the
Inception Date for such Fund and on or prior to the Distributor Last Sale
Cut-off Date in respect of such Fund.
"Dividend" shall mean, in respect of any Share of any Fund, any
dividend or other distribution by such Fund in respect of such Share.
"Free Exchange" shall mean any exchange of a Commission Share (or
portion thereof) of one Fund (the "Redeeming Fund") for a Share (or portion
thereof) of another Fund (the "Issuing Fund"), under any arrangement which
defers the exchanging Shareholder's obligation to pay the CDSC in respect of the
Commission Share (or portion thereof) of the Redeeming Fund so exchanged until
the later redemption of the Share (or portion thereof) of the Issuing Fund
received in such exchange.
"Free Share" shall mean, in respect of any Fund, each Share of such
Fund other than a Commission Share, including, without limitation: (i) Shares
issued in connection with the automatic reinvestment of Capital Gain Dividends
or Other Dividends by such Fund, (ii) Special Free Shares issued by such Fund
and (iii) Shares (or portion thereof) issued by such Fund in connection with an
exchange whereby a Free Share (or portion thereof) of another Fund is redeemed
and the Net Asset Value of such redeemed Free Share (or portion thereof) is
invested in such Shares (or portion thereof) of such Fund.
"Fund" shall mean each of the regulated investment companies or series
or portfolios of regulated investment companies identified in Schedule II to the
Irrevocable Payment Instruction, as the same may be amended from time to time in
accordance with the terms thereof.
"Instant Fund" shall mean Keystone Liquid Trust.
"ML Omnibus Account" shall mean, in respect of any Fund, the Omnibus
Account maintained by Merrill Lynch, Pierce, Fenner & Smith as subtransfer
agent.
"Month of Original Purchase" shall mean, in respect of any Share of any
Fund, the calendar month in which such Share was first issued by such Fund;
provided, that if such Share is a Commission Share and such Fund issued the
Commission Share (or portion thereof) in question in connection with a Free
Exchange for a Commission Share (or portion thereof) of another Fund, the Month
of Original Purchase for the Commission Share (or portion thereof) in question
shall be the calendar month in which the Commission Share (or portion thereof)
of the other Fund was first issued by such other Fund (unless such Commission
Share (or portion thereof) was also issued by such other Fund in a Free
Exchange, in which case this proviso shall apply to that Free Exchange and this
application shall be repeated until one reaches a Commission Share (or portion
thereof) which was issued by a Fund other than in a Free Exchange); provided,
further, that if such Share is a Free Share and such Fund issued such Free Share
in connection with the automatic reinvestment of dividends in respect of other
Shares of such Fund, the Month of Original Purchase of such Free Share shall be
deemed to be the Month of Original Purchase of the Share in respect of which
such dividend was paid; provided, further, that if such Share is a Free Share
and such Fund issued such Free Share in connection with an exchange whereby a
Free Share (or portion thereof) of another Fund is redeemed and the Net Asset
Value of such redeemed Free Share (or portion thereof) is invested in a Free
Share (or portion thereof) of such Fund, the Month of Original Issue of such
Free Share shall be the Month of Original Issue of the Free Share of such other
Fund so redeemed (unless such Free Share of such other Fund was also issued by
such other Fund in such an exchange, in which case this proviso shall apply to
that exchange and this application shall be repeated until one reaches a Free
Share which was issued by a Fund other than in such an exchange); and provided,
finally, that for purposes of this Schedule I each of the following periods
shall be treated as one calendar month for purposes of applying the rules of
this Schedule I to any Fund: (i) the period of time from and including the
Distributor Inception Date for such Fund to and including the last day of the
calendar month in which such Distributor Inception Date occurs; (ii) the period
of time commencing with the first day of the calendar month in which the
Distributor Last Sale Cutoff Date in respect of such Fund occurs to and
including such Distributor Last Sale Cutoff Date; and (iii) the period of time
commencing on the day immediately following the Distributor Last Sale Cutoff
Date in respect of such Fund to and including the last day of the calendar month
in which such Distributor Last Sale Cut-off Date occurs.
"Omnibus Account" shall mean any Shareholder Account the record owner
of which is a registered broker-dealer which has agreed with the Transfer Agent
to provide sub-transfer agent functions relating to each Sub-shareholder Account
within such Shareholder Account as contemplated by this Schedule I in respect of
each of the Funds.
"Omnibus Asset Based Sales Charge Settlement Date" shall mean, in
respect of each Omnibus Account, the Business Day next following the twentieth
day of each calendar month for the calendar month immediately preceding such
date so long as the record owner is able to allocate the Asset Based Sales
Charge accruing in respect of Shares of any Fund as contemplated by this
Schedule I no more frequently than monthly; provided, that at such time as the
record owner of such Omnibus Account is able to provide information sufficient
to allocate the Asset Based Sales Charge accruing in respect of such Shares of
such Fund owned of record by such Omnibus Account as contemplated by this
Schedule I on a weekly or daily basis, the Omnibus Asset Based Sales Charge
Settlement Date shall be a weekly date as in the case of the Omnibus CDSC
Settlement Date or a daily date as in the case of Asset Based Sales Charges
accruing in respect of Shareholder Accounts other than Omnibus Accounts, as the
case may be.
"Omnibus CDSC Settlement Date" shall mean, in respect of each Omnibus
Account, the third Business Day of each calendar week for the calendar week
immediately preceding such date so long as the record owner of such Omnibus
Account is able to allocate the CDSCs accruing in respect of any Shares of any
Fund as contemplated by this Schedule I for no more frequently than weekly;
provided, that at such time as the record owner of such Shares of such Fund
owned of record by such Omnibus Account is able to provide information
sufficient to allocate the CDSCs accruing in respect of such Omnibus Account as
contemplated by this Schedule I on a daily basis, the Omnibus CDSC Settlement
Date for such Omnibus Account shall be a daily date as in the case of CDSCs
accruing in respect of Shareholder Accounts other than Omnibus Accounts.
"Original Purchase Amount" shall mean, in respect of any Commission
Share of any Fund, the amount paid (i.e., the Net Asset Value thereof on such
date), on the Date of Original Purchase in respect of such Commission Share, by
such Shareholder Account or Sub-shareholder Account for such Commission Share;
provided, that if such Fund issued the Commission Share (or portion thereof) in
question in connection with a Free Exchange for a Commission Share (or portion
thereof) of another Fund, the Original Purchase Amount for the Commission Share
(or portion thereof) in question shall be the Original Purchase Amount in
respect of such Commission Share (or portion thereof) of such other Fund (unless
such Commission Share (or portion thereof) was also issued by such other Fund in
a Free Exchange, in which case this proviso shall apply to that Free Exchange
and this application shall be repeated until one reaches a Commission Share (or
portion thereof) which was issued by a Fund other than in a Free Exchange).
"Other Dividend" shall mean in respect of any Share, any Dividend paid
in respect of such Share other than a Capital Gain Dividend.
"Post-distributor Shares" shall mean, in respect of any Fund, all
Shares of such Fund the Month of Original Purchase of which occurs after the
Distributor Last Sale Cut-off Date for such Fund.
"Program Agent" shall mean Citicorp North America, Inc., as Program
Agent under the Purchase Agreement, and its successors and assigns in such
capacity.
"Purchase Agreement" shall mean that certain Purchase and Sale
Agreement dated as of May 31, 1995, among Keystone Investment Distributors
Company, as Seller, Citibank, N.A., as Purchaser, and Citicorp North America,
Inc., as Program Agent.
"Share" shall mean in respect of any Fund any share of the classes of
shares specified in Schedule II to the Irrevocable Payment Instruction opposite
the name of such Fund, as the same may be amended from time to time by notice
from the Distributor and the Program Agent to the Fund and the Transfer Agent;
provided, that such term shall include, after the Distributor Last Sale Cut-off
Date, a share of a new class of shares of such Fund: (i) with respect to each
record owner of Shares which is not treated in the records of each Transfer
Agent and Sub-transfer Agent for such Fund as an entirely separate and distinct
class of shares from the classes of shares specified Schedule II to the
Irrevocable Payment Instruction or (ii) the shares of which class may be
exchanged for shares of another Fund of the classes of shares specified on
Schedule II to the Irrevocable Payment Instruction of any class existing on or
prior to the Distributor Last Sale Cut-off Date; or (iii) dividends on which can
be reinvested in shares of the classes specified on Schedule II to the
Irrevocable Payment Instruction under the automatic dividend reinvestment
options; or (iv) which is otherwise treated as though it were of the same class
as the class of shares specified on Schedule II to the Irrevocable Payment
Instruction.
"Shareholder Account" shall have the meaning set forth in clause (B)(1)
hereof.
"Special Free Share" shall mean, in respect of any Fund, a Share (other
than a Commission Share) issued by such Fund other than in connection with the
automatic reinvestment of Dividends and other than in connection with an
exchange whereby a Free Share (or portion thereof) of another Fund is redeemed
and the Net Asset Value of such redeemed Share (or portion thereof) is invested
in a Share (or portion thereof) of such Fund.
"Sub-shareholder Account" shall have the meaning set forth in clause
(B)(1) hereof.
"Sub-transfer Agent" shall mean, in respect of each Omnibus Account,
the record owner thereof.
(B) RECORDS TO BE MAINTAINED BY THE TRANSFER AGENT FOR EACH FUND AND
THE RECORD OWNER OF EACH OMNIBUS ACCOUNT:
The Transfer Agent shall maintain Shareholder Accounts, and shall cause
each record owner of each Omnibus Account to maintain Sub-shareholder Accounts,
each in accordance with the following rules:
(1) SHAREHOLDER ACCOUNTS AND SUB-SHAREHOLDER ACCOUNTS. The Transfer
Agent shall maintain a separate account (a "Shareholder Account") for each
record owner of Shares of each Fund. Each Shareholder Account (other than
Omnibus Accounts) will represent a record owner of Shares of such Fund, the
records of which will be kept in accordance with this Schedule I. In the case of
an Omnibus Account, the Transfer Agent shall require that the record owner of
the Omnibus Account maintain a separate account (a "Sub-shareholder Account")
for each record owner of Shares which are reflected in the Omnibus Account, the
records of which will be kept in accordance with this Schedule I. Each such
Shareholder Account and Sub-shareholder Account shall relate solely to Shares of
such Fund and shall not relate to any other class of shares of such Fund.
(2) COMMISSION SHARES. For each Shareholder Account (other than an
Omnibus Account), the Transfer Agent shall maintain daily records of each
Commission Share of such Fund which records shall identify each Commission Share
of such Fund reflected in such Shareholder Account by the Month of Original
Purchase of such Commission Share.
For each Omnibus Account, the Transfer Agent shall require that the
Sub-transfer Agent in respect thereof maintain daily records of such
Sub-shareholder Account which records shall identify each Commission Share of
such Fund reflected in such Sub-shareholder Account by the Month of Original
Purchase; provided, that until the Sub-transfer Agent in respect of the ML
Omnibus Account develops the data processing capability to conform to the
foregoing requirements, such Sub-transfer Agent shall maintain daily records of
Sub-shareholder Accounts which identify each Commission Share of such Fund
reflected in such Sub-shareholder Account by the Date of Original Purchase. Each
such Commission Share shall be identified as either a Distributor Share or a
Post-distributor Share based upon the Month of Original Purchase of such
Commission Share (or in the case of a Sub-shareholder Account within the ML
Omnibus Account, based upon the Date of Original Purchase).
(3) FREE SHARES. The Transfer Agent shall maintain daily records of
each Shareholder Account (other than an Omnibus Account) in respect of any Fund
so as to identify each Free Share (including each Special Free Share) reflected
in such Shareholder Account by the Month of Original Purchase of such Free
Share. In addition, the Transfer Agent shall require that each Shareholder
Account (other than an Omnibus Account) have in effect separate elections
relating to reinvestment of Capital Gain Dividends and relating to reinvestment
of Other Dividends in respect of any Fund. Either such Shareholder Account shall
have elected to reinvest all Capital Gain Dividends or such Shareholder Account
shall have elected to have all Capital Gain Dividends distributed. Similarly,
either such Shareholder Account shall have elected to reinvest all Other
Dividends or such Shareholder Account shall have elected to have all Other
Dividends distributed.
The Transfer Agent shall require that the Sub-transfer Agent in respect
of each Omnibus Account maintain daily records for each Sub-shareholder Account
in the manner described in the immediately preceding paragraph for Shareholder
Accounts (other than Omnibus Accounts); provided, that until the Sub-transfer
Agent in respect of the ML Omnibus Account develops the data processing
capability to conform to the foregoing requirements, such Sub-transfer Agent
shall not be obligated to conform to the foregoing requirements. Each
Sub-shareholder Account shall also have in effect Dividend reinvestment
elections as described in the immediately preceding paragraph.
The Transfer Agent and each Sub-transfer Agent in respect of an Omnibus
Account shall identify each Free Share as either a Distributor Share or a
Post-distributor Share based upon the Month of Original Purchase of such Free
Share; provided, that until the Sub-transfer Agent in respect of the ML Omnibus
Account develops the data processing capability to conform to the foregoing
requirements, the Transfer Agent shall require such Sub-transfer Agent to
identify each Free Share of a given Fund in the ML Omnibus Account as a
Distributor Share, or Post-distributor Share, as follows:
(a) Free Shares of such Fund which are outstanding on the Distributor Last
Sale Cut-off Date for such Fund shall be identified as Distributor
Shares.
(b) Free Shares of such Fund which are issued (whether or not in connection
with an exchange for a Free Share of another Fund) to the ML Omnibus
Account during any calendar month (or portion thereof) after the
Distributor Last Sale Cut-off Date for such Fund shall be identified as
Distributor Shares in a number computed as follows:
A X (B/C)
where:
A = Free Shares of such Fund issued to the ML Omnibus Account during
such calendar month (or portion thereof)
B = Number of Commission Shares and Free Shares of such Fund in the
ML Omnibus Account identified as Distributor Shares and outstanding
as of the close of business in the last day of the immediately
preceding calendar month (or portion thereof)
C = Total number of Commission Shares and Free Shares of such Fund in
the ML Omnibus Account and outstanding as of the close of business
on the last day of the immediately preceding calendar month (or
portion thereof).
(c) Free Shares of such Fund which are issued (whether or not in connection
with an exchange for a free share of another Fund) to the ML Omnibus
Account during any calendar month (or portion thereof) after the
Distributor Last Sale Cut-off Date for such Fund shall be identified as
Post-distributor Shares in a number computed as follows:
(A X (B/C)
where:
A = Free Shares of such Fund issued to the ML Omnibus Account during
such calendar month (or portion thereof)
B = Number of Commission Shares and Free Shares of such Fund in the
ML Omnibus Account identified as Post-distributor Shares and
outstanding as of the close of business in the last day of the
immediately preceding calendar month (or portion thereof)
C = Total number of Commission Shares and Free Shares of such Fund in
the ML Omnibus Account and outstanding as of the close of business
on the last day of the immediately preceding calendar month (or
portion thereof).
(d) Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a Class A Share of
such Fund) from the ML Omnibus Account in any calendar month (or
portion thereof) after the Distributor Last Sale Cut-off Date for such
Fund shall be identified as Distributor Shares in a number computed as
follows:
A X (B/C)
Where:
A = Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a class A share
of such Fund) from the ML Omnibus Account during such calendar
month (or portion thereof)
B = Free Shares of such Fund in the ML Omnibus Account identified as
Distributor Shares and outstanding as of the close of business on
the last day of the immediately preceding calendar month.
C = Total number of Free Shares of such Fund in the ML Omnibus
Account and outstanding as of the close of business on the last day
of the immediately preceding calendar month.
(e) Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a class A share of
such Fund) from the ML Omnibus Account in any calendar month (or
portion thereof) after the Distributor Last Sale Cut-off Date for such
Fund shall be identified as Post-distributor Shares in a number
computed as follows:
A X (B/C)
where:
A = Free Shares of such Fund which are redeemed (whether or not in
connection with an exchange for Free Shares of another Fund or in
connection with the conversion of such Shares into a class A share
of such Fund) from the ML Omnibus Account during such calendar
month (or portion thereof)
B = Free Shares of such Fund in the ML Omnibus Account identified as
Post-distributor Shares and outstanding as of the close of business
on the last day of the immediately preceding calendar month.
C = Total number of Free Shares of such Fund in the ML Omnibus
Account and outstanding as of the close of business on the last day
of the immediately preceding calendar month.
