SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934(Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
Financial Reserves Fund
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
[ X] Fee previously paid
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check the box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date File:
FINANCIAL RESERVES FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 24, 1994
A special meeting of the shareholders of FINANCIAL RESERVES FUND (the
"Fund"), will be held at the offices of Society National Bank, 127 Public
Square, Cleveland, Ohio 44114, 21st Floor, at 1:45 p.m., February 24, 1994,
for
the following purposes:
(1)To approve or disapprove a new Investment Advisory Contract between
the
Fund and Society Asset Management, Inc.; and
(2)To transact such other business as may properly come before the
meeting
or any adjournment thereof.
The Board of Trustees has fixed December 30, 1993 as the record date
for
determination of shareholders entitled to vote at this special meeting.
By Order of the Trustees
Jay S. Neuman
January 12, 1994 Secretary
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU
ARE
UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED
PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL
MEETING.
THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
FINANCIAL RESERVES FUND
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees of
the
Fund. The proxy is revocable at any time before it is voted by sending
written
notice of the revocation to the Fund or by appearing personally at the
February
24, 1994 special meeting of shareholders ("Special Meeting"). THE COST OF
PREPARING AND MAILING THE NOTICE OF MEETING, THE PROXY CARD, THIS PROXY
STATEMENT AND ANY ADDITIONAL PROXY MATERIAL IS BEING BORNE BY SOCIETY ASSET
MANAGEMENT, INC. ("SAMI"), THE FUND'S "PRESENT ADVISER." Proxy solicitations
will be made primarily by mail, but may also be made by telephone,
telegraph, or
personal interview conducted by certain officers or employees of the Fund or
of
Society National Bank (the Fund's transfer agent) or Federated
Administrative
Services (the Fund's administrator). In the event that a shareholder signs
and
returns the proxy card but does not indicate a choice as to any of the items
on
the proxy card, the proxy attorneys will vote those shares in favor of such
proposal(s).
On December 30, 1993, the Fund had outstanding 501,917,533.38 shares
of
beneficial interest ("Shares"), each Share being entitled to one vote. Only
shareholders of record at the close of business on December 30, 1993, will
be
entitled to notice of and to vote at the Special Meeting. Holders of a
majority
of Shares entitled to vote, represented in person or by proxy, shall be
required
to constitute a quorum at the Special Meeting.
For purposes of determining the presence of a quorum and counting
votes on
the matters presented, Shares represented by abstentions and "broker non-
votes"
will be counted as present, but not as votes cast, at the Special Meeting.
Under
the Investment Company Act of 1940 (the "1940 Act"), the affirmative vote
necessary to approve the matter under consideration may be determined with
reference to a percentage of votes present at the Special Meeting, which
would
have the effect of treating abstentions and non-votes as if they were votes
against the proposal.
The Fund's executive offices are located on the 19th floor of the
Federated Investors Tower, Liberty Avenue at Grant Street, Pittsburgh,
Pennsylvania 15222-3779. The Special Meeting will be held at the offices of
Society National Bank, 127 Public Square, Cleveland, Ohio, 21st Floor. This
proxy statement and the enclosed notice of meeting and proxy card are first
being mailed on or about January 12, 1994.
INTRODUCTION
This Special Meeting is being called to approve or disapprove a new
investment advisory contract between the Fund and SAMI. Consideration of a
new
investment advisory contract is being requested on account of the pending
merger
of KeyCorp and Society Corporation ("Society"). The resulting company of
this
merger will be known as Key Bancshares Inc. The proposed new investment
advisory
contract between the Fund and SAMI would take effect at the time the merger
is
consummated.
Here are some of the factors you should consider in determining
whether to
approve the new investment advisory contract:
the Board of Trustees has unanimously approved the new investment
advisory
contract;
no change in the Fund's investment objective or investment policies
will
take place;
there will be no change in the fees payable by the Fund for advisory
services;
the Board of Trustees has been advised that those persons currently
responsible for providing investment advice to the Fund will continue
to
do so following the consummation of the merger.
APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY CONTRACT ("NEW CONTRACT")
The Present Adviser, located at Society Center, 127 Public Square,
Cleveland, Ohio 44115, serves as investment adviser to the Fund pursuant to
an
investment advisory contract dated January 7, 1993 (the "Present Contract").