(4) APPRECIATION AMOUNT AND COST ACCUMULATION AMOUNT. The Transfer
Agent shall maintain on a daily basis in respect of each Shareholder Account
(other than Omnibus Accounts) a Cost Accumulation Amount representing the total
of the Original Purchase Amounts paid by such Shareholder Account for all
Commission Shares reflected in such Shareholder Account as of the close of
business on each day. In addition, the Transfer Agent shall maintain on a daily
basis in respect of each Shareholder Account (other than Omnibus Accounts)
sufficient records to enable it to compute, as of the date of any actual or
deemed redemption or Free Exchange of a Commission Share reflected in such
Shareholder Account an amount (such amount an "Appreciation Amount") equal to
the excess, if any, of the Net Asset Value as of the close of business on such
day of the Commission Shares reflected in such Shareholder Account minus the
Cost Accumulation Amount as of the close of business on such day. In the event
that a Commission Share (or portion thereof) reflected in a Shareholder Account
is redeemed or under these rules is deemed to have been redeemed (whether in a
Free Exchange or otherwise), the Appreciation Amount for such Shareholder
Account shall be reduced, to the extent thereof, by the Net Asset Value of the
Commission Share (or portion thereof) redeemed, and if the Net Asset Value of
the Commission Share (or portion thereof) being redeemed equals or exceeds the
Appreciation Amount, the Cost Accumulation Amount will be reduced to the extent
thereof, by such excess. If the Appreciation Amount for such Shareholder Account
immediately prior to any redemption of a Commission Share (or portion thereof)
is equal to or greater than the Net Asset Value of such Commission Share (or
portion thereof) deemed to have been tendered for redemption, no CDSCs will be
payable in respect of such Commission Share (or portion thereof).
The Transfer Agent shall require that the Sub-transfer Agent in respect
of each Omnibus Account maintain on a daily basis in respect of each
Sub-shareholder Account reflected in such Omnibus Account a Cost Accumulation
Amount and sufficient records to enable it to compute, as of the date of any
actual or deemed redemption or Free Exchange of a Commission Share reflected in
such Sub-shareholder Account an Appreciation Amount in accordance with the
preceding paragraph and to apply the same to determine whether a CDSC is payable
(as though such Sub-shareholder Account were a Shareholder Account other than an
Omnibus Account; provided, that until the Sub-transfer Agent in respect of the
ML Omnibus Account develops the data processing capability to conform to the
foregoing requirements, such Sub-transfer Agent shall maintain for each
Sub-shareholder Account a separate Cost Accumulation Amount and a separate
Appreciation Amount for each Date of Original Purchase of any Commission Share
which shall be applied as set forth in the preceding paragraph as if each Date
of Original Purchase were a separate Month of Original Purchase.
(5) NASD CAP. On the date the distribution fees paid in respect of any
class of Shares equals the maximum amount thereon under the Rules of Fair
Practice, in respect of such class, all outstanding Shares of such class of such
Fund shall be converted into Class A shares of such Fund and will be deemed to
have been redeemed for their Net Asset Value for purposes of this Schedule I.
(6) IDENTIFICATION OF REDEEMED SHARES. If a Shareholder Account (other
than an Omnibus Account) tenders a Share of a Fund for redemption (other than in
connection with an exchange of such Share for a Share of another Fund or in
connection with the conversion of such Share pursuant to a Conversion Feature),
such tendered Share will be deemed to be a Free Share if there are any Free
Shares reflected in such Shareholder Account immediately prior to such tender.
If there is more than one Free Share reflected in such Shareholder Account
immediately prior to such tender, such tendered Share will be deemed to be the
Free Share with the earliest Month of Original Purchase. If there are no Free
Shares reflected in such Shareholder Account immediately prior to such tender,
such tendered Share will be deemed to be the Commission Share with the earliest
Month of Original Purchase reflected in such Shareholder Account.
If a Sub-shareholder Account reflected in an Omnibus Account tenders a
Share for redemption (other than in connection with an Exchange of such Share
for a Share of another Fund or in connection with the conversion of such Share
pursuant to a Conversion Feature), the Transfer Agent shall require that the
record owner of each Omnibus Account supply the Transfer Agent sufficient
records to enable the Transfer Agent to apply the rules of the preceding
paragraph to such Sub-shareholder Account (as though such Sub-shareholder
Account were a Shareholder Account other than an Omnibus Account); provided,
that until the Sub-transfer Agent in respect of the ML Omnibus Account develops
the data processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall not be required to conform to the foregoing rules
regarding Free Shares (and the Transfer Agent shall account for such Free Shares
as provided in (3) above) but shall apply the foregoing rules to each Commission
Share with respect to the Date of Original Purchase of any Commission Share as
though each such Date were a separate Month of Original Purchase.
(7) IDENTIFICATION OF EXCHANGED SHARES. When a Shareholder Account
(other than an Omnibus Account) tenders Shares of one Fund (the "Redeeming
Fund") for redemption where the proceeds of such redemption are to be
automatically reinvested in shares of another Fund (the "Issuing Fund") to
effect an exchange (whether or not pursuant to a Free Exchange) into Shares of
the Issuing Fund: (1) such Shareholder Account will be deemed to have tendered
Shares (or portions thereof) of the Redeeming Fund with each Month of Original
Purchase represented by Shares of the Redeeming Fund reflected in such
Shareholder Account immediately prior to such tender in the same proportion that
the number of Shares of the redeeming Fund with such Month of Original Purchase
reflected in such Shareholder immediately prior to such tender bore to the total
number of Shares of the Redeeming Fund reflected in such Shareholder Account
immediately prior to such tender, and on that basis the tendered Shares of the
Redeeming Fund will be identified as Distributor Shares or Post-distributor
Shares; (2) such Shareholder Account will be deemed to have tendered Commission
Shares (or portions thereof) and Free Shares (or portions thereof) of the
Redeeming Fund of each category (i.e., Distributor Shares or Post-distributor
Shares) in the same proportion that the number of Commission Shares or Free
Shares (as the case may be) of the Redeeming Fund in such category reflected in
such Shareholder Account bore to the total number of Shares of the Redeeming
Fund in such category reflected in such Shareholder Account immediately prior to
such tender, (3) the Shares (or portions thereof) of the Issuing Fund issued in
connection with such exchange will be deemed to have the same Months of Original
Purchase as the Shares (or portions thereof) of the Redeeming Fund so tendered
and will be categorized as Distributor Shares and Post-distributor Shares
accordingly, and (4) the Shares (or portions thereof) of each Category of the
Issuing Fund issued in connection with such exchange will be deemed to be
Commission Shares and Free Shares in the same proportion that the Shares of such
Category of the Redeeming Fund were Commission Shares and Free Shares.
The Transfer Agent shall require that each record owner of an Omnibus
Account maintain records relating to each Sub-shareholder Account in such
Omnibus Account sufficient to apply the foregoing rules to each such
Sub-shareholder Account (as though such Sub-shareholder Account were a
Shareholder Account other than an Omnibus Account); provided, that until the
Sub-transfer Agent in respect of the ML Omnibus Account develops the data
processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall not be required to conform to the foregoing rules
relating to Free Shares (and the Sub-transfer Agent shall account for such Free
Shares as provided in (3) above) and shall apply a first-in-first-out procedure
(based upon the Date of Original Purchase) to determine which Commission Shares
(or portions thereof) of a Redeeming Fund were redeemed in connection with an
exchange.
(8) IDENTIFICATION OF CONVERTED SHARES. The Transfer Agent records
maintained for each Shareholder Account (other than an Omnibus Account) will
treat each Commission Share of a Fund as though it were redeemed at its Net
Asset Value on the date such Commission Share converts into a class A share of
such Fund in accordance with an applicable Conversion Feature applied with
reference to its Month of Original Purchase and will treat each Free Share of
such Fund with a given Month of Original Purchase as though it were redeemed at
its Net Asset Value when it is simultaneously converted to a class A share at
the time the Commission Shares of such Fund with such Month of Original Purchase
are so converted.
The Transfer Agent shall require that each record owner of an Omnibus
Account maintain records relating to each Sub-shareholder Account in such
Omnibus Account sufficient to apply the foregoing rules to each such
Sub-shareholder Account (as though such Sub-shareholder Account were a
Shareholder Account other than an Omnibus Account) ; provided, that until the
Sub-transfer Agent in respect of the ML Omnibus Account develops the data
processing capability to conform to the foregoing requirements, such
Sub-transfer Agent shall apply the foregoing rules to Commission Shares with
reference to the Date of Original Issue of each Commission Share (as though each
such date were a separate Month of Original Issue) and shall not be required to
apply the foregoing rules to Free Shares (and the Sub-transfer Agent shall
account for such Free Shares as provided in (3) above).
(C) ALLOCATIONS OF ASSET BASED SALE CHARGES AND CDSCS AMONG DISTRIBUTOR
SHARES AND POST-DISTRIBUTOR SHARES:
The Transfer Agent shall use the following rules to allocate the
amounts of Asset Based Sales Charges and CDSCs payable by each Fund in respect
of Shares between Distributor Shares and Post-distributor Shares:
(1) RECEIVABLES CONSTITUTING CDSCS: CDSCs will be treated as relating
to Distributor Shares or Post-distributor Shares depending upon the Month of
Original Purchase of the Commission Share the redemption of which gives rise to
the payment of a CDSC by a Shareholder Account.
The Transfer Agent shall cause each Sub-transfer Agent to apply the
foregoing rule to each Sub-shareholder Account based on the records maintained
by such Sub-transfer Agent; provided, that until the Sub-transfer Agent in
respect of the ML Omnibus Account develops the data processing capability to
conform to the foregoing requirements, such Sub-transfer Agent shall apply the
foregoing rules to each Sub-shareholder Account with respect to the Date of
Original Purchase of any Commission Share as though each such date were a
separate Month of Original Purchase.
(2) RECEIVABLES CONSTITUTING ASSET BASED SALES CHARGES:
The Asset Based Sales Charges accruing in respect of each Shareholder
Account (other than an Omnibus Account) shall be allocated to each Share
reflected in such Shareholder Account as of the close of business on such day on
an equal per share basis. For example, the Asset Based Sales Charges
attributable to Distributor Shares on any day shall be computed and allocated as
follows:
A X (B/C)
where:
A. = Total amount of Asset Based Sales Charge accrued in respect of
such Shareholder Account (other than an Omnibus Account) on such
day.
B. = Number of Distributor Shares reflected in such Shareholder
Account (other than an Omnibus Account) on the close of business
on such day
C. = Total number of Distributor Shares and Post-Distributor Shares
reflected in such Shareholder Account (other than an Omnibus
Account) and outstanding as of the close of business on such day.
The Portion of the Asset Based Sales Charges of such Fund accruing in respect of
such Shareholder Account for such day allocated to Post-distributor Shares will
be obtained using the same formula but substituting for "B" the number of
Post-distributor Shares, as the case may be, reflected in such Shareholder
Account and outstanding on the close of business on such day. The foregoing
allocation formula may be adjusted from time to time by notice to the Fund and
the transfer agent for the Fund from the Seller and the Program Agent pursuant
to Section 8.18 of the Purchase Agreement.
The Transfer Agent shall, based on the records maintained by the record
owner of such Omnibus Account, allocate the Asset Based Sales Charge accruing in
respect of each Omnibus Account on each day among all Sub-shareholder Accounts
reflected in such Omnibus Account on an equal per share basis based upon the
total number of Distributor Shares and Post-distributor Shares reflected in each
such Sub-shareholder Account as of the close of business on such day. In
addition, the Transfer Agent shall apply the foregoing rules to each
Sub-shareholder Account (as though it were a Shareholder Account other than an
Omnibus Account), based on the records maintained by the record owner, to
allocate the Asset Based Sales Charge so allocated to any Sub-shareholder
Account among the Distributor Shares and Post-distributor Shares reflected in
each such Sub-shareholder Account in accordance with the rules set forth in the
preceding paragraph; provided, that until the Sub-transfer Agent in respect of
the ML Omnibus Account develops the data processing capacity to apply the rules
of this Schedule I as applicable to Sub-shareholder Accounts other than ML
Omnibus Accounts, the Transfer Agent shall allocate the Asset Based Sales Charge
accruing in respect of Shares of any Fund in the ML Omnibus Account during any
calendar month (or portion thereof) among Distributor Shares and
Post-distributor Shares as follows:
(a) The portion of such Asset Based Sales Charge allocable to Distributor
Shares shall be computed as follows:
A X ((B + C)/2)
-----------
((D + E)/2)
where:
A = Total amount of Asset Based Sales Charge accrued during such
calendar month (or portion thereof) in respect of Shares of such
Fund in the ML Omnibus Account
B = Shares of such Fund in the ML Omnibus Account and identified as
Distributor Shares and outstanding as of the close of business on
the last day of the immediately preceding calendar month (or
portion thereof), times Net Asset Value per Share as of such time
C = Shares of such Fund in the ML Omnibus Account and identified as
Distributor Shares and outstanding as of the close of business on
the last day of such calendar month (or portion thereof), times Net
Asset Value per Share as of such time
D = Total number of Shares of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last day of the
immediately preceding calendar month (or portion thereof), times
Net Asset Value per Share as of such time.
E = Total number of Shares of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last day of such
calendar month (or portion thereof), times Net Asset Value per
Share as of such time.
(b) The portion of such Asset Based Sales Charge allocable to
Post-distributor Shares shall be computed as follows:
A X ((B + C)/2)
-----------
((D + E)/2)
where:
A = Total amount of Asset Based Sales Charge accrued during such
calendar month (or portion thereof) in respect of Shares of such
Fund in the ML Omnibus Account
B = Shares of such Fund in the ML Omnibus Account and identified as
Post-distributor Shares and outstanding as of the close of business
on the last day of the immediately preceding calendar month (or
portion thereof), times Net Asset Value per Share as of such time
C = Shares of such Fund in the ML Omnibus Account and identified as
Post-distributor Shares and outstanding as of the close of business
on the last day of such calendar month (or portion thereof), times
Net Asset Value per Share as of such time
D = Total number of Shares of such Fund in the ML Omnibus Account and
outstanding as of the close of business on the last day of the
immediately preceding calendar month (or portion thereof), times
Net Asset Value per Share as of such time.
E = Total number of Shares of such Fund in the ML Omnibus Account
outstanding as of the close of business on the last day of such
calendar month, times Net Asset Value per Share as of such time.
(3) PAYMENTS ON BEHALF OF EACH FUND.
On the close of business on each day the Transfer Agent shall cause payment to
be made of the amount of the Asset Based Sales Charge and CDSCs accruing on such
day in respect of the Shares of such Fund owned of record by Shareholder
Accounts (other than Omnibus Accounts) by two separate wire transfers, directly
from accounts of such Fund as follows:
1. The Asset Based Sales Charge and CDSCs accruing in respect of
Shareholder Accounts other than Omnibus Accounts and allocable to
Distributor Shares in accordance with the preceding rules shall be paid
to the Distributor's Account, unless the Distributor otherwise
instructs the Fund in any irrevocable payment instruction; and
2. The Asset Based Sales Charges and CDSCs accruing in respect of
Shareholder Accounts other than Omnibus Accounts and allocable to
Post-distributor Shares in accordance with the preceding rules shall be
paid in accordance with direction received from any future distributor
of Shares of the Instant Fund.
On each Omnibus CDSC Settlement Date, the Transfer Agent for each Fund
shall cause the applicable Sub-transfer Agent to cause payment to be made of the
amount of the CDSCs accruing during the period to which such Omnibus CDSC
Settlement Date relates in respect of the Shares of such Fund owned of record by
each Omnibus Account by two separate wire transfers directly from the account of
such Fund maintained by such Transfer Agent, as follows:
1. The CDSCs accruing in respect of such Omnibus Account and allocable
to Distributor Shares in accordance with the preceding rules shall be
paid to the Distributor's Account, unless the Distributor otherwise
instructs the Fund in any irrevocable payment instruction; and
2. The CDSCs accruing in respect of such Omnibus Account and allocable
to Post-distributor Shares in accordance with the preceding rules shall
be paid in accordance with direction received from any future
distributor of Shares of the Instant Fund.