The
Present Adviser is a wholly owned subsidiary of Society National Bank, which
in
turn is a wholly owned subsidiary of Society, a bank holding company.
On October 4, 1993, Society and KeyCorp signed a definitive Agreement
and
Plan of Merger ("Merger Agreement"). See "Proposed Merger of Society
Corporation." Consummation of the transaction contemplated by the Merger
Agreement (the "Merger") will cause the Present Adviser to become an
indirect
wholly owned subsidiary of the resulting corporation. To the extent the
Merger
might be deemed to result in a change in ownership of the Present Adviser,
it
would automatically terminate the Present Contract in accordance with its
terms
as required by the 1940 Act. Thus, although SAMI will remain the entity
responsible for providing investment advisory services to the Fund following
the
Merger, approval of the New Contract by the shareholders of the Fund is
being
sought in order to avoid any possible issue with respect to provision of
advisory services to the Fund.
On December 14, 1993, the Trustees, including a majority of the
Trustees
who are not interested Trustees, unanimously approved the New Contract with
SAMI
and directed that it be submitted to shareholders for their approval. The
terms
of the New Contact are identical in all material respects to the Present
Contract, except for the effective date which, in the case of the New
Contract,
will be the date of the consummation of the Merger (the "Closing Date"). It
is
currently expected that the Closing Date will occur on or about March 1,
1994.
Copies of the Present Contract and the New Contract appear as Exhibits
A
and B, respectively, to this proxy statement.
The Present Contract was approved by the Board of Trustees, including
a
majority of the Trustees who are not interested Trustees, on January 7,
1993.
Prior to the Present Contract, Society National Bank had served as
investment
adviser to the Fund pursuant to a contract that was approved by shareholders
on
February 20, 1992. SAMI became the Present Adviser as part of a
reorganization
of the corporate structure through which Society National Bank provided
investment management services to a variety of clients, including the Fund.
This
reorganization did not result in any change in the persons responsible for
providing investment advice to the Fund. Society National Bank serves as the
Fund's custodian and transfer agent and receives compensation for these
services
pursuant to separate contracts.
As under the Present Contract, the terms of the New Contract provide
that
SAMI, subject to the direction of the Board of Trustees, will provide
investment
research, advice, management and supervision of the investments of the Fund
and
will conduct a continuous program of investment evaluation and sale or other
disposition and reinvestment of the Fund's assets. For its services, SAMI is
entitled to receive an annual investment advisory fee of .50 of 1% of the
average daily net assets of the Fund.
Both the Present Contract and New Contract provide that the Fund shall
pay
all of its own expenses. These expenses include expenses of administrative
personnel and services provided to the Fund by Federated Administrative
Services
at an annual rate as described in the Fund's prospectus. However, the
Present
Contract also provided that if the total expenses of the Fund exceeded .55
of 1%
of average daily net assets, the Present Adviser was required, until May 16,
1993, to reimburse the Fund for any such excess, up to .15 of 1% of average
daily net assets. Both the Present Contract and New Contract provide that
the
adviser may, from time to time and for such periods as it deems appropriate,
further reduce its compensation by voluntarily limiting the expenses of the
Fund. During the fiscal year ended October 31, 1993, the Present Adviser
earned
investment advisory fees of $2,383,062 and reimbursed the Fund an aggregate
of
$714,919 pursuant to the expense reimbursement provisions of the Present
Contract.
If approved by shareholders at this Special Meeting, the New Contract
will
continue for two years after it takes effect, unless terminated, and may be
continued from year to year thereafter by the Board of Trustees. The
continuation of the New Contract must be approved by a majority vote of the
Trustees, including a majority of the Trustees who are not interested
Trustees,
cast in person at a meeting called for that purpose. SAMI has the right, in
any
year, to notify the Fund in writing at least 60 days before the New Contract
anniversary date, that it does not desire a renewal of the New Contract. The
Trustees, or a majority of the outstanding voting shares of the Fund, may
terminate the New Contract at any time without penalty by giving SAMI 60
days'
written notice. The New Contract may not be assigned by SAMI and shall
terminate
automatically in the event of an assignment as defined in the 1940 Act. The
New
Contract provides that it may be amended by a vote of both a majority of the
Trustees, including a majority of the Trustees who are not interested
Trustees,
and by the holders of a majority of the outstanding voting shares of the
Fund.