On each Omnibus Asset Based Sales Charge Settlement Date the Transfer
Agent for each Fund shall cause payment to be made of the amount of the Asset
Based Sales Charge accruing for the period to which such Omnibus Asset Based
Sales Charge Settlement Date relates in respect of the Shares of such Fund owned
of record by each Omnibus Account by two separate wire transfers directly from
accounts of such Fund as follows:
1. The Asset Based Sales Charge accruing in respect of such Omnibus
Account and allocable to Distributor Shares shall be paid to the
Distributor's Collection Account, unless the Distributor otherwise
instructs the Fund in any irrevocable payment instruction; and
2. The Asset Based Sales Charge accruing in respect of such Omnibus
Account and allocable to Post-Distributor Shares shall be paid in
accordance with direction received from any future distributor of
Shares of the Instant Fund.
190801.c1
EXHIBIT 99.24(b)(8)
CUSTODIAN, FUND ACCOUNTING AND
RECORDKEEPING AGREEMENTS, AND AMENDMENTS THERETO
<PAGE>
CUSTODIAN AND RECORDKEEPING AGREEMENT
BY AND BETWEEN
AMERICAN LIQUID TRUST
AND
STATE STREET BANK AND TRUST COMPANY
Agreement made as of this 31st day of December, 1979 by and between
AMERICAN LIQUID TRUST, a Massachusetts business trust, having it principal place
of business at 99 High Street, Boston, Massachusetts 02110, (the "Fund"), and
STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation, having
its principal place of business at 225 Franklin Street, Boston, Massachusetts
02110 ("State Street").
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the Fund
and State Street agree as follows:
I. DEPOSITORY
The Fund hereby appoints State Street as its Depository subject to the
provisions hereof. The Fund shall delivery to State Street certified or
authenticated copies of its Declaration of Trust, By-Laws, all amendments
thereto, a certified copy of the resolution of its board of directors appointing
State Street to act in the capacities covered by this Agreement and authorizing
the signing of this Agreement and copies of such resolutions of its board of
trustees, contracts and other documents as may be reasonably required by State
Street in performance of its duties hereunder.
II. CUSTODIAN
1. The Fund appoints State Street as its Custodian, subject to the
provisions hereof. State Street hereby accepts such appointment as Custodian. As
such Custodian, State Street shall retain all securities and cash now owned or
hereafter acquired by the Fund, and the Fund shall deliver and pay or cause to
be delivered and paid to State Street, as Custodian, all securities and cash now
owned or hereafter acquired by the Fund during the period of this Agreement.
2. All securities delivered to State Street (other than in bearer form)
shall be properly endorsed and in proper form for transfer into or in the name
of the Fund, of a nominee of State Street for the exclusive use of the Fund, or
of such other nominee as may be mutually agreed upon by State Street and the
Fund.
3. As Custodian, State Street shall promptly:
A. Safekeeping. Keep safely in a separate account the securities of the
Fund, including without limitation all securities in bearer form, and on behalf
of the Fund, receive delivery of certificates, including without limitation all
securities in bearer form, for safekeeping and keep such certificates physically
segregated at all times from those of any other person. State Street shall
maintain records of all receipts, deliveries and locations of such securities,
together with a current inventory thereof and shall conduct periodic physical
inspections of certificates representing bonds and other securities held by it
under this Agreement at least annually in such manner as State Street shall
determine form time to time to be advisable in order to verify the accuracy of
such inventory. State Street shall provide the Fund with copies of any reports
of its internal count or other verification of the securities of the Fund held
in its custody, including reports on its own system of internal accounting
control. In addition, if and when independent certified public accountants
retained by State Street shall count or otherwise verify the securities of the
Fund held in State Street's custody, State Street shall provide the Fund with a
copy of the report of such accountants. With respect to securities held by any
agent or Sub-Custodian appointed pursuant to paragraph 6-C of section II hereof,
State Street may rely upon certificates from such agent as to the holdings of
such agent and from such Sub-Custodian as to the holdings of such Sub-Custodian,
it being understood that such reliance in no way releases State Street of its
responsibilities or liabilities under this Agreement. State Street shall
promptly report to the Fund the results of such inspections, indicating any
shortages or discrepancies uncovered thereby, and take appropriate action to
remedy any such shortages or discrepancies.
B. Use of a System for the central Handling of Securities.
Notwithstanding any other provision of this Agreement, if in the best interest
of the Fund, deposit all or any part of the securities owned by the Fund in the
book-entry system of the Federal Reserve Banks (hereinafter called the "System")
and to use the facilities of such system, all as provided under the provisions
of Rule 17f-4 of the Investment Company Act of 1940, as amended. Without
limiting the generality of such use, the following provisions shall apply
thereto:
(1) State Street may keep securities of the Fund in the system provided
that such securities are represented in an account ("Account") of State Street's
(or its agent or Sub-Custodian) in the system which shall not include any assets
of State Street (or such agent or Sub-Custodian) other than assets held as
fiduciary, custodian or otherwise for customers. The records of State Street
(and such agents or Sub-Custodians) shall at all times during the regular
business hours of State Street (or such agents or Sub-Custodians) be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission.
(2) State Street shall send to the Fund a confirmation of all transfers
to or from the system for the account of the Fund. Where securities are
transferred to the Fund's account, State Street shall, 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 State Street or its
nominee or (ii) shown on State Street's account on the books of the appropriate
Federal Reserve Bank. For this purpose, the term (confirmation" means advice or
notice of transaction; it is not intended to require preparation by State Street
of the confirmation required of broker-dealers under the Securities Exchange Act
of 1934.
(3) Anything to the contrary in this Agreement notwithstanding, State
Street shall be liable to the Fund for any claim, liability, loss or expense,
including attorney's fees, resulting to such Fund from use of the system by
reason of any negligence, misfeasance or misconduct of State Street (or any of
its agents or Sub-Custodians) or of any of its (or their) employees or from any
failure of State Street (or any such agent or Sub-Custodian) to enforce
effectively such rights as it (or they) may have against the system. At the
election of the Fund, it shall be entitled to be subrogated to State Street, its
agents or Sub-Custodians in any claim against the system or any other person
which State Street, its agents or Sub-Custodians may have as a consequence of
any such claim, liability, loss or expense if and to the extent that the Fund
has not been made whole for such claim, liability, loss or expense.
C. Registered Name, Nominee. Register securities of the Fund held by
State Street in the name of the Fund, of a nominee of State Street for the
exclusive use of the Fund, of such other nominees as may be mutually agreed
upon, or of any mutually acceptable nominee of any agent or Sub-Custodian
appointed pursuant to paragraph 6-C of section II hereof.
D. Purchases. Upon receipt of proper instructions (as defined in
paragraph 5-A of section II hereof; hereafter "proper instructions") and insofar
as cash is available for the purpose, pay for and receive all securities
purchased for the account of the Fund, payment being made only upon receipt of
the securities by State Street (or any bank, banking firm, responsible
commercial agent or trust company doing business in the United States and
appointed pursuant to paragraph 6-C of section II hereof as State Street's agent
or Sub-Custodian for this purpose, registered as provided in paragraph 3-C of
section II hereof or in form for transfer satisfactory to State Street, or, in
the case of repurchase agreements entered into between the Fund and a bank or a
dealer, delivery of the securities either in certificate form or through an
entry crediting State Street's account at the Federal Reserve Bank with such
securities. All securities accepted by State Street shall be accompanied by
payment of, or a "due bill" for, any dividends, interest or other distributions
of the issuer, due the purchaser. In any and every case of a purchase of
securities for the account of the Fund where payment is made by State Street in
advance of receipt of the securities purchased, State Street shall be absolutely
liable to the Fund for such securities to the same extent as if the securities
had been received by State Street except that in the case of repurchase
agreements entered into by the Fund with a bank which is a member of the Federal
Reserve System, State Street may transfer funds to the account of such bank
prior to the receipt of written evidence that the securities subject to such
repurchase agreement have been transferred by book-entry into a segregated
nonproprietary account of State Street maintained with the Federal Reserve Bank
of Boston, provided that such securities have in fact been so transferred by
book-entry; and provided, further however, that State Street and the Fund agree
to use their best efforts to insure receipt by State Street of copies of
documentation for each such transaction as promptly as possible.
E. Exchanges. Upon receipt of proper instructions, exchange securities,
interim receipts or temporary securities held by it or by any agent or any
Sub-Custodian appointed by it pursuant to paragraph 6-C of section II hereof for
the account of the Fund for other securities alone or for other securities and
cash, and expend cash insofar as cash is available in connection with any
merger, consolidation, reorganization, recapitalization, split-up of shares
changes of par value, conversion or in connection with the exercise of warrants,
subscriptions or purchase rights, or otherwise, and deliver securities to the
designated depository or other receiving agent in response to tender offers or
similar offers to purchase received in writing; provided that in any such case
the securities and/or cash to be received as a result of any such exchange,
expenditure or delivery are to be delivered to State Street, its agents or
Sub-Custodians. State Street shall give notice as provided under paragraph 4-L
of section II hereof to the Fund in connection with any transaction specified in
this paragraph and at the same time shall specify to the Fund whether such
notice relates to securities held by an agent or Sub-Custodian appointed
pursuant to paragraph 6-C of section II hereof, so that the Fund may issue to
State Street proper instructions for State Street to act thereon prior to any
expiration date (which shall be presumed to be two business days prior to such
date unless State Street has previously advised the Fund of a different period).
The Fund shall give to State Street full details of the time and method of
submitting securities in response to any tender or similar offer, exercising any
subscription or purchase right or making any exchange pursuant to this
paragraph. When such securities are in the possession of an agent appointed by
State Street pursuant to paragraph 6-C of section II hereof, the proper
instructions referred to in the preceding sentence must be received by State
Street in timely enough fashion (which shall be presumed to be three business
days unless State Street has advised the Fund in writing of a different period)
for State Street to notify the agent in sufficient time to permit such agent to
act prior to any expiration date. When the securities are in the possession of a
Sub-Custodian appointed pursuant to paragraph 6-C of section II hereof, the
proper instructions must be received by the Sub-Custodian in timely enough
fashion as previously advised in writing to the Fund by State Street or the
Sub-Custodian to permit the Sub-Custodian to act prior to any expiration date.
F. Sales. Upon receipt of proper instructions and upon receipt of full
payment therefor, release and deliver securities which have been sold for the
account of the Fund. At the time of delivery all such payments are to be made in
cash, by a certified check upon or a treasurer's or cashier's check of a bank,
by effective bank wire transfer through the Federal Reserve Wire System or, if
appropriate, outside of the Federal Reserve Wire System and subsequent credit to
the Fund's Custodian account, or, in the case of delivery through a stock
clearing company, by book-entry credit by the stock clearing company in
accordance with the then current "street" custom.
G. Purchases by Issuer. Upon receipt of proper instructions, release
and deliver securities owned by the Fund to the issuer thereof or its agent when
such securities are called, redeemed retired or otherwise become payable;
provided that in any such case, the cash or other consideration is to be
delivered to State Street.
H. Changes of Name and Denomination. Upon receipt of proper
instructions, release and deliver securities owned by the Fund to the issuer
thereof or its agent for transfer into the name of the Fund or of a nominee of
State Street or of the Fund for the exclusive use of the Fund or for exchange
for a different number of bonds, certificates, or other evidence representing
the same aggregate face amount of number of units bearing the same interest
rate, maturity date and call provisions, if any; provided that in any such case,
the new securities are to be delivered to State Street.
I. Street Delivery. In connection with delivery in New York City and
upon receipt of proper instructions, which in the case of registered securities
may be standing instructions, release securities owned by the Fund upon receipt
of a written receipt for such securities to the broker selling the same for
examination in accordance with the existing "street delivery" custom. In every
instance either payment in full for such securities shall be made or such
securities shall be returned to the Custodian that same day. In the event
existing "street delivery" custom is modified, State Street shall obtain
authorization from the board of directors of the Fund prior to any use of such
modified "street delivery" custom.
J. Release of Securities for Use as Collateral. Upon receipt of proper
instructions, release securities belonging to the Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Fund; provided, however, that securities shall be released only upon
payment to State Street of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, subject to
proper prior authorization from the Fund, further securities may be released for
that purpose. Upon receipt of proper instructions, pay such loan upon redelivery
to it of the securities pledged or hypothecated therefore and upon surrender of
the note or notes evidencing the loan.
K. Release or Delivery of Securities for Other Purposes. Upon receipt
of proper instructions, release or deliver any securities held by it for the
account of the Fund for any other purpose (in addition to those specified in
paragraphs 3-E, 3-F, 3-G 3-H, 3-I ad 3-J of section II hereof) which the Fund
declares is a proper corporate purpose pursuant to proper instructions.
L. Proxies, Notices, Etc. State Street shall promptly forward upon
receipt to the Fund all forms of proxies and all notices of meetings and any
other notices or announcements affecting or relating to the securities,
including without limitation notices relating to the class action claims and
bankruptcy claims, and upon receipt of proper instructions execute and deliver
or cause its nominee to execute and delivery such proxies or other
authorizations as may be required. State Street, its nominee, its agents and
Sub-Custodians shall not vote upon any of the securities or execute any proxy to
vote thereon or give any consent or take any other action with respect thereto
(except as otherwise herein provided) unless ordered to do so by proper
instructions. State Street shall require its agents and Sub-Custodians appointed
pursuant to paragraph 6-C of section II hereof to forward any such announcements
and [sic]
M. Miscellaneous. In general, attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealing with such securities or property of the Fund, except as otherwise
directed by the Fund pursuant to proper instructions. State Street shall render
to the Fund daily a report of all monies received or paid on behalf of the Fund,
an itemized statement of the securities and cash for which it is accountable to
the Fund under this Agreement and an itemized statement of security transactions
which settled the day before and shall render to the Fund weekly an itemized
statement of security transactions which failed to settle as scheduled. At the
end of each week State Street shall provide a list of all security transactions
that remain unsettled at such time.
4. Additionally, as Custodian, State Street shall promptly:
A. Bank Account. Retain all cash of the Fund, other than cash
maintained by the Fund in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940, as amended, in the banking
department of State Street in a separate account or accounts in the name of the
Fund, subject only to draft of order by State Street acting pursuant to the
terms of this Agreement. If and when authorized by proper instructions in
accordance with a vote of the board of directors of the Fund, State Street may
open and maintain an additional account or accounts in such other bank or trust
companies as may be designated by such instructions, such account or accounts,
however, to be solely in the name of State Street in its capacity as Custodian
and subject only to its draft or order in accordance with the terms of this
Agreement. State Street shall furnish the Fund, not later than thirty (30)
calendar days after the last business day of each month, a statement reflecting
the current status of its internal reconciliation of the closing balance as of
that day in all accounts described in this paragraph to the balance shown on the
daily cash report for that day rendered to the Fund.
B. Collections. Unless otherwise instructed by receipt of proper
instructions, collect, receive and deposit in the bank account or accounts
maintained pursuant to paragraph 4-A of section II hereof all income and other
payments with respect to the securities held hereunder, execute ownership and
other certificates and affidavits for all Federal and State tax purposes in
connection with the collection of bond and note coupons, do all other things
necessary or proper in connection with the collection of such income, and
without waiving the generality of the foregoing:
(1) Present for payment on the date of payment all coupons and other
income items requiring presentation;
(2) Present for payment all securities which may mature or be
called, redeemed, retired or otherwise become payable on the date such
securities become payable;
(3) Endorse and deposit for collection, in the name of the Fund,
checks, drafts or other negotiable instruments on the same day as received.
In any case in which State Street does not receive any such due and
unpaid income within a reasonable time after it has made proper demands for the
same (which shall be presumed to consist of at least three demand letters and at
least one telephonic demand), it shall so notify the Fund in writing, including
copies of all demand letters, any written responses thereto, and memoranda of
all oral responses thereto and to telephonic demands, and await proper
instruction; the Custodian shall not be obligated to take legal action for
collection unless and until reasonably indemnified to its satisfaction for the
reasonable costs of such legal action for collection. It shall also notify the
Fund as soon as reasonably practicable whenever income due on securities is not
collected in due course.
C. Sale of Shares of the Fund. Make such arrangements with the
Transfer Agent of the Fund as will enable State Street to make certain it
receives the cash consideration due to the Fund for shares of the Fund as may be
issued or sold from time to time by the Fund, all in accordance with the Fund's
Declaration of Trust and By-Laws, both as amended.
In connection with such issuance of shares of the Fund, State Street
shall make such arrangements with the transfer Agent as shall insure the timely
notification to the Transfer Agent and to the Fund of the receipt of Federal
funds by the Custodian by means of the Federal Reserve Wire System or of the
receipt of funds by other bank wire transfers in payment for the issuance of
such share.
At 9:00 A.M. on the first business day after the deposit of a check
into the Trust's account, State Street agrees to make Federal funds available to
the Fund in the amount of the check.
D. Dividends and Distributions. Upon receipt of proper instructions,
release or otherwise apply cash insofar as cash is available for the purpose for
payment of dividends or other distributions to shareholders of the Fund.
E. Redemption of Shares of the Fund. From such funds as may be
available for the purpose, but subject to the limitations of the Fund's
Declaration of Trust and By-Laws, both as amended, and applicable resolutions of
the board of directors of the Fund pursuant thereto, make funds available for
payment to shareholders who have delivered to the Transfer Agent a request for
redemption of their shares by the Fund pursuant to said Declaration of Trust and
By-Laws, both as amended.
In connection with the redemption of shares of the Fund pursuant to the
Fund's Declaration of Trust and By-Laws, both as amended, State Street is
authorized and directed upon receipt of proper instructions from the Transfer
Agent for the Fund to make funds available for transfer through the Federal
Reserve Wire System or by other bank wire to a commercial bank account
designated by the redeeming shareholder.
F. Stock Dividends, Rights, Etc. Receive and collect all stock
dividends, rights and other items of like nature; and deal with the same
pursuant to proper instructions relative thereto.
F.[sic] Disbursements. Upon receipt of proper instructions, make of
cause to be made, insofar as cash is available for the purpose, disbursements
for the payment on behalf of the Fund of interest, taxes, advisory fees and
operating expenses, including registration and qualification costs and other
expenses of issuing and selling shares or changing its capital structure,
whether or not such expenses shall be in whole or in part capitalized or treated
as deferred expenses.
G. Other Proper Corporate Purposes. Upon receipt of proper
instructions, make or cause to be made, insofar as cash is available for the
purpose, disbursements for any other purpose (in addition to the purposes
specified in paragraphs 3-D, 3-E, 4-D, 4-E, and 4-G of this Agreement) which the
Fund declares is a proper corporate purpose.
H. Records. Create, maintain and retain all records relating to its
activities and obligations under this Agreement in such manner as (a) shall meet
the obligations of the Fund under the Investment Company Act of 1940, as
amended, particularly Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
under applicable federal and state tax laws and under any other law or
administrative rules or procedures which may be applicable to the Fund, (b) as
necessary to comply with the representations of Part I - Fund Custodian Services
and Part II - Portfolio Pricing and Accounting of State Street's Response, dated
May 1, 1979, as amended to Keystone Custodian Funds, Inc.'s and The
Massachusetts Companies, Inc.'s Request for Proposal, dated March 19, 1979, as
amended, (amendments since June 22, 1979 are set forth in Exhibit B) ("Parts I
and II"), insofar as such representations relate to the creations, maintenance
and retention of records for the Fund or (c) as reasonably requested from time
to time by the Fund. All records maintained by State Street in connection with
the performance of its duties under this Agreement shall remain the property of
the Fund and in the event of termination of this Agreement shall be delivered in
accordance with the terms of paragraph 8 below.
I. Miscellaneous. Assist generally in the preparation of routine
reports to holders of shares of the Fund, to the Securities and Exchange
Commission, including forms N1-R and N1-Q, to State "Blue Sky" authorities, to
others in the auditing of accounts and in other matters or like matters of like
nature, as required to comply with the representations of Parts I and II insofar
as such representations relate to the preparation of reports for the Fund and as
otherwise reasonably requested by the Fund.
K.[sic] Determination of Net Income. If requested by the Fund and
upon receipt of proper instructions, which may be continuing instructions when
deemed appropriate by the parties, State Street shall calculate daily the "net
income" of the Fund in a manner consistent with the Fund's Declaration of Trust
and in accordance with the then current prospectus of the Fund, and shall advise
the Fund and the Transfer Agent daily of the total amount of such "net income".
L. Services Under Parts I and Part II. In addition to the services
specified herein, State Street shall perform those services set forth in Parts I
and II, including without limitation general ledger accounting, daily Fund
portfolio pricing and custodian services to the extent such services relate to
the Fund; provided, however, that in the event that Parts I and II as they
relate to the Fund are in conflict with the terms of this Agreement, the terms
of this Agreement shall govern.
5. State Street and the Fund further agree as follows:
A. Proper Instructions. State Street shall be deemed to have
received proper instructions upon receipt of written instructions signed by the
board of Trustees or by one or more person or persons as the Board of directors
shall have from time to time authorized to give the particular class of
instructions in questions. Different persons may be authorized to give
instructions for different purposes. A copy of a resolution or action of the
board of Trustees certified by the secretary or an assistant secretary of the
Fund may be received and accepted by State Street as conclusive evidence of the
instruction of the board of directors and/or the authority of any person or
persons to act on behalf of the Fund and may be considered as in full force and
effect until receipt of written notice to the contrary. Such instructions may be
general or specific in terms. Oral instructions will be considered proper
instructions if the Custodian reasonably believes them to have been given by a
person authorized by the board of directors to give such oral instructions with
respect to the class of instruction involved. The Fund shall cause all oral
instructions to be confirmed in writing.
B. Investments, Limitations. In performing its duties generally, and
more particularly in connection with the purchase, sale and exchange of
securities made by or for the Fund, State Street may take cognizance of the
provisions of the Declaration of Trust and By-Laws of the Fund, both as amended;
provided, however, that except as otherwise expressly provided herein, State
Street may assume unless and until notified in writing to the contrary that
instructions purporting to be proper instructions received by it are not in
conflict with or in any way contrary to any provision of the Declaration of
Trust and By-Laws of the Fund both as amended, or resolutions or proceedings of
the board of Trustees of the Fund.
6. State Street and the Fund further agree as follows:
A. Indemnification. State Street, as Depository and Custodian, shall
be entitled to receive and act upon advice of counsel (who may be counsel for
the Fund) and shall be without liability for any action reasonably taken or
thing reasonably done pursuant to such advice; provided that such action is not
in violation of applicable Federal or State laws or regulations or contrary to
written instructions received from the Fund, and shall be indemnified by the
Fund and without liability for any action taken or thing done by it in carrying
out the terms and provisions of this Agreement in good faith and without
negligence, misfeasance or misconduct. In order that the indemnification
provision contained in this paragraph shall apply, however, if the Fund is asked
to indemnify or save State Street harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question and State
Street shall use all reasonable care to identify and notify the Fund fully and
promptly concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the Fund. The Fund
shall have the option to defend State Street against any claim which may be the
subject of this indemnification, and in the event that the Fund so elects it
will so notify State Street, and thereupon the Fund shall take over complete
defense of the claim, and State Street shall initiate no further legal or other
expenses for which it shall seek indemnification under this paragraph. State
Street shall in no case confess any claim or make any compromise in any case in
which the Fund will be asked to indemnify State Street except with the Fund's
prior written consent.
B. Expense Reimbursement. State Street shall be entitled to receive
from the Fund on demand reimbursement for its cash disbursements, expenses and
charges, excluding salaries and usual overhead expenses, as set forth on
Schedule A.
C. Appointment of Agent and Sub-Custodians. State Street, as
Custodian, may appoint (and may remove) any other bank, trust company or
responsible commercial agent as its agent to carry out such of the provisions of
this Agreement as State Street may from time to time direct, and State Street,
as Custodian, may from time to time employ one or more Sub-Custodians, but only
in compliance with the terms and conditions set forth in the Fund's Declaration
of Trust and By-Laws, both as amended; provided, however, that the appointment
of any such agent of Sub-Custodian shall not relieve State Street of any of its
responsibilities under this Agreement.
D. Reliance on Documents. So long as and to the extent that it is in
good faith and in the exercise of reasonable care, State Street, as Depository
and Custodian, shall not be responsible for the title, validity or genuineness
of any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement, shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to constitute proper instructions under this
Agreement and shall, accept as otherwise specifically provided in this
Agreement, be entitled to receive as conclusive proof of any fact or matter
required to be ascertained by it hereunder a certificate signed by the board of
trustees, the secretary or an assistant secretary of the Fund or any other
person expressly authorized by the board of trustees of the Fund.
E. Access to Records. Subject to security requirements of State
Street applicable to its own employees having access to similar records within
State Street and such regulations as to the conduct of such monitors as may be
reasonably imposed by State Street after prior consultation with an authorized
officer of the Fund, books and records of State Street pertaining to its actions
under this Agreement shall be open to inspection and audit at reasonable times
by the directors of, attorneys for, auditors employed by the Fund or any other
person as the board of directors shall direct.
F. Record-Keeping. State Street shall maintain such records as shall
enable the Fund to comply with the requirements of all Federal and State laws
and regulations applicable to the Fund with respect to the matters covered by
this Agreement and shall comply with the representations of Parts I and II as
such representations relate to maintaining records of the Fund.
7. The Fund shall pay State Street for its services as Custodian such
compensation as shall be as specified in the attached Exhibit A. Such
compensation shall remain fixed for two years from the date hereof, unless this
Agreement is terminated as provided in section 8A, and shall remain fixed for an
additional year in the event of the Fund decides to continue this Agreement for
such period; provided, however, that in the event either party terminates this
Agreement as provided in section 8A State Street hereby guarantees and agrees
that no new Agreement entered into between the parties shall require payment of
compensation greater than that specified herein during such three year period.
8. State Street and the Fund further agree as follows:
A. Effective Period, Termination, Amendment and Interpretive and
Additional Provisions. This Agreement shall become effective as of the date of
its execution, shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated at any time by the Fund by an instrument in
writing delivered or mailed, postage prepaid, to State Street and may be so
terminated by State Street through notice to the Fund at any time after three
years from the date hereof, or in the event of the Fund's substantial default
under this Agreement which default continues, after notice to the Fund of such
default, uncorrected for 30 days; provided, however, that in such event State
Street shall remain as Custodian hereunder for a reasonable period thereafter if
the Fund has used its best efforts and is unable to find a Successor Custodian,
any such termination to take effect not sooner than sixty (60) days after the
date of such delivery of mailing; provided, however, that the Fund shall not
amend or terminate this Agreement in contravention of any applicable Federal or
State laws or regulations, or any provision of the Declaration of Trust or
By-Laws of the Fund, both as amended, and further provided, that the Fund may by
action of its board of directors substitute another bank or trust company for
State Street by giving notice as provided above to State Street.
In connection with the operation of this Agreement, State Street and
the Fund may agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement, any such interpretive or
additional provision to be signed by both parties and annexed hereto, provided
that no such interpretive or additional provisions shall contravene any
applicable Federal or State laws or regulations, or any provision of the Fund's
Declaration of Trust or By-Laws, both as amended. No interpretive provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Agreement.
B. Successor Custodian. Upon termination hereof or the inability of
the Custodian to continue to serve hereunder, the Fund shall pay to State Street
such compensation as may be due for services through the date of such
termination and shall likewise reimburse State Street for its costs, expenses
and disbursements incurred prior to such termination in accordance with
paragraph 6-B of section II hereof and such reasonable costs, expenses and
disbursements as may be incurred by State Street in connection with such
termination.
If a successor Custodian is appointed by the board of trustees of the
Fund in accordance with section 11.1 of the Fund's Declaration of Trust, as
amended, State Street shall, upon termination, deliver to such Successor
Custodian at the office of State Street, properly endorsed and in proper form
for transfer, all securities then held hereunder, all cash and other properties
of the Fund deposited with or held by it hereunder.
If no such Successor custodian is appointed, State Street shall, in
like manner at its office, upon receipt of a certified copy of a resolution of
the shareholders or board of trustees pursuant to section 11.1 of the Fund's
Declaration of Trust as amended, deliver such securities, cash and other
properties in accordance with such resolution.
In the event that no written order designating a successor custodian or
certified copy of a resolution of the shareholders or board of trustees shall
have been delivered to State street on or before the date when such termination
shall become effective, then State Street shall have the right to delivery to a
bank or trust company doing business in Boston, Massachusetts of its own
selection, having an aggregate capital, surplus and undivided profits as shown
by its last published report, of not less than $2,000,000, all securities, cash
and other properties held by State Street and all instruments held by State
Street and all instruments held by it relative thereto and all other property
held by it under this Agreement. Thereafter, such bank or trust company shall be
the Successor of State Street under this Agreement and subject to the
restrictions, limitations and other requirements of the Fund's Declaration of
Trust and By-Laws, both as amended.
In the event that securities, funds, and other properties remain in the
possession of State Street after the date of termination hereof owing to failure
of the fund to procure the certified copy above referred to, or of the board of
directors to appoint a Successor Custodian, State Street shall be entitled to
fair compensation for its services during such period and the provisions of this
Agreement relating to the duties and obligations of State Street shall remain in
full force and effect.
C. Duplicate Records and Backup Facilities. State Street shall not
be liable for loss of data, occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or military authority,
national emergencies, fire, flood or catastrophe, acts of God, insurrection,
war, riots, or failure of transportation, communication or power supply.
However, State Street shall keep in a separate and safe place additional copies
of all records required to be maintained pursuant to this Agreement or
additional tapes, disks or other sources of information necessary to reproduce
all such records, furthermore, at all times during this Agreement, State Street
shall maintain a contractual arrangement whereby State Street will have a
back-up computer facility available for its use in providing the services
required hereunder in the event circumstances beyond State Street's control
result in State Street not being able to process the necessary work at its
principal computer facility, State Street shall, from time to time, upon request
from the Fund provide written evidence and details of its arrangement for
obtaining the use of such a back-up computer facility. State Street shall use
its best efforts to minimize the likelihood of all damage, loss of data, delays
and errors resulting from an uncontrollable event, and should such damage, loss
of data, delays or errors occur, State Street shall use its best efforts to
mitigate the effects of such occurrence. Representatives of the Fund shall be
entitled to inspect the State Street premises and operating capabilities within
reasonable business hours upon reasonable notice to State Street, and, upon
request of such representative or representatives, State Street shall from time
to time as appropriate, furnish to the Fund a letter setting forth the insurance
coverage thereon. Any changes in such coverage which may occur and any claim
relating to the Fund which State Street may have made under such insurance.
D. Confidentiality. State Street agrees to treat all records and
other information relative to the Fund confidentially and State Street on behalf
of itself and its officers, employees, agents and Sub-Custodians agrees to keep
confidential all such information, except after prior notification to and
approval by the Fund (which approval shall not be unreasonably withheld and may
not be withheld where State Street may be exposed to civil or criminal contempt
proceedings), when requested to divulge such information by duly constituted
authorities or when so requested by a properly authorized person.
(a) State Street and the Fund agree that they, their officers,
employees, agents and Sub-Custodians shall maintain all information
disclosed to them by the other in connection with this Agreement in
confidence and will not disclose any such information to any other
person, nor use such information for their own benefit or for the
benefit of third parties without the consent in writing of the
other; provided, however, that each party shall have the right to
use any such information for its own necessary internal purposes
while this Agreement is in effect. The provisions of this Paragraph
shall not apply to information which (i) is in or becomes part of
the public domain, or (ii) is demonstrably known previously to the
party to whom it is disclosed, or (iii) is independently developed
outside this Agreement by the party to whom it is disclosed or (iv)
is rightfully obtained from third parties by the party to whom it is
disclosed.
9. The Fund shall not circulate any printed matter which contains any
reference to State Street without the prior written approval of State Street,
excepting solely such printed matter as merely identifies State Street as
Depository or Custodian. The Fund will submit printed matter requiring approval
to State Street in draft form, allowing sufficient time for review by State
Street and its counsel prior to any deadline for printing.
10. In the event of a reorganization of the Fund through a merger,
consolidation, sale of assets or other reorganization, State Street, at the
request of the Fund, shall act as Custodian for shares of any investment company
or other company obtained in any such reorganization by the Fund for
distribution to those Fund shareholders whose shares are represented by
certificates. The Fund shall give notice to each such shareholder of his right
to exchange his Fund shares represented by certificates for shares held by the
Custodian upon surrender to the Custodian of his certificates representing such
Fund shares properly endorsed and in proper form for transfer. Upon the
surrender of such Fund certificates State Street will issue a certificate or
certificates to the surrendering shareholder for an appropriate number of shares
held by State Street, unless such shareholder established an Open Account Plan
or other similar account as that time in which case such shares will be credited
to his or her account. State Street shall not be required to issue certificates
for any fractional shares held by it. Instead, fractional interests in such
shares shall be distributed to the shareholder in cash at their then current
market value or, if the fractional share represents an interest in an investment
company, it shall be redeemed by State Street at the then current redemption
price for such shares and the proceeds of such redemption shall be distributed
to such shareholder in cash. The Custodian shall not release to any shareholder
any such shares held by it until such shareholder has properly surrendered for
exchange his Fund shares represented by certificates.