As does the Present Contract, the New Contract provides that in the
absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of its obligations or duties under the New Contract, SAMI shall
not be
liable to the Fund or to any shareholder for any act or omission in the
course
of, or connected in any way with, rendering services or for any losses that
may
be sustained in the purchase, holding, or sale of any security.
Approval of the new contract requires the affirmative vote of: (a) 67%
or
more of the Shares present at the Special Meeting, if the holders of more
than
50% of the outstanding Shares are present or represented by proxy, or (b)
more
than 50% of the outstanding Shares, whichever is less. If the New Contract
is
approved by shareholders and the Merger is consummated, the New Contract
will be
executed and become effective on the Closing Date. In the event the Merger
is
not consummated, the Present Contract will continue in accordance with its
terms. If the Merger is consummated and if the New Contract is not approved
by
the shareholders of the Fund, the Board of Trustees will consider what
actions
should be taken, including but not limited to requesting that the Present
Adviser perform
investment advisory services at cost until a new investment advisory
contract is
approved by the shareholders.
There are various conditions precedent to the consummation of the
Merger,
including approval by the shareholders of Society and KeyCorp, and approval
of
regulatory authorities. Shareholders of the Fund are not being asked to vote
on
the Merger.
PROPOSED MERGER OF SOCIETY CORPORATION
The terms of the Merger Agreement provide that upon consummation of
the
Merger of KeyCorp with and into Society each outstanding share of KeyCorp
common
stock will be converted into the right to receive 1.025 common shares of the
resulting corporation, and each outstanding common share of Society will
remain
outstanding. The board of the resulting corporation will consist of 22
Directors, half of whom will be from the current board of Society and half
of
whom will be from the current board of KeyCorp. It is also anticipated that
the
affiliate banks and other subsidiaries of Society and KeyCorp will retain
their
current names for the foreseeable future. The resulting corporation will be
headquartered in the Society Center complex in Cleveland, Ohio.
The Fund has been advised that, after careful review and
consideration,
Society's Board of Directors determined that the terms of the Merger were
fair
to, and in the best interests of, Society and its shareholders. The Fund
further
has been advised that Society's board believes the Merger will provide
significant value to all of its shareholders and, at the same time, enable
holders of Society common shares to participate in the expanded
opportunities
for growth the Merger will make possible.
Consummation of the Merger is subject to the satisfaction of certain
conditions including the receipt of all necessary regulatory approvals and
the
approval by the shareholders of Society and KeyCorp of the Merger Agreement.
The
Merger Agreement may be terminated and the Merger abandoned at any time
prior to
the Closing Date by the mutual consent of KeyCorp and Society or upon the
occurrence of other events specified in the Merger Agreement. Completion of
the
Merger will occur as soon as practicable after satisfaction or waiver of the
applicable conditions, which the parties anticipate will occur on or about
March
1, 1994.
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The New Contract was unanimously approved by the Board of Trustees of
the
Fund including those Trustees who are not interested persons of the Fund as
that
term is defined in the 1940 Act, at a meeting held on December 14, 1993. By
approving the New Contract, the Trustees have acted in what they believe to
be
the best interest of the shareholders of the Trust.
In connection with the approval of the New Contract, the Trustees were
advised by SAMI that those persons currently responsible for management of
Fund
assets will have similar responsibilities to the Fund subsequent to
consummation
of the Merger. The Trustees considered information relating to SAMI and the
consolidated entity that would result from the Merger, including present
capabilities and expertise in serving as investment adviser to the Fund, as
well
as to other investment companies, as noted below. They also considered the
nature and quality of services provided by SAMI, the investment record of
the
Fund, comparative data as to the advisory fees and expenses, and such other
information as the Trustees believed to be relevant. The Trustees also were
advised that all mutual fund activities of the combined entities would be
examined subsequent to consummation of the Merger in order to determine
whether
further efficiencies can be realized. The Trustees are unable to predict
whether
changes will be recommended which would materially impact Fund operations.
The
Trustees also considered the fact that no changes in the compensation
payable to
SAMI from the compensation paid to the Present Adviser were proposed. After
consideration of these facts, the Trustees, including all Trustees who are
not
interested persons, concluded that SAMI is fully capable of performing the
services contemplated by the New Contract and recommended that the New
Contract
be approved by the shareholders of the Fund.