11. This Agreement is executed and delivered in the Commonwealth of
Massachusetts and shall be subject to and be construed in accordance with the
laws of said Commonwealth.
12. Notices and other writings delivered or mailed postage prepaid to
the Fund, c/o Keystone Custodian Funds, Inc., 99 High Street, 32nd Floor,
Boston, Massachusetts 02110 or the State Street at 225 Franklin Street, Boston,
Massachusetts 02110 or to such other address as the Fund or State Street may
hereafter specify, shall be deemed to have been properly delivered or given
hereunder to the respective address.
13. It is understood and is expressly stipulated that neither the
holders of shares in the Fund nor its board of directors, officers or employees
shall be personally liable hereunder, but only the assets of the Fund shall be
bound.
14. This Agreement shall be binding on and shall inure to the benefit
of the Fund and State Street and their respective successors or assigns.
15. State Street and the Fund hereby agree that Custodian Agreement,
dated May 1, 1979 between them shall terminate upon the effectiveness of this
Agreement.
16. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
ATTEST: AMERICAN LIQUID TRUST
- -------------------------------- By:----------------------------------------
ATTEST: STATE STREET BANK AND TRUST COMPANY
- --------------------------------- By:----------------------------------------
#101605d6
<PAGE>
SCHEDULE A
American Liquid Trust
State Street Bank and Trust Company
Custodian and Recordskeeping Fee Schedule
1. Annual Fee
$18,000
II. Out-of-Pocket expenses
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include the
following:
Telephone
Postage and insurance
Courier service
Legal fees
Supplies related to Fund records
Duplicating
Transfer fees
Wire Service ($2.00 in or out)
Checkwriting service ($.35 per check)
III. Additional Services
Any modifications, innovations, improvements or other changes made by
State Street in the services and reports which it provides to other
customers receiving its custodial services without additional charges
or fees shall be provided to the Fund at its request for no additional
charge or fee.
<PAGE>
SCHEDULE B
I. Operating Plan - Fund Custodian Services
1. Page 1
(a) Trade instructions by tape input compatible with the SPARK
system will not be given.
(b) System 34 terminals will not be provided for trade input.
2. Page 2
(a) Distributions will be charged against the custodian
account and credited to the disbursement account on the
payable date.
(b) Reports - improved or new SPARK Reports will be made
available to the Fund at its request for no additional
cost, if made available at no additional cost to other
customers of State Street.
II. Fund Custodian Services
A. Page 1
(1) The Fund will receive Custody and Full Accounting
Services.
B. Page 2
(1) Polaris Fund Inc. is not Keystone International Fund Inc.
III. I. Custodian Reports
A. Page 1
(2) Analytics - SPARK information reports - the Funds will
receive none of these.
IV. KM - SSB Reports Comparison
A. Page 1 - MASSCO Report
(1) (9) Different form with similar content to be prepared for
Keystone Tax Free Fund (Massachusetts Fund for Tax Exempt
Income) rather than Master Reserves Trust (MRT).
(2) (12) To be prepared for all Funds.
(3) (13) Trade Settlement Authorizations and all other reports
as provided to the Keystone Funds will be provided MassCo
Funds.
(4) (26) Initial instructions in memo from Mr. Joseph Naples.
Instructions may be changed from time to time by proper
instructions.
(5) (30) Letter to be supplied by Bradford Trust Company.
(6) (31) Report to be supplied by Bradford Trust Company.
B. Keystone Reports
(1) (3) Information to be supplied by Open Order System.
(2) (16) Will be prepared manually by State Street,
Calculations to be based on initial instructions provided
under (4) (26) memo.
(3) (18) To be prepared by State Street.
(4) (30) New SPARK Report to be provided the Funds.
(5) (31) Pricing Quotes for foreign issues, restricted
securities and private placements not otherwise available
to State Street to be supplied by the Fund.
(6) (46) KIMCO Reports unnecessary.
(7) (58) State Street to prepare manually.
(8) (57) Keystone to provide.
(9) (70) New SPARK Report to be provided the Funds.
(10) (73) SPARK Report to be provided the Funds
(11) (74) New SPARK Report and hard copy tape to be provided
the Funds.
(12) (75) State Street to provide weekly report of fails for
each Fund.
(13) All new SPARK reports must be reviewed and accepted by
the Funds before they will be considered to comply with
State Street's Custodian, Portfolio Accounting and
Recordskeeping Agreements with the Funds, such acceptance
not to be unreasonably withheld.
VI. Responses
I. Fund Custodian Services
(a) Page 2
Checkwriting privilege is $.35 per check - charged only
for American Liquid Trust at this time. Other Fund
agreements to be amended to include this charge if such
privilege is ever offered to shareholders of other Funds.
(b) Page 3 (6) Individuals responsible for Fund services may
change as long as the quality of the personnel is
maintained.
(c) Page 6 (11) State Street is liable for the acts of its
sub-custodians to the same extent that it is liable for
the acts of its agents.
II. Exhibits
1. Exhibits 1-2
(a) (6) Notices of corporate actions shall include, without
limitation notices of class actions and bankruptcy actions
in connection with issues held by the Funds.
<PAGE>
FIRST AMENDMENT
TO
CUSTODIAN, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
BY AND BETWEEN
AMERICAN LIQUID TRUST
AND
STATE STREET BANK AND TRUST COMPANY
This First Amendment to the Custodian, Fund Accounting and
Recordkeeping Agreement by and between AMERICAN LIQUID TRUST (the "Fund") and
STATE STREET BANK AND TRUST COMPANY ("State Street"), dated December 31, 1979
(the "Agreement") is made by and between the Fund and State Street as of
December 31, 1982.
In consideration of the mutual agreements contained herein, State
Street and the fund hereby agree to amend the Agreement by replacing each of
Section II, Paragraph 6(B), and Section II, Paragraph 7 with the following
provisions:
"6. B. Expense Reimbursement. State Street shall be entitled
to receive from the Fund on demand reimbursement for its cash
disbursements, expenses and charges, excluding salaries and usual
overhead expenses, as set forth on the attached Schedule C."
"7. The Fund shall pay State Street for its services as
Custodian such compensation as shall be as specified in the attached
Schedule C. Such compensation shall remain as provided in Schedule C
until December 31, 1984, unless this Agreement is terminated as
provided in section 8A; provided, however, that in the event either
party terminates this Agreement as provided in section 8A State Street
hereby guarantees and agrees that no new Agreement entered into between
the parties shall require payment of compensation greater than that
specified herein during such period."
<PAGE>
IT WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to the Agreement to be executed in its name and on its behalf by a
duly authorized officer as of the day and year first written above.
AMERICAN LIQUID TRUST
By:--------------------------------------
Attest:----------------------------
STATE STREET BANK AND TRUST COMPANY
By:--------------------------------------
Attest:----------------------------
#101e0a6c
<PAGE>
SCHEDULE C
STATE STREET BANK AND TRUST COMPANY
CUSTODIAN FEE SCHEDULE
AMERICAN LIQUID TRUST
(EFFECTIVE 1/1/83)
I. ADMINISTRATION
Custody, Portfolio and Fund Accounting Service - Maintain custody of
fund assets. Settle portfolio purchases and sales. Report buy and sell
fails. Determine and collect portfolio income. Make cash disbursements
and report cash transactions. Maintain investment ledgers, provide
selected portfolio transactions, position and income reports. Maintain
general ledger and capital stock accounts. Prepare daily trial balance.
Calculate net asset value daily. Provide selected general ledger
reports. Securities yield or market value quotations will be provided
to State Street from a source designated by the Fund.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average net assets and calculated in the same
manner as the fund management fee.
Annual Fee
Fund Net Assets
First $35 million 1/15 of 1%
Next $65 million 1/30 of 1%
Excess 1/100 of 1%
No Minimum
II. PORTFOLIO TRADES - For each line item processed
All Trades $ 10.00
III. OUT-OF-POCKET EXPENSES
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but
are not limited to the following:
Telephone Wire charges ($3.65 per wire in and $3.50 out)
Postage and insurance
Courier service
Legal fees
Supplied related to fund records
Rush transfer - $8 each
Duplicating
DTC Eligibility Books
Transfer fees
Sub-Custodian charges
Price Waterhouse Audit Letter
Check writing ($.50 per check)
This fee schedule will terminate 12/31/83.
<PAGE>
SCHEDULE C
STATE STREET BANK AND TRUST COMPANY
CUSTODIAN FEE SCHEDULE
AMERICAN LIQUID TRUST
(EFFECTIVE 1/1/84)
I. ADMINISTRATION
Custody, Portfolio and Fund Accounting Service - Maintain custody of
fund assets. Settle portfolio purchases and sales. Report buy and sell
fails. Determine and collect portfolio income. Make cash disbursements
and report cash transactions. Maintain investment ledgers, provide
selected portfolio transactions, position and income reports. Maintain
general ledger and capital stock accounts. Prepare daily trial balance.
Calculate net asset value daily. Provide selected general ledger
reports. Securities yield or market value quotations will be provided
to State Street from a source designated by the Fund.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average net assets and calculated in the same
manner as the fund management fee.
Annual Fee
Fund Net Assets
First $35 million 1/15 of 1%
Next $65 million 1/30 of 1%
Excess 1/100 of 1%
No Minimum
II. PORTFOLIO TRADES - For each line item processed
All Trades $ 12.50
III. OUT-OF-POCKET EXPENSES
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but
are not limited to the following:
Telephone
Wire charges ($3.65 per wire in and $3.50 out)
Postage and insurance
Courier service
Legal fees
Supplied related to fund records
Rush transfer - $8 each
Duplicating
DTC Eligibility Books
Transfer fees
Sub-Custodian charges
Price Waterhouse Audit Letter
Check writing ($.50 per check)
This fee schedule will terminate 12/31/84.
<PAGE>
THIRD AMENDMENT
TO
CUSTODIAN, FUND ACCOUNTING ND RECORDKEEPING AGREEMENT
BY AND BETWEEN
KEYSTONE LIQUID TRUST
AND
STATE STREET BANK AND TRUST COMPANY
This Third Amendment to the Custodian, Fund Accounting and
Recordkeeping Agreement by and between KEYSONE LIQUID TRUST, formerly known as
American Liquid Trust, (the "Fund") and STATE STREET BANK AND TRUST COMPANY
("State Street"), dated December 31, 1979, amended January 1, 1982, and December
31, 1982 ("Agreement") is made by and between the Fund and State Street as of
December 31, 1984.
In consideration of the mutual agreements contained herein, State
Street and the Fund hereby agree to amend the Agreement by replacing each of
Section II, Paragraph 6(B), and Section II, Paragraph 7 with the following
provisions:
"6. B. Expense Reimbursement. State Street shall be entitled
to receive from the Fund on demand reimbursement for its cash
disbursements, expenses and charges, excluding salaries and usual
overhead expenses, as set forth on the attached Schedule D.
"7. The Fund shall pay State Street for its services as
Custodian such compensations as shall be as specified in the attached
Schedule D. Such compensation shall remain as provided in Schedule D
until December 31, 1986, unless this Agreement is terminated as
provided in section 8A; provided however, that in the event either
party terminates this Agreement as provided in section 8A State Street
hereby guarantees and agrees that no new Agreement entered into between
the parties shall require payment during such period of compensation
greater than that specified herein."
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to the Agreement to be executed in its name and on its behalf by a
duly authorized officer as of the day and year first written above.
KEYSTONE LIQUID TRUST
By:-------------------------------------
Office:---------------------------------
Attest:
- ------------------------------------
STATE STREET BANK AND TRUST COMPANY
By:-------------------------------------
Office:---------------------------------
Attest:
- ------------------------------------
#101e016d
<PAGE>
SCHEDULE D
STATE STREET BANK AND TRUST COMPANY
CUSTODIAN FEE SCHEDULE
AMERICAN LIQUID TRUST
(EFFECTIVE 1/1/85)
I. ADMINISTRATION
Custody, Portfolio and Fund Accounting Service - Maintain custody of
fund assets. Settle portfolio purchases and sales. Report buy and sell
fails. Determine and collect portfolio income. Make cash disbursements
and report cash transactions. Maintain investment ledgers, provide
selected portfolio transactions, position and income reports. Maintain
general ledger and capital stock accounts. Prepare daily trial balance.
Calculate net asset value daily. Provide selected general ledger
reports. Securities yield or market value quotations will be provided
to State Street from a source designated by the Fund.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average net assets and calculated in the same
manner as the fund management fee.
Annual Fee
Fund Net Assets
First $35 million 1/15 of 1%
Next $65 million 1/30 of 1%
Excess 1/100 of 1%
No Minimum
II. PORTFOLIO TRADES - For each line item processed
(a) Depository Trust Company and
Federal Reserve Book Entry System $ 12.25
(b) Physical delivery, options and
all other trades $16.00
III. OUT-OF-POCKET EXPENSES
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but
are not limited to the following:
Telephone
Wire charges ($3.65 per wire in and $3.50 out)
Postage and insurance
Courier service
Legal fees
Supplied related to fund records
Rush transfer - $8 each
Duplicating
DTC eligibility books
Transfer fees
Sub-Custodian charges
Price Waterhouse audit letter
Check writing ($.50 per check)
IV. ADDITIONAL ACCOUNTING AND REPORTING FUNCTIONS
$150 per month
This fee schedule will terminate 12/31/86.
<PAGE>
FOURTH
AMENDMENT
TO
CUSTODIAN, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
BY AND BETWEEN
KEYSTONE LIQUID TRUST
AND
STATE STREET BANK AND TRUST COMPANY
This Fourth Amendment to the Custodian, Fund Accounting
and Recordkeeping Agreement by and between KEYSTONE LIQUID TRUST ("Fund") and
STATE STREET BANK AND TRUST COMPANY ("State Street"), dated December 31, 1979
and amended through December 31, 1984 ("Agreement") is made by and between the
Fund and State Street as of September 1, 1988.
In consideration of the mutual agreements contained herein, State Street and
the Fund hereby agree to amend the Agreement as follows:
1. Section II, Paragraph 3(K) is amended by inserting the following
language after Paragraph 3(J) and by renumbering existing Paragraph 3(K) as
Paragraph 3(L):
"K. Compliance with Applicable Rules and Regulations of The
Options Clearing Corporation and National Securities or Commodities Exchanges or
Commissions. Upon receipt of proper instructions, deliver securities in
accordance with the provisions of any agreement among the Fund, the Custodian
and a broker-dealer registered under the Securities Exchange Act of 1934
("Exchange Act") and a member of the National Association of Securities Dealers,
Inc.("NASD"), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund; or, upon receipt of proper
instructions deliver securities in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Fund."
2. Existing Section II, Paragraph 3(L) is renumbered as Paragraph 3(M).
3. The following language is inserted after new Paragraph 3(M) as
Paragraph 3(N) :
"N. Segregated Account. The Custodian shall upon receipt of
proper instructions, establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by the
Custodian pursuant to Paragraph 3(B) hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by the Fund,
(iii) for the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv), for other
proper corporate purposes, but only, in the case of clause (iv), upon receipt
of, in addition to proper instructions, a certified copy of a resolution of the
Board of Trustees signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such segregated account and declaring such purposes to be proper corporate
purposes."
4. Existing Section II, Paragraphs 3(M) and 3(N) are renumbered as
Paragraphs 3(O) and 3(P).
5. In all other respects the Agreement shall remain in full force and
effect.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
ATTEST: KEYSTONE LIQUID TRUST
- --------------------------------- By:----------------------------------------
ATTEST: STATE STREET BANK AND TRUST COMPANY
- --------------------------------- By:----------------------------------------
Vice President
#1016018c
<PAGE>
FIFTH
AMENDMENT
TO
CUSTODIAN, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
BY AND BETWEEN
KEYSTONE LIQUID TRUST
AND
STATE STREET BANK AND TRUST COMPANY
This Fifth Amendment to the Custodian, Fund Accounting and
Recordkeeping Agreement by and between KEYSTONE LIQUID TRUST ("Fund") and STATE
STREET BANK AND TRUST COMPANY ("State Street"), dated December 31, 1979 and
amended through September 1, 1988 ("Agreement") is made by and between the Fund
and State Street as of January 1, 1989.
In consideration of the mutual agreements contained herein, State
Street and the Fund hereby agree to amend the Agreement as follows:
1. Section 3-D of Section II entitled, Purchases is amended by
concluding the first sentence of such paragraph with the following:
"or, upon receipt by State Street of a facsimile copy of a letter of
understanding with respect to a time deposit account of the Fund signed
by any bank, whether domestic or foreign, and pursuant to Proper
Instructions from the Fund as defined in Section 5-A, for transfer to
the time deposit account of the Fund in such bank; such transfer may be
effected prior to receipt of a confirmation from a broker and/or the
applicable bank."
2. Section II is amended by deleting existing Paragraph 7 and by
inserting the following as Paragraphs 7 and 8:
" 7. Lien on Assets. If the Fund requires State Street to advance cash
or securities for any purpose or in the event that State Street 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 and should the Fund fail to repay State Street
promptly, State Street shall be entitled to utilize available cash and
to dispose of the Fund assets to the extent necessary to obtain
reimbursement; provided, however, that the total value of any property
of any Portfolio of the Fund which at any time is security for any
payment by State Street hereunder shall not exceed 15% of such
Portfolio's total net asset value.
8. The Fund shall pay State Street for its services as Custodian such
compensation as shall be specified in the attached Exhibit A. Such
compensation shall remain fixed until December 31, 1989, unless this
Agreement is terminated as provided in Section 8A."
3. In all other respects the Agreement shall remain in full force and
effect.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
ATTEST: KEYSTONE LIQUID TRUST
- ------------------------------------ By:-------------------------------------
ATTEST: STATE STREET BANK AND TRUST COMPANY
- ------------------------------------ By:-------------------------------------
Vice President
#10160193
<PAGE>
SIXTH
AMENDMENT
TO
CUSTODIAN, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
BY AND BETWEEN
KEYSTONE LIQUID TRUST
AND
STATE STREET BANK AND TRUST COMPANY
This Sixth Amendment to the Custodian, Fund Accounting and
Recordkeeping Agreement by and between KEYSTONE LIQUID TRUST ("Fund") and STATE
STREET BANK AND TRUST COMPANY ("State Street"), dated December 31, 1979 and
amended through January 1, 1989 ("Agreement"), is made by and between the Fund
and State Street as of February __, 1990.
In consideration of the mutual agreements contained herein, State Street and
the Fund hereby agree to amend the Agreement as
follows:
1. Section II is amended by deleting Paragraph 8 and by inserting the
following as Paragraph 7A:
" 7A. The Fund shall pay State Street for its services as
Custodian such compensation as specified in the existing Schedule A.
Such compensation shall remain fixed until March 31, 1990 unless this
Agreement is terminated as provided in Paragraph 8A."
2. In all other respects the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
ATTEST: KEYSTONE LIQUID TRUST
- ---------------------------------- By:----------------------------------------
ATTEST: STATE STREET BANK AND TRUST COMPANY
- ---------------------------------- By:----------------------------------------
Vice President
#10160192
<PAGE>
SEVENTH
AMENDMENT
TO
CUSTODIAN, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
BY AND BETWEEN
KEYSTONE LIQUID TRUST
AND
STATE STREET BANK AND TRUST COMPANY
This Seventh Amendment to the Custodian, Fund Accounting and
Recordkeeping Agreement by and between KEYSTONE LIQUID TRUST, a Massachusetts
business trust organized and existing under the laws of the Commonwealth of
Massachusetts and having a principal place of business at 99 High Street,
Boston, Massachusetts 02110 (hereinafter called the "Fund"), and State Street
Bank and Trust Company, a Massachusetts trust company, having its principal
place of business at 225 Franklin Street, Boston, Massachusetts 02110
(hereinafter called the "Custodian").
WHEREAS: The Fund and the Custodian are parties to a Custodian, Fund
Accounting and Recordkeeping Agreement dated December 31, 1979, as most recently
amended January 1, 1989 (the "Custodian Contract");
WHEREAS: The Fund desires that the Custodian issue a letter of credit
(the "Letter of Credit") on behalf of the Fund for the benefit of ICI Mutual
Insurance Company (the "Company") in accordance with the Continuing Letter of
Credit and Security Agreement and that the Fund's obligations to the Custodian
with respect to the Letter of Credit shall be fully collateralized at all times
while the Letter of Credit is outstanding by, among other things, segregated
assets of the Fund equal to 100% of the Fund's proportionate share of the face
amount of the Letter of Credit;
WHEREAS: the Custodian Contract provides for the establishment of
segregated accounts for proper Fund purposes upon Proper Instructions (as
defined in the Custodian Contract); and
WHEREAS: The Fund and the Custodian desire to establish a segregated
account to hold the collateral for the Fund's obligations to the Custodian with
respect to the Letter of Credit and to amend the Custodian Contract to provide
for the establishment and maintenance thereof:
<PAGE>
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto hereby amend the Custodian
Contract as follows:
1. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Custodian Contract.
2. The Fund hereby instructs the Custodian to establish and maintain a
segregated account (the "Letter of Credit Custody Account") for and
on behalf of the Fund as contemplated by [Section II, Paragraph 3N
(iv) of the Custodian Contract] for the purpose of collateralizing
the Fund's obligations under this Amendment to the Custodian
Contract.
3. The Fund shall deposit with the Custodian and the Custodian shall
hold in the Letter of Credit Custody Account cash, certificates of
deposit, U.S. government securities or other high-grade debt
securities owned by the Fund acceptable to the Custodian
(collectively "Collateral Securities") equal to 100% of the Fund's
proportionate share of the face amount which the Company may draw
under the Letter of Credit. Upon receipt of such Collateral
Securities in the Letter of Credit Custody Account, the Custodian
shall issue the Letter of Credit to the Company.
4. The Fund hereby grants to the Custodian a security interest in the
Collateral Securities from time to time in the Letter of Credit
Custody Account (the "Collateral") to secure the performance of the
Fund's obligations to the Custodian with respect to the Letter of
Credit, including, without limitation, under Section 5-144(3) of the
Uniform Commercial Code. The Fund shall register the pledge of
Collateral and execute and deliver to the Custodian such powers and
instruments of assignment as may be requested by the Custodian to
evidence and perfect the limited interest in the Collateral granted
hereby.
5. The Collateral Securities in the Letter of Credit Custody Account
may be substituted or exchanged (including substitutions or
exchanges which increase or decrease the aggregate value of the
Collateral) only pursuant to Proper Instructions from the Fund after
the Fund notifies the Custodian of the contemplated substitution or
exchange and the Custodian agrees that such substitution or exchange
is acceptable to the Custodian.
6. Upon any payment made pursuant to the Letter of Credit by the
Custodian to the Company, the Custodian may withdraw from the Letter
of Credit Custody Account Collateral Securities in an amount equal
in value to the amount actually so paid. The Custodian shall have
with respect to the Collateral so withdrawn all of the rights of a
secured creditor under the Uniform Commercial Code as adopted in the
Commonwealth of Massachusetts at the time of such withdrawal and all
other rights granted or permitted to it under law.
7. The Custodian will transfer upon receipt all income earned on the
Collateral to the Fund custody account unless the Custodian receives
Proper Instructions from the Fund to the contrary.
8. Upon the drawing by the Company of all amounts which may become
payable to it under the Letter of Credit and the withdrawal of all
Collateral Securities with respect thereto by the Custodian pursuant
to Section 6 hereof, or upon the termination of the Letter of Credit
by the Fund with the written consent of the Company, the Custodian
shall transfer any Collateral Securities then remaining in the
Letter of Credit Custody Account to another fund custody account.
9. Collateral held in the Letter of Credit Custody Account shall be
released only in accordance with the provisions of this Amendment to
Custodian Contract. The Collateral shall at all times until
withdrawn pursuant to Section 6 hereof remain the property of the
Fund, subject only to the extent of the interest granted herein to
the Custodian.
10. Notwithstanding any other termination of the Custodian Contract,
the Custodian Contract shall remain in full force and effect with
respect to the Letter of Credit Custody Account until transfer of
all Collateral Securities pursuant to Section 8 hereof.
11. The Custodian shall be entitled to reasonable compensation for its
issuance of the Letter of Credit and for its services in connection
with the Letter of Credit Custody Account as agreed upon from time
to time between the Fund and the Custodian.
12. The Custodian Contract as amended hereby shall be governed by, and
construed and interpreted under, the laws of the Commonwealth of
Massachusetts.
13. The parties agree to execute and deliver all such further documents
and instruments and to take such further action as may be required
to carry out the purposes of the Custodian Contract, as amended
hereby.
14. Except as provided in this Amendment, the Custodian Contract shall
remain in full force and effect, without amendment or modification,
and all applicable provisions of the Custodian Contract, as amended
hereby, shall govern the Letter of Credit Custody Account and the
rights and obligations of the Fund and the Custodian under this
Amendment to Custodian Contract. No provision of this Amendment to
Custodian Contract shall be deemed to constitute a waiver of any
rights of the Custodian under the Custodian Contract or under law.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Amendment to
Custodian Contract to be executed in its name and behalf by its duly authorized
representatives and its seal to be hereunder affixed as of the _____ day of
February, 1990.
ATTEST: KEYSTONE LIQUID TRUST
By:------------------------------- By:----------------------------------------
ATTEST: STATE STREET BANK AND TRUST COMPANY
By:------------------------------- By:----------------------------------------
Assistant Secretary Vice President
#10160190
EXHIBIT 99.24(B)(11)
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Keystone Liquid Trust
We consent to the use of our report dated July 28, 1995, included herein
and to the references to our firm under the captions "FINANCIAL HIGHLIGHTS" in
the prospectus and "ADDITIONAL INFORMATION" in the statement of additional
information.
/S/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
August 31, 1995
<PAGE>
Exhibit 99.24(b)(15)
KEYSTONE LIQUID TRUST
CLASS A DISTRIBUTION PLAN
SECTION 1. Keystone Liquid Trust (the "Fund") may act as the
distributor of securities of which it is the issuer pursuant to Rule 12-1 under
the Investment Company Act of 1940 (the "Act") according to the terms of this
Distribution Plan (the "Plan")
SECTION 2. Amounts not exceeding in the aggregate a maximum amount
equal to 0.35% of the average of the daily aggregate net asset value of Class A
shares of the Fund during each fiscal year of the Fund elapsed after the
inception of the Plan may be paid by the Fund to the Principal Underwriter at
any time after the inception of the Plan in order to pay to the Principal
Underwriter for efforts expended in respect of or in furtherance of sales of
Class A shares of the Fund and to enable the Principal Underwriter to pay or to
have paid to others who sell or have sold Class A shares, a maintenance or other
fee, at such intervals as the Principal Underwriter may determine, in respect of
Class A shares previously sold by any such others at any time and remaining
outstanding during the period in respect of which such fee is or has been paid.
SECTION 3. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the Act) of the outstanding
Class A shares of the Fund.
SECTION 4. This Plan shall not take effect until it has been approved
together with any related agreements of the Fund by votes of the majority of
both (a) the Trustees of the Fund and (b) those Trustees who are not "interested
persons" of the Fund as defined in the 1940 Act and who have no direct or
indirect financial interest in the operation of this Plan or any agreements of
the Fund or any other person related to this Plan (the "Rule 12b-1 Directors"),
cast in person at a meeting called for the purpose of voting on this Plan or
such agreements.
SECTION 5. Unless sooner terminated pursuant to Section 8, this Plan
shall continue in effect for a period of one year from the date it takes effect
and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Section 4.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Plan or any related agreement shall
provide to the Fund's Board and the Board shall review at least quarterly a
written report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 7. This Plan may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees, or by vote of a majority of the Fund's
outstanding Class A shares.
SECTION 8. Any agreement of the Fund related to this Plan shall be in
writing, and shall provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Rule
12b-1 Trustees or by a vote of a majority of the Fund's
outstanding Class A shares on not more than sixty days
written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the
event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 3 hereof and no material
amendment to the Plan shall be made unless approved in the manner provided for
in Section 4 hereof.
<PAGE>
DISTRIBUTION PLAN
FOR
CLASS B-1 SHARES
OF
KEYSTONE LIQUID TRUST
Section 1. Keystone Liquid Trust, individually and/or on behalf of its
series, if any, referred to above in the title of this 12b-1 Plan (the "Plan"),
to which series this Plan shall then relate, as applicable (the "Fund"), may act
as the distributor of certain securities of which it is the issuer pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") according
to the terms of this Distribution Plan.
Section 2. The Fund may expend daily amounts at an annual rate of up to
1.00% of the average daily net asset value of the Fund attributable to the
Fund's Class B-1 shares (the "Shares"). Such amounts may be expended to finance
any activity that is principally intended to result in the sale of Shares,
including, without limitation, expenditures consisting of payments to a
principal underwriter of the Fund or others as sales commissions or other
compensation for services provided or to be provided ("Distribution Fees") or as
reimbursement for expenses that are incurred or accrued at any time during which
this Plan is in effect, together with interest on any such amounts, at rates
approved by the Rule 12b-1 Directors (as defined below) in the manner referred
to below, all whether or not this Plan has been otherwise terminated, if such
payment of such expenditures is for services theretofore provided or for
reimbursement of expenses theretofore incurred or accrued prior to termination
of this Plan in other respects and if such payment is or has been so approved by
such Rule 12b-1 Directors, or agreed to by the Fund with such approval, all
subject to such specific implementation as such 12b-1 Directors may approve;
provided that, at the time any such payment is made, whether or not this Plan
has been otherwise terminated, the making of such payment will not cause the
limitation upon such payments set forth in the preceding sentence to be
exceeded. Without limiting the generality of the foregoing, the Fund may pay to,
or on the order of, any person who has served from time to time as principal
underwriter (a "Principal Underwriter") amounts for distribution services
pursuant to a principal underwriting agreement or otherwise. No principal
underwriting agreement or other agreement shall be an agreement related to this
Plan, as referred to in Rule 12b-1 of the Securities and Exchange Commission,
unless it specifically states that it is such a related agreement. Any such
principal underwriting agreement may, but need not, provide that such Principal
Underwriter may be paid for distribution services to Class B-1 Shares and/or
other specified classes of shares of the Fund (together the B-Class-of-Shares ),
a fee which may be designated a Distribution Fee and may be paid at a rate per
annum up to .75% of the average daily net asset value of such B-Class-of-Shares
of the Fund and may, but need not, also provide: (I) that a Principal
Underwriter will be deemed to have fully earned its "Allocable Portion" of the
Distribution Fee upon the sale of the Commission Shares (as defined in the
Allocation Schedule) taken into account in determining its Allocable Portion;
(II) that the Fund's obligation to pay such Principal Underwriter its Allocable
Portion of the Distribution Fees shall be absolute and unconditional and shall
not be subject to dispute, offset, counterclaim or any defense whatsoever (it
being understood that such provision is not a waiver of the Fund's right to
pursue such Principal Underwriter and enforce such claims against the assets of
such Principal Underwriter other than its right to its Allocable Portion of the
Distribution Fees and CDSCs (as defined below) (III) that the Fund's obligation
to pay such Principal Underwriter its Allocable Portion of the Distribution Fees
shall not be changed or terminated except to the extent required by any change
in applicable law, including without limitation, the Investment Company Act of
1940, the Rules promulgated thereunder by the Securities and Exchange Commission
and the Rules of Fair Practice of the National Association of Securities
Dealers, Inc., in each case enacted or promulgated after June 1, 1995, or in
connection with a "Complete Termination" (as hereinafter defined); (IV) that the
Fund will not waive or change any contingent deferred sales charge ( CDSC ) in
respect of the Distributor's Allocable Portion thereof, except as provided in
the Fund's prospectus or statement of additional information without the consent
of the Principal Underwriter or any assignee of such Principal Underwriter's
rights to its Allocable Portion; (V) that the termination of the Principal
Underwriter, the principal underwriting agreement or this Plan will not
terminate such Principal Underwriter's rights to its Allocable Portion of the
CDSCs; and (VI) that any Principal Underwriter may assign its rights to its
Allocable Portion of the Distribution Fees and CDSCs (but not such Principal
Underwriter's obligations to the Fund under its principal underwriting
agreement) to raise funds to make expenditures described in Section 2 above and
in connection therewith, and upon receipt of notice of such assignment, the Fund
shall pay to the assignee such portion of the Principal Underwriter's Allocable
Portion of the Distribution Fees and CDSCs so assigned. For purposes of such
principal underwriting agreement, the term Allocable Portion of Distribution
Fees as applied to any Principal Underwriter may mean the portion of the
Distribution Fee allocable to Distributor Shares in accordance with the
"Allocation Schedule" attached to such Principal Underwriter's principal
underwriting agreement. For purposes of such principal underwriting agreement,
the term Allocable Portion of CDSCs as applied to any Principal Underwriter may
mean the portion of the CDSCs allocable to Distributor Shares in accordance with
the Allocation Schedule attached to such Principal Underwriter's principal
underwriting agreement. For purposes of such principal underwriting agreement,
the term "Complete Termination" may mean a termination of this Plan involving
the cessation of payments of the Distribution Fees thereunder, the cessation of
payments of distribution fees pursuant to every other rule 12b-1 plan of the
Fund for every existing or future B-Class-of-Shares and the cessation of the
offering by the Fund of existing or future B-Class-of-Shares, which conditions
shall be deemed to be satisfied when they are first complied with and so long
thereafter as they are complied with prior to the earlier of (i) the date upon
which all of the B-2 Shares which are Distributor Shares pursuant to the
Allocation Schedule shall have been redeemed or converted or (ii) a specified
date, after either of which times such conditions need no longer be complied
with. For purposes of such principal underwriting agreement, the term
"B-Class-of-Shares" may mean each of the B-1 Class of Shares of the Fund, the
B-2 Class of Shares of the Fund and each other class of shares of the Fund
hereafter issued which would be treated as "Shares" under such Allocation
Schedule or which has economic characteristics substantially similar to those of
the B-1 or B-2 Classes of Shares taking into account the total sales charge,
CDSC or other similar charges borne directly or indirectly by the holder of the
shares of such classes. The parties may agree that the existing C Class of
Shares of the Fund does not have substantially similar economic characteristics
to the B-1 or B-2 Classes of Shares taking into account the total sales charge,
CDSC or other similar charges borne directly or indirectly by the holder of such
shares. For purposes of clarity the parties to such principal underwriting
agreement may state that they intend that a new installment load class of shares
which may be authorized by amendments to Rule 6(c)-10 under the 1940 Act will be
considered to be a B-Class-of-Shares if it has economic characteristics
substantially similar to the economic characteristics of the existing B-1 or B-2
Classes of Shares taking into account the total sales charge, CDSC or other
similar charges borne directly or indirectly by the holder of such shares and
will not be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing C Class of shares of the Fund taking into account the total sales
charge, CDSC or other similar charges borne directly or indirectly by the holder
of such shares. For purposes of such principal underwriting agreement,
"Allocation Schedule" may mean a schedule which shall be approved by Directors
(as defined below) in connection with their required approval of such principal
underwriting agreement as assigning to each Principal Underwriter of Shares the
portion of the total Distribution Fees payable by the Fund under such principal
underwriting agreement which has been earned by such Principal Underwriter to
the extent necessary so that the continued payments thereof if such Principal
Underwriter ceases to serve in that capacity does not penalize the Fund by
requiring it to pay for services that have not been earned.