The 1940 Act provides that in connection with the sale of any interest
in
an investment adviser which results in the "assignment" of an investment
advisory contract, an investment adviser of a registered investment company
such
as the Fund, or an affiliated person of such investment adviser, may receive
any
amount or benefit if (i) for a period of three years after the sale, at
least
75% of the members of the Board of Trustees of the investment company are
not
interested persons of the investment adviser or the predecessor adviser, and
(ii) there is no "unfair burden" imposed on the investment company as a
result
of such sale or any express or implied terms, conditions or understanding
applicable thereto. For this purpose, "unfair burden" is defined to include
any
arrangement during the two-year period after the transaction, whereby the
investment adviser or its predecessor or successor investment advisers, or
any
interested persons of any such adviser, receives or is entitled to receive
any
compensation directly or indirectly (i) from any person in connection with
the
purchase or sale of securities or other property to, from or on behalf of
the
investment company other than bona fide ordinary compensation as principal
underwriter for such company, or (ii) from the investment company or its
security holders for other than bona fide investment advisory or other
services.
This provision of the 1940 Act was enacted by Congress in 1975 to make it
clear
that an investment adviser (or an affiliated person of the adviser) can
realize
a profit on the sale of the adviser's business subject to the two safeguards
described above. Although it is not clear that this provision of the 1940
Act
would be applied in connection with the proposed Merger, the Board of
Trustees
of the Fund has received assurances from SAMI that no "unfair burden" will
be
imposed on the Fund as a result of the proposed transaction.
KEYCORP
KeyCorp, a bank holding company, is a financial services company
headquartered at One KeyCorp Plaza, Albany, New York, 12207. At June 30,
1993,
KeyCorp had an asset base of $32 billion, with over 900 banking offices in
New
York, Alaska, Colorado, Idaho, Maine, Oregon, Utah, Washington, and Wyoming.
KeyCorp's major business activities include providing traditional banking
and
associated financial services to consumer, business, and commercial markets.
Its
non-bank subsidiaries include securities brokerage, insurance, bank credit
card
processing, and leasing.
KeyTrust, a wholly owned subsidiary of KeyCorp, acts as investment
adviser
to the Victory Funds, a family of mutual funds that includes two money
market
funds similar to the Fund. The following schedule lists the advisory fees
for
each of the Victory Funds and their approximate net assets (in millions), in
parentheses, as of September 30, 1993.
.25 OF 1% OF AVERAGE DAILY NET ASSETS
Victory U.S. Treasury Money Market Fund ($160)
Victory Money Market Fund ($313)
.40 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Shares Daily Tax-Free Income Fund ($1.4)
.45 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Short-Term Government Income Fund ($36)
.55 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Government Bond Fund ($46)
Victory Corporate Bond Fund ($39)
Victory New York Municipal Fund ($2)
Victory National Municipal Fund*
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Victory Aggressive Growth Fund*
Victory Equity Fund ($81)
Victory Equity Income Fund*
*As of December 30, 1993, fund has not commenced public offering of
shares.
The principal executive officers and directors of KeyCorp are:
<TABLE>
<CAPTION>
NAME POSITION WITH KEYCORP.
PRINCIPAL OCCUPATION
<S> <C> <C>
Victor J. Riley Chairman, President, (Other
affiliations: Director of Albany Medical Center;
Chief Executive Officer and Director, New York
Telephone Company; Knight of Malta;
Director formerly,
President, New York State Bankers Association)
Gary R. Allen Group Executive Vice
President, Chief
Banking Officer
Michael A. Butler Senior Vice President
Robert W. Bouchard Executive Vice President,
Office of the Chairman;
Secretary
Ralph M. Carestio, Jr. Executive Vice
President
William H. Dougherty Group Executive Vice
President; and Chief
Financial Officer
Walter V. Ferris Executive Vice Presi-
dent, General Counsel
Francis X. Hamilton Senior Vice President
Leroy G. Irving Senior Vice President,
Treasurer
John M. Lang Executive Vice
President
Evelyn A. Morris Senior Vice President
Maurice P. Shea, III Executive Vice
President
Bruce E. Tofte Executive Vice
President, Chief
Control Officer
F. Jay Ward Executive Vice
President
William J. Agee Director Chairman and Chief
Executive Officer, Morrison Knudsen
Corporation.