Section 3. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the 1940 Act) of the outstanding
Shares.
Section 4. This Plan, and the specific implementation of expenditures
provided for under this Plan, shall not take effect until this Plan, and such
implementation, have been approved, together with any related agreements of the
Fund, by votes of both (a) a majority of the Board of Trustees or Directors
(together the Directors ) of the Fund and (b) a majority of those Directors of
the Fund who are not "interested persons" of the Fund (as said term is defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of this Plan or any agreements of the Fund or any other person related
to this Plan (the "Rule 12b-1 Directors"), cast in person at a meeting called
for the purpose of voting on this Plan or such agreements.
Section 5. Unless sooner terminated pursuant to Section 7 hereof, this
Plan shall continue in effect for a period of one year from the date it takes
effect and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Section 4 hereof, except that, if terminated except for payments
provided to be made after termination of other aspects of this Plan, such
payments may be made pursuant to approvals made, and or agreements approved, as
provided above.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Plan or any related agreement shall
provide to the Fund's Board of Directors, and the Board shall review, at least
quarterly a written report of the amounts so expended and the purposes for which
such expenditures were made.
Section 7. This Plan may be terminated, in whole or in part, at any
time by vote of a majority of the Rule 12b-1 Directors or by vote of a majority
of the outstanding Shares, with the effects provided for in Section 2, as
applicable.
Section 8. Any agreement of the Fund related to this Plan shall be in
writing, and shall provide as follows:
(a) That such agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the Rule 12b-1 Directors
or by a vote of a majority of the outstanding Shares on not more
than sixty days written notice to any other party to the agreement;
and
(b) That such agreement shall terminate automatically in the event of
its assignment.
Section 9. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 3 hereof, and no
material amendment to this Plan shall be made unless approved in the manner
provided for in Section 4 hereof.
<PAGE>
DISTRIBUTION PLAN
FOR
CLASS B-2 SHARES
OF
KEYSTONE LIQUID TRUST
Section 1. Keystone Liquid Trust, individually and/or on behalf of its
series, if any, referred to above in the title of this 12b-1 Plan (the "Plan"),
to which series this Plan shall then relate, as applicable (the Fund ), may act
as the distributor of certain securities of which it is the issuer pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") according
to the terms of this Distribution Plan.
Section 2. The Fund may expend daily amounts at an annual rate of up to
1.00% of the average daily net asset value of the Fund attributable to the
Fund's Class B-2 shares (the "Shares"). Such amounts may be expended to finance
any activity that is principally intended to result in the sale of Shares,
including, without limitation, expenditures consisting of payments to a
principal underwriter of the Fund or others as sales commissions or other
compensation for services provided or to be provided ("Distribution Fees") or as
reimbursement for expenses that are incurred or accrued at any time during which
this Plan is in effect, together with interest on any such amounts, at rates
approved by the Rule 12b-1 Directors (as defined below) in the manner referred
to below, all whether or not this Plan has been otherwise terminated, if such
payment of such expenditures is for services theretofore provided or for
reimbursement of expenses theretofore incurred or accrued prior to termination
of this Plan in other respects and if such payment is or has been so approved by
such Rule 12b-1 Directors, or agreed to by the Fund with such approval, all
subject to such specific implementation as such 12b-1 Directors may approve;
provided that, at the time any such payment is made, whether or not this Plan
has been otherwise terminated, the making of such payment will not cause the
limitation upon such payments set forth in the preceding sentence to be
exceeded. Without limiting the generality of the foregoing, the Fund may pay to,
or on the order of, any person who has served from time to time as principal
underwriter (a "Principal Underwriter") amounts for distribution services
pursuant to a principal underwriting agreement or otherwise. No principal
underwriting agreement or other agreement shall be an agreement related to this
Plan, as referred to in Rule 12b-1 of the Securities and Exchange Commission,
unless it specifically states that it is such a related agreement. Any such
principal underwriting agreement may, but need not, provide that such Principal
Underwriter may be paid for distribution services to Class B-2 Shares and/or
other specified classes of shares of the Fund (together the B-Class-of-Shares ),
a fee which may be designated a Distribution Fee and may be paid at a rate per
annum up to .75% of the average daily net asset value of such B-Class-of-Shares
of the Fund and may, but need not, also provide: (I) that a Principal
Underwriter will be deemed to have fully earned its "Allocable Portion" of the
Distribution Fee upon the sale of the Commission Shares (as defined in the
Allocation Schedule) taken into account in determining its Allocable Portion;
(II) that the Fund's obligation to pay such Principal Underwriter its Allocable
Portion of the Distribution Fees shall be absolute and unconditional and shall
not be subject to dispute, offset, counterclaim or any defense whatsoever (it
being understood that such provision is not a waiver of the Fund's right to
pursue such Principal Underwriter and enforce such claims against the assets of
such Principal Underwriter other than its right to its Allocable Portion of the
Distribution Fees and CDSCs (as defined below); (III) that the Fund's obligation
to pay such Principal Underwriter its Allocable Portion of the Distribution Fees
shall not be changed or terminated except to the extent required by any change
in applicable law, including without limitation, the Investment Company Act of
1940, the Rules promulgated thereunder by the Securities and Exchange Commission
and the Rules of Fair Practice of the National Association of Securities
Dealers, Inc., in each case enacted or promulgated after June 1, 1995, or in
connection with a "Complete Termination" (as hereinafter defined); (IV) that the
Fund will not waive or change any contingent deferred sales charge ( CDSC ) in
respect of the Distributor's Allocable Portion thereof, except as provided in
the Fund's prospectus or statement of additional information without the consent
of the Principal Underwriter or any assignee of such Principal Underwriter's
rights to its Allocable Portion; (V) that the termination of the Principal
Underwriter, the principal underwriting agreement or this Plan will not
terminate such Principal Underwriter's rights to its Allocable Portion of the
CDSCs; and (VI) that any Principal Underwriter may assign its rights to its
Allocable Portion of the Distribution Fees and CDSCs (but not such Principal
Underwriter's obligations to the Fund under its principal underwriting
agreement) to raise funds to make expenditures described in Section 2 above and
in connection therewith, and upon receipt of notice of such assignment, the Fund
shall pay to the assignee such portion of the Principal Underwriter's Allocable
Portion of the Distribution Fees and CDSCs so assigned. For purposes of such
principal underwriting agreement, the term Allocable Portion of Distribution
Fees as applied to any Principal Underwriter may mean the portion of the
Distribution Fee allocable to Distributor Shares in accordance with the
"Allocation Schedule" attached to such Principal Underwriter's principal
underwriting agreement. For purposes of such principal underwriting agreement,
the term Allocable Portion of CDSCs as applied to any Principal Underwriter may
mean the portion of the CDSCs allocable to Distributor Shares in accordance with
the Allocation Schedule attached to such Principal Underwriter's principal
underwriting agreement. For purposes of such principal underwriting agreement,
the term "Complete Termination" may mean a termination of this Plan involving
the cessation of payments of the Distribution Fees thereunder, the cessation of
payments of distribution fees pursuant to every other rule 12b-1 plan of the
Fund for every existing or future B-Class-of-Shares and the cessation of the
offering by the Fund of existing or future B-Class-of-Shares, which conditions
shall be deemed to be satisfied when they are first complied with and so long
thereafter as they are complied with prior to the earlier of (i) the date upon
which all of the B-2 Shares which are Distributor Shares pursuant to the
Allocation Schedule shall have been redeemed or converted or (ii) a specified
date, after either of which times such conditions need no longer be complied
with. For purposes of such principal underwriting agreement, the term
"B-Class-of-Shares" may mean each of the B-1 Class of Shares of the Fund, the
B-2 Class of Shares of the Fund and each other class of shares of the Fund
hereafter issued which would be treated as "Shares" under such Allocation
Schedule or which has economic characteristics substantially similar to those of
the B-1 or B-2 Classes of Shares taking into account the total sales charge,
CDSC or other similar charges borne directly or indirectly by the holder of the
shares of such classes. The parties may agree that the existing C Class of
Shares of the Fund does not have substantially similar economic characteristics
to the B-1 or B-2 Classes of Shares taking into account the total sales charge,
CDSC or other similar charges borne directly or indirectly by the holder of such
shares. For purposes of clarity the parties to such principal underwriting
agreement may state that they intend that a new installment load class of shares
which may be authorized by amendments to Rule 6(c)-10 under the 1940 Act will be
considered to be a B-Class-of-Shares if it has economic characteristics
substantially similar to the economic characteristics of the existing B-1 or B-2
Classes of Shares taking into account the total sales charge, CDSC or other
similar charges borne directly or indirectly by the holder of such shares and
will not be considered to be a B-Class-of-Shares if it has economic
characteristics substantially similar to the economic characteristics of the
existing C Class of shares of the Fund taking into account the total sales
charge, CDSC or other similar charges borne directly or indirectly by the holder
of such shares. For purposes of such principal underwriting agreement,
"Allocation Schedule" may mean a schedule which shall be approved by Directors
(as defined below) in connection with their required approval of such principal
underwriting agreement as assigning to each Principal Underwriter of Shares the
portion of the total Distribution Fees payable by the Fund under such principal
underwriting agreement which has been earned by such Principal Underwriter to
the extent necessary so that the continued payments thereof if such Principal
Underwriter ceases to serve in that capacity does not penalize the Fund by
requiring it to pay for services that have not been earned.
Section 3. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the 1940 Act) of the outstanding
Shares.
Section 4. This Plan, and the specific implementation of expenditures
provided for under this Plan, shall not take effect until this Plan, and such
implementation, have been approved, together with any related agreements of the
Fund, by votes of both (a) a majority of the Board of Trustees or Directors
(together the Directors ) of the Fund and (b) a majority of those Directors of
the Fund who are not "interested persons" of the Fund (as said term is defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of this Plan or any agreements of the Fund or any other person related
to this Plan (the "Rule 12b-1 Directors"), cast in person at a meeting called
for the purpose of voting on this Plan or such agreements.
Section 5. Unless sooner terminated pursuant to Section 7 hereof, this
Plan shall continue in effect for a period of one year from the date it takes
effect and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Section 4 hereof, except that, if terminated except for payments
provided to be made after termination of other aspects of this Plan, such
payments may be made pursuant to approvals made, and or agreements approved, as
provided above.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Plan or any related agreement shall
provide to the Fund's Board of Directors, and the Board shall review, at least
quarterly a written report of the amounts so expended and the purposes for which
such expenditures were made.
Section 7. This Plan may be terminated, in whole or in part, at any
time by vote of a majority of the Rule 12b-1 Directors or by vote of a majority
of the outstanding Shares, with the effects provided for in Section 2, as
applicable.
Section 8. Any agreement of the Fund related to this Plan shall be in
writing, and shall provide as follows:
(a) That such agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the Rule 12b-1 Directors
or by a vote of a majority of the outstanding Shares on not more
than sixty days written notice to any other party to the agreement;
and
(b) That such agreement shall terminate automatically in the event of
its assignment.
Section 9. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 3 hereof, and no
material amendment to this Plan shall be made unless approved in the manner
provided for in Section 4 hereof.
<PAGE>
KEYSTONE LIQUID TRUST
CLASS C DISTRIBUTION PLAN
SECTION 1. Keystone Liquid Trust (the "Fund") may act as the
distributor of securities of which it is the issuer pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "1940 Act") according to the terms of
this Distribution Plan ("Plan").
SECTION 2. The Fund may expend daily amounts at an annual rate of 1.00%
of the average daily net asset value of the Fund attributable to the Fund's
Class C shares to finance any activity that is principally intended to result in
the sale of Class C shares, including, without limitation, expenditures
consisting of payments to a principal underwriter of the Fund ("Principal
Underwriter") or others as sales commissions or other compensation for their
services that have been earned or as reimbursement for expenses that have been
incurred or accrued at any time during which this Plan has been in effect
together with interest at a rate approved from time to time by the Rule 12b-1
Trustees (as defined below) on any such amounts.
SECTION 3. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the 1940 Act) of the outstanding
Class C shares.
SECTION 4. This Plan shall not take effect until it has been approved
together with any related agreements of the Fund by votes of a majority of both
(a) the Board of Trustees of the Fund and (b) those Trustees of the Fund who are
not "interested persons" of the Fund (as said term is defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation of this
Plan or any agreements of the Fund or any other person related to this Plan (the
"Rule 12b-1 Trustees"), cast in person at a meeting called for the purpose of
voting on this Plan or such agreements.
SECTION 5. Unless sooner terminated pursuant to Section 7 hereof, this
Plan shall continue in effect for a period of one year from the date it takes
effect and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Section 4 hereof.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Plan or any related agreement shall
provide to the Fund's Board of Trustees/Directors and the Board shall review at
least quarterly a written report of the amounts so expended and the purposes for
which such expenditures were made.
SECTION 7. This Plan may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees/Directors or by vote of a majority of the
outstanding Class C shares.
SECTION 8. Any agreement of the Fund related to this Plan shall be in
writing, and shall provide as follows:
(a) That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Rule
12b-1 Trustees/Directors or by a vote of a majority of the
outstanding Class C shares on not more than sixty days written
notice to any other party to the agreement; and
(b) That such agreement shall terminate automatically in the event
of its assignment.
SECTION 9. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 3 hereof and no material
amendment to this Plan shall be made unless approved in the manner provided for
in Section 4 hereof.
<PAGE>
<TABLE>
<CAPTION>
EFFECTIVE YIELD FOR
KLT 'CLASS A'
(1) (2) (3) (4) (5) (6)
7-Day 30-Day
EFFECTIVE EFFECTIVE
7 DAY 7 DAY YIELD 30 DAY YIELD
BPR ROLLING YIELD 365/7 ROLLING 365/30
DATE DAILY DIVIDEND DIVIDEND (2)/7x365 [((2)+1) ]-1 DIVIDEND [((5)+1) ]-1
<S> <C> <C> <C> <C> <C> <C>
06/01/95 A 0.00013398 $0.000950 4.95% 5.08% $0.004075 5.07%
06/02/95 A 0.00013400 $0.000948 4.94% 5.06% $0.004073 5.07%
06/03/95 A 0.00013400 $0.000946 4.93% 5.05% $0.004072 5.07%
06/04/95 A 0.00013401 $0.000944 4.92% 5.04% $0.004069 5.06%
06/05/95 A 0.00013391 $0.000942 4.91% 5.03% $0.004066 5.06%
06/06/95 A 0.00013354 $0.000939 4.90% 5.02% $0.004063 5.06%
06/07/95 A 0.00013382 $0.000937 4.89% 5.01% $0.004061 5.05%
06/08/95 A 0.00013343 $0.000937 4.88% 5.00% $0.004058 5.05%
06/09/95 A 0.00013338 $0.000936 4.88% 5.00% $0.004056 5.05%
06/10/95 A 0.00013338 $0.000935 4.88% 5.00% $0.004054 5.05%
06/11/95 A 0.00013338 $0.000935 4.87% 4.99% $0.004052 5.04%
06/12/95 A 0.00013440 $0.000935 4.88% 5.00% $0.004050 5.04%
06/13/95 A 0.00013400 $0.000936 4.88% 5.00% $0.004049 5.04%
06/14/95 A 0.00013372 $0.000936 4.88% 5.00% $0.004047 5.04%
06/15/95 A 0.00013313 $0.000935 4.88% 5.00% $0.004044 5.03%
06/16/95 A 0.00013200 $0.000934 4.87% 4.99% $0.004041 5.03%
06/17/95 A 0.00013200 $0.000933 4.86% 4.98% $0.004037 5.02%
06/18/95 A 0.00013200 $0.000931 4.86% 4.97% $0.004034 5.02%
06/19/95 A 0.00013298 $0.000930 4.85% 4.97% $0.004032 5.02%
06/20/95 A 0.00013338 $0.000929 4.85% 4.96% $0.004030 5.01%
06/21/95 A 0.00013403 $0.000930 4.85% 4.96% $0.004027 5.01%
06/22/95 A 0.00013328 $0.000930 4.85% 4.96% $0.004024 5.01%
06/23/95 A 0.00013402 $0.000932 4.86% 4.98% $0.004022 5.00%
06/24/95 A 0.00013402 $0.000934 4.87% 4.99% $0.004020 5.00%
06/25/95 A 0.00013402 $0.000936 4.88% 5.00% $0.004018 5.00%
06/26/95 A 0.00013356 $0.000936 4.88% 5.00% $0.004015 5.00%
06/27/95 A 0.00013378 $0.000937 4.88% 5.00% $0.004013 4.99%
06/28/95 A 0.00013366 $0.000936 4.88% 5.00% $0.004011 4.99%
06/29/95 A 0.00013326 $0.000936 4.88% 5.00% $0.004008 4.99%
06/30/95 A 0.00013304 $0.000935 4.88% 5.00% $0.004005 4.98%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EFFECTIVE YIELD FOR
KLT 'CLASS B'
(1) (2) (3) (4) (5) (6)
7-Day 30-Day
EFFECTIVE EFFECTIVE
7 DAY 7 DAY YIELD 30 DAY YIELD
BPR ROLLING YIELD 365/7 ROLLING 365/30
DATE DAILY DIVIDEND DIVIDEND (2)/7x365 [((2)+1) ]-1 DIVIDEND [((5)+1) ]-1
<S> <C> <C> <C> <C> <C> <C>
06/01/95 B 0.00010728 $0.000762 3.97% 4.05% $0.003272 4.05%
06/02/95 B 0.00010717 $0.000760 3.96% 4.04% $0.003269 4.05%
06/03/95 B 0.00010717 $0.000758 3.95% 4.03% $0.003267 4.05%
06/04/95 B 0.00010718 $0.000756 3.94% 4.02% $0.003264 4.04%
06/05/95 B 0.00010719 $0.000754 3.93% 4.01% $0.003262 4.04%
06/06/95 B 0.00010670 $0.000752 3.92% 4.00% $0.003258 4.04%
06/07/95 B 0.00010752 $0.000750 3.91% 3.99% $0.003257 4.03%
06/08/95 B 0.00010653 $0.000749 3.91% 3.98% $0.003254 4.03%
06/09/95 B 0.00010643 $0.000749 3.90% 3.98% $0.003252 4.03%
06/10/95 B 0.00010643 $0.000748 3.90% 3.98% $0.003249 4.03%
06/11/95 B 0.00010643 $0.000747 3.90% 3.97% $0.003247 4.02%
06/12/95 B 0.00010848 $0.000749 3.90% 3.98% $0.003247 4.02%
06/13/95 B 0.00010719 $0.000749 3.91% 3.98% $0.003245 4.02%
06/14/95 B 0.00010648 $0.000748 3.90% 3.98% $0.003242 4.02%
06/15/95 B 0.00010553 $0.000747 3.89% 3.97% $0.003239 4.01%
06/16/95 B 0.00010513 $0.000746 3.89% 3.96% $0.003236 4.01%
06/17/95 B 0.00010513 $0.000744 3.88% 3.96% $0.003233 4.00%
06/18/95 B 0.00010514 $0.000743 3.87% 3.95% $0.003229 4.00%
06/19/95 B 0.00010594 $0.000741 3.86% 3.94% $0.003227 4.00%
06/20/95 B 0.00010565 $0.000739 3.85% 3.93% $0.003224 3.99%
06/21/95 B 0.00010703 $0.000740 3.86% 3.93% $0.003221 3.99%
06/22/95 B 0.00010522 $0.000739 3.85% 3.93% $0.003217 3.98%
06/23/95 B 0.00010603 $0.000740 3.86% 3.93% $0.003213 3.98%
06/24/95 B 0.00010603 $0.000741 3.86% 3.94% $0.003210 3.98%
06/25/95 B 0.00010604 $0.000742 3.87% 3.94% $0.003207 3.97%
06/26/95 B 0.00010614 $0.000742 3.87% 3.94% $0.003204 3.97%
06/27/95 B 0.00010642 $0.000743 3.87% 3.95% $0.003201 3.96%
06/28/95 B 0.00010636 $0.000742 3.87% 3.94% $0.003198 3.96%
06/29/95 B 0.00010576 $0.000743 3.87% 3.95% $0.003195 3.96%
06/30/95 B 0.00010522 $0.000742 3.87% 3.94% $0.003191 3.95%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EFFECTIVE YIELD FOR
KLT 'CLASS C'
(1) (2) (3) (4) (5) (6)
7-Day 30-Day
EFFECTIVE EFFECTIVE
7 DAY 7 DAY YIELD 30 DAY YIELD
BPR ROLLING YIELD 365/7 ROLLING 365/30
DATE DAILY DIVIDEND DIVIDEND (2)/7x365 [((2)+1) ]-1 DIVIDEND [((5)+1) ]-1
<S> <C> <C> <C> <C> <C> <C>
06/01/95 C 0.00010714 $0.000762 3.97% 4.05% $0.003269 4.05%
06/02/95 C 0.00010714 $0.000760 3.96% 4.04% $0.003267 4.05%
06/03/95 C 0.00010714 $0.000758 3.95% 4.03% $0.003265 4.05%
06/04/95 C 0.00010714 $0.000756 3.94% 4.02% $0.003262 4.04%
06/05/95 C 0.00010692 $0.000754 3.93% 4.01% $0.003259 4.04%
06/06/95 C 0.00010670 $0.000751 3.92% 3.99% $0.003256 4.03%
06/07/95 C 0.00010698 $0.000749 3.91% 3.98% $0.003253 4.03%
06/08/95 C 0.00010664 $0.000749 3.90% 3.98% $0.003251 4.03%
06/09/95 C 0.00010653 $0.000748 3.90% 3.98% $0.003249 4.03%
06/10/95 C 0.00010653 $0.000747 3.90% 3.97% $0.003247 4.02%
06/11/95 C 0.00010653 $0.000747 3.89% 3.97% $0.003245 4.02%
06/12/95 C 0.00010753 $0.000747 3.90% 3.97% $0.003243 4.02%
06/13/95 C 0.00010699 $0.000748 3.90% 3.97% $0.003242 4.02%
06/14/95 C 0.00010672 $0.000747 3.90% 3.97% $0.003239 4.01%
06/15/95 C 0.00010630 $0.000747 3.90% 3.97% $0.003237 4.01%
06/16/95 C 0.00010517 $0.000746 3.89% 3.96% $0.003233 4.01%
06/17/95 C 0.00010517 $0.000744 3.88% 3.96% $0.003230 4.00%
06/18/95 C 0.00010516 $0.000743 3.87% 3.95% $0.003227 4.00%
06/19/95 C 0.00010619 $0.000742 3.87% 3.94% $0.003226 4.00%
06/20/95 C 0.00010581 $0.000741 3.86% 3.94% $0.003223 3.99%
06/21/95 C 0.00010663 $0.000740 3.86% 3.93% $0.003220 3.99%
06/22/95 C 0.00010201 $0.000736 3.84% 3.91% $0.003213 3.98%
06/23/95 C 0.00010661 $0.000738 3.85% 3.92% $0.003210 3.98%
06/24/95 C 0.00010662 $0.000739 3.85% 3.93% $0.003207 3.97%
06/25/95 C 0.00010662 $0.000740 3.86% 3.94% $0.003205 3.97%
06/26/95 C 0.00010605 $0.000740 3.86% 3.93% $0.003202 3.97%
06/27/95 C 0.00010688 $0.000741 3.87% 3.94% $0.003199 3.96%
06/28/95 C 0.00010688 $0.000742 3.87% 3.94% $0.003197 3.96%
06/29/95 C 0.00010593 $0.000746 3.89% 3.96% $0.003194 3.96%
06/30/95 C 0.00010594 $0.000745 3.88% 3.96% $0.003191 3.95%
</TABLE>
EXHIBIT 99.24(B)(19)
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and/or Chairman of the Board and Chief
Executive Officer and for which Keystone Custodian Funds, Inc. serves as Adviser
or Manager and registering from time to time the shares of such companies, and
generally to do all such things in my name and in my behalf to enable such
investment companies to comply with the provisions of the Securities Act of
1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
/S/ George S. Bissell
-------------------------------
George S. Bissell
Director/Trustee,
Chairman of the Board and
Chief Executive Officer
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director, Trustee or officer and for which Keystone
Custodian Funds, Inc. serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and in my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Albert H. Elfner, III
-------------------------------
Albert H. Elfner, III
Director/Trustee and President
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director, Trustee or officer and for which Keystone
Custodian Funds, Inc. serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and in my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Kevin J. Morrissey
-------------------------------
Kevin J. Morrissey
Treasurer
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Frederick Amling
-------------------------------
Frederick Amling
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Charles A. Austin III
-------------------------------
Charles A. Austin III
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Edwin D. Campbell
-------------------------------
Edwin D. Campbell
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Charles F. Chapin
-------------------------------
Charles F. Chapin
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ K. Dun Gifford
-------------------------------
K. Dun Gifford
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Leroy Keith, Jr.
-------------------------------
Leroy Keith, Jr.
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ F. Ray Keyser, Jr.
-------------------------------
F. Ray Keyser, Jr.
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ David M. Richardson
-------------------------------
David M. Richardson
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Richard J. Shima
-------------------------------
Richard J. Shima
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Custodian
Funds, Inc. serves as Adviser or Manager and registering from time to time the
shares of such companies, and generally to do all such things in my name and in
my behalf to enable such investment companies to comply with the provisions of
the Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and all requirements and regulations of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to any and all registration statements and
amendments thereto.
/S/ Andrew J. Simons
-------------------------------
Andrew J. Simons
Director/Trustee
Dated: December __, 1994
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Roger T. Wickers, Rosemary D. Van
Antwerp, Jean S. Loewenberg, Dorothy E. Bourassa, James M. Wall and Melina M. T.
Murphy, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-1 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and/or Chief Executive Officer and for
which Keystone Custodian Funds, Inc. serves as Adviser or Manager and
registering from time to time the shares of such companies, and generally to do
all such things in my name and in my behalf to enable such investment companies
to comply with the provisions of the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and all requirements and regulations
of the Securities and Exchange Commission thereunder, hereby ratifying and
confirming my signature as it may be signed by my said attorneys to any and all
registration statements and amendments thereto.
/S/ Albert H. Elfner, III
-------------------------------
Albert H. Elfner, III
Director/Trustee,
President and Chief
Executive Officer
Dated: January __, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> KEYSTONE LIQUID TRUST CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 251,069,777
<INVESTMENTS-AT-VALUE> 251,067,814
<RECEIVABLES> 7,006,072
<ASSETS-OTHER> 61,558
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 258,135,444
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,434,129
<TOTAL-LIABILITIES> 1,434,129
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 245,308,083
<SHARES-COMMON-STOCK> 245,308,083
<SHARES-COMMON-PRIOR> 398,617,047
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 245,308,083
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19,543,073
<OTHER-INCOME> 0
<EXPENSES-NET> (3,373,063)
<NET-INVESTMENT-INCOME> 16,170,010
<REALIZED-GAINS-CURRENT> (67)
<APPREC-INCREASE-CURRENT> (1,094)
<NET-CHANGE-FROM-OPS> 16,168,849
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16,168,849)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 725,781,933
<NUMBER-OF-SHARES-REDEEMED> (892,973,139)
<SHARES-REINVESTED> 13,882,242
<NET-CHANGE-IN-ASSETS> (153,308,964)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (1,829,020)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (3,373,063)
<AVERAGE-NET-ASSETS> 363,830,537
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> KEYSTONE LIQUID TRUST CLASS B
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 251,069,777
<INVESTMENTS-AT-VALUE> 251,067,814
<RECEIVABLES> 7,006,072
<ASSETS-OTHER> 61,558
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 258,135,444
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,434,129
<TOTAL-LIABILITIES> 1,434,129
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,281,559
<SHARES-COMMON-STOCK> 7,281,559
<SHARES-COMMON-PRIOR> 11,197,588
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,281,559
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 654,485
<OTHER-INCOME> 0
<EXPENSES-NET> (219,395)
<NET-INVESTMENT-INCOME> 435,090
<REALIZED-GAINS-CURRENT> (3)
<APPREC-INCREASE-CURRENT> 421
<NET-CHANGE-FROM-OPS> 435,508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (435,508)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,267,166
<NUMBER-OF-SHARES-REDEEMED> (34,518,836)
<SHARES-REINVESTED> 335,641
<NET-CHANGE-IN-ASSETS> (3,916,029)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (59,458)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (219,395)
<AVERAGE-NET-ASSETS> 11,827,355
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> KEYSTONE LIQUID TRUST CLASS C
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 251,069,777
<INVESTMENTS-AT-VALUE> 251,067,814
<RECEIVABLES> 7,006,072
<ASSETS-OTHER> 61,558
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 258,135,444
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,434,129
<TOTAL-LIABILITIES> 1,434,129
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,111,673
<SHARES-COMMON-STOCK> 4,111,673
<SHARES-COMMON-PRIOR> 6,599,324
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,111,673
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 378,162
<OTHER-INCOME> 0
<EXPENSES-NET> (128,913)
<NET-INVESTMENT-INCOME> 249,249
<REALIZED-GAINS-CURRENT> (1)
<APPREC-INCREASE-CURRENT> (12)
<NET-CHANGE-FROM-OPS> 249,236
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (249,236)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,924,336
<NUMBER-OF-SHARES-REDEEMED> (14,624,256)
<SHARES-REINVESTED> 212,269
<NET-CHANGE-IN-ASSETS> (2,487,651)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (35,392)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (128,913)
<AVERAGE-NET-ASSETS> 7,044,792
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