Frank A. Augsbury Director Chairman of the
Board and Chief Executive Officer, The
Augsbury
Organization, Inc.
H. Douglas Barclay Director Partner, Hiscock &
Barclay.
Robert H. Bischoff Director Chairman of the
Board, Key Bancshares of Utah, Inc.
Curtis M. Carlson Director Retired Executive
Vice President-Finance, KeyCorp.
Kenneth M. Curtis Director President, Maine
Maritime Academy; Partner, Curtis,
Thaxter, Stevens,
Broder & Micoleau.
John C. Dimmer Director President, Firs
Management Corporation.
Lucie J. Fjeldstad Director Vice President and
General Manager, Multimedia, IBM
Corporation.
Henry S. Hemingway Director President, Town &
Country Life Insurance
Company.
Charles R. Hogan Director Co-Chairman of the
Board, Puget Sound Marketing Co.,
Inc.
Raymond E. Lavoie, Jr. Director Retired Banker.
Robert A. Schumacher Director Consultant for
Georgia Pacific Corporation.
Ronald B. Stafford Director Partner, Stafford,
Trombley, Purcell, Lahtinen, Owens &
Curtin.
Peter G. Ten Eyck II Director President, Indian
Ladder Farms.
Nancy B. Veeder Director President, Veeder
Realty, Inc.; Partner, VR Associates
Ltd. d/b/a
Residence Inn.
</TABLE>
SOCIETY CORPORATION AND SAMI
At June 30, 1993, Society Corporation had an asset base of
approximately
$26 billion, over 440 banking offices in Ohio, Florida, Indiana, and
Michigan,
and trust subsidiaries in Florida and Texas. Society Corporation's major
business activities include providing traditional banking, trust and
associated
financial services to consumer, business, and commercial markets. Its non-
bank
subsidiaries include securities brokerage, insurance, bank credit card
processing, and leasing. Society National Bank is the lead affiliate bank of
Society Corporation. Society National Bank and its affiliate banks, through
their trust offices, provide administrative and investment management
services
for approximately $67 billion in trust assets including assets managed by
SAMI.
SAMI, an Ohio corporation organized on October 23, 1981, is a
registered
investment adviser under the Investment Advisers Act of 1940. SAMI manages
assets of over $16 billion for numerous clients, including mutual funds,
employee benefit plans, endowments, common trust funds, and individuals.
SAMI's audited balance sheet as of December 31, 1992, along with its
unaudited balance sheet as of November 30, 1993 appear as Exhibits C and D,
respectively, to this proxy statement. SAMI has represented that, since the
date
of the unaudited balance sheet, there has been no material adverse change in
its
financial condition. Proxies solicited for the shareholders' meeting will
not be
voted for the approval of the proposal presented unless in the judgment of
the
Fund's Board of Trustees there has been no material adverse change in SAMI's
financial condition between the date of the unaudited balance sheet and
SAMI's
most recent fiscal year ending prior to the meeting date.
The following schedule lists the advisory fees for each mutual fund
that
is advised by SAMI, and their approximate net assets (in millions), in
parenthesis, as of December 31, 1993.
.35 OF 1% OF AVERAGE DAILY NET ASSETS
Society Prime Obligations Fund ($699)
Society U.S. Government Obligations Fund ($523)
Society Tax-Exempt Fund ($217)
Society International Growth Fund ($40) (sub-adviser)
.50 OF 1% OF AVERAGE DAILY NET ASSETS
A.T. Ohio Tax-Free Money Fund ($306)
Society Limited-Term Income Fund ($87)
Society U.S. Government Income Fund ($194)
Financial Reserves Fund ($475)
.60 OF 1% OF AVERAGE DAILY NET ASSETS
Society Ohio Tax-Free Bond Fund ($53)
Society Stock Index Fund ($48)
.65 OF 1% OF AVERAGE DAILY NET ASSETS
Society Diversified Stock Fund ($249)
.75 OF 1% OF AVERAGE DAILY NET ASSETS
Society Earnings Momentum Fund ($11)
Society Intermediate Income Fund ($101)
Society Investment Quality Bond Fund ($103)
Society Ohio Regional Stock Fund ($34)
1% OF AVERAGE DAILY NET ASSETS
Society's Collective Investment Retirement Fund Balanced Fund
($40)
Society's Collective Investment Retirement Fund Government Income
Fund
($18)
Society Balanced Fund ($83)
Society Value Stock Fund ($157)
Society Growth Stock Fund ($60)
Society Special Value Stock Fund ($67)
Society Special Growth Stock Fund ($28)
The principal executive officers and directors of Society Corporation are:
<TABLE>
<CAPTION>
POSITION WITH
NAME SOCIETY CORPORATION
PRINCIPAL OCCUPATION
<S> <C> <C>
Robert W. Gillespie Chairman of the Board and
Chief Executive Officer
Henry L. Meyer III Vice Chairman of the Board
and Chief Banking Officer
Roger Noall Vice Chairman of the Board
and Chief Administrative
Officer
James W. Wert Vice Chairman of the Board
and Chief Financial Officer
William G. Bares Director President and Chief
Operating Officer, The Lubrizol
Corporation
Edward F. Bell Director Retired President,
Ameritech Ohio
Albert C. Bersticker Director President and Chief
Executive Officer, Ferro
Corporation
Thomas A. Commes Director President and Chief
Operating Officer, The
Sherwin-Williams
Company
Howard J. Cooper Director President, Howard
Cooper, Inc.
Betty Cope Director President, WVIZ-TV
Allen H. Ford Director Consultant
T. Raymond Gregory Director Chairman of the
Board and Chief Executive Officer,
Gregory Galvanizing
& Metal Processing, Inc.
Jerry Hammes Director Chairman of the
Board and President, Romy Hammes, Inc.
Stephen R. Hardis Director Vice Chairman,
Chief Financial and Administrative
Officer, Eaton
Corporation
Lawrence A. Leser Director President and Chief
Executive Officer, the E.W. Scripps
Company
A. Stephen Martindale Director President and Chief
Executive Officer, The Kiemle-Harkins
Company
John G. Mc Donald Director Retired President,
BP Oil Company
Steven A. Minter Director Director, The
Cleveland Foundation
M. Thomas Moore Director Chairman and Chief
Executive Officer, Cleveland Cliffs
Inc.
John C. Morley Director President and Chief
Executive Officer, Reliance Electric
Company
Richard W. Pogue Director Senior Partner,
Jones, Day, Reavis and Pogue
James S. Reid, Jr. Director Chairman of the
Board and Chief Executive Officer, The
Standard Products
Company
Harry A. Shaw, III Director Chairman of the
Board and Chief Executive Officer, Huffy
Corporation
Dennis W. Sullivan Director Executive Vice
President, Parker-Hannifin
Corporation
Renold D. Thompson Director Vice Chairman and
Director, Oglebay Norton Company
</TABLE>
PORTFOLIO TRANSACTIONS
All portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Subject to review by the Board
of
Trustees, the investment adviser makes decisions on and selects brokers or
dealers for portfolio transactions. The Board of Trustees periodically
reviews
and monitors the investment adviser's performance. The purchase of money
market
instruments from and their sale to dealers are executed with recognized
dealers
in these money market instruments except when a better execution and price
can
be obtained elsewhere.
The investment adviser may select brokers and dealers who, in addition
to
meeting the above requirements, also furnish brokerage and research
services.
These services may include advice as to the advisability of investing in
securities, security analyses and reports, economic studies, industry
studies,
receipt of quotations for portfolio valuations and similar services. These
services may be furnished either directly to the Fund, to the investment
adviser, to advisers who are affiliates of the investment adviser or to
accounts
advised by those companies. The brokers and dealers who execute portfolio
transactions selected for the above reasons may also sell shares of the Fund
and
certain other affiliated funds. The fact that a broker or dealer may sell
shares
of the Fund or any other fund is not a criterion used by the investment
adviser
in selecting a broker or dealer to execute portfolio transactions on behalf
of
the Fund.
The investment adviser, in selecting brokers or dealers to execute
portfolio transactions, exercises reasonable business judgment and
determines in
good faith that commissions charged by such persons are reasonable in
relationship to the value of the brokerage and research services provided by
such persons, viewed in terms of the overall responsibilities of the
investment
adviser and its affiliated companies with respect to the Fund itself and the
other accounts to which they render investment advice. As a practical
matter,
the benefits inuring to these companies or accounts are not divisible. To
the
extent that the receipt of the above-described services may supplant
services
for which the investment adviser might otherwise have paid, it would, of
course,
tend to reduce its expenses. The same is true of services furnished to the
Fund
and in turn made available by the Fund to the investment adviser or its
affiliates. The investment adviser does not lower its fee as a consequence
of
receiving such services.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT
THE SHAREHOLDERS APPROVE THE NEW INVESTMENT
ADVISORY CONTRACT
------------------
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY
While the Special Meeting is called to act upon any other business
that
may properly come before it, at the date of this proxy statement the only
business which the management intends to present or knows that others will
present is the business mentioned in the Notice of Meeting. If any other
matters
lawfully come before the Special Meeting, and in all procedural matters at
said
Special Meeting, it is the intention that the enclosed proxy shall be voted
in
accordance with the best judgment of the persons named therein, or their
substitutes, present and acting at the Special Meeting.
If at the time any session of the Special Meeting is called to order,
a
quorum is not present in person or by proxy, the persons named as proxies
may
vote those proxies which have been received to adjourn the Special Meeting
to a
later date. In the event that a quorum is present but sufficient votes in
favor
of one or more of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to
permit
further solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the Shares
present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote those proxies which they
are
entitled to vote in favor of the proposal, in favor of such an adjournment,
and
will vote those proxies required to be voted against the proposal, against
any
such adjournment.
The following list indicates the beneficial ownership of the
shareholders
who, to the best knowledge of the Fund, are the beneficial owners of more
than
5% of the outstanding Shares of the Fund as of December 30, 1993: Community
Mutual Insurance Company, Cincinnati, Ohio, various custody accounts, owned
approximately 68,017,687.07 shares (13.55%); Case Western Reserve
University,
Cleveland, Ohio, various custody accounts, owned approximately 36,657,909.72
shares (7.30%); and University Hospitals, Cleveland, Ohio, various custody
accounts, owned approximately 25,134,499.05 shares (5.00%).
Officers and Trustees own less than 1% of the Fund's outstanding
shares.
The Fund's principal distributor is Federated Securities Corp.
("FSC"), a
wholly-owned subsidiary of Federated Investors. Its address is Federated
Investors Tower, Pittsburgh, PA 15222-3779. The following Officers of the
Fund
may be deemed to have an interest in FSC by virtue of their positions with
the
following organizations: Edward C. Gonzales, President and Treasurer of the
Fund, is Vice President, Treasurer and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management, and
Federated
Research; Executive Vice President, Treasurer and Director, Federated
Securities
Corp.; and Chairman, Treasurer, and Director, Federated Administrative
Services;
Jay S. Neuman, Secretary of the Fund, is Corporate Counsel, Federated
Investors;
and Jeffrey W. Sterling, Vice President and Assistant Treasurer of the Fund
is
Vice President of Federated Administrative Services.
If you do not expect to attend the Special Meeting, please sign your
proxy
card promptly and return it in the enclosed envelope to avoid unnecessary
expense and delay. No postage is necessary.
By Order of the Trustees
Jay S. Neuman
January 12, 1994 Secretary
EXHIBIT A
("PRESENT CONTRACT")
FINANCIAL RESERVES FUND
INVESTMENT ADVISORY CONTRACT
This Contract is made between SOCIETY ASSET MANAGEMENT, INC., a
registered
investment adviser having its principal place of business in Cleveland, Ohio
(hereinafter referred to as "Adviser"), and FINANCIAL RESERVES FUND, a
Massachusetts Business Trust having its principal place of business in
Pittsburgh, Pennsylvania (hereinafter referred to as the "Fund") and is
based on
the following premises:
(a) That the Fund is an open-end management investment company as
that
term is defined in the Investment Company Act of 1940 and is registered
as
such with the Securities and Exchange Commission;
(b) That Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby
agree as follows:
1. The Fund hereby appoints Adviser as investment adviser and Adviser
accepts the appointment. Subject to the direction of the Trustees of the
Fund,
Adviser shall provide investment research and supervision of the investments
of
the Fund and conduct a continuous program of investment, evaluation and of
appropriate sale or other disposition and reinvestment of the Fund
portfolio.
2. Adviser, in its supervision of the investments of the Fund will be
guided by the Fund's fundamental investment policies and the provisions and
restrictions contained in the Declaration of Trust and By-Laws of the Fund
and
as set forth in the Registration Statements and exhibits as may be on file
with
the Securities and Exchange Commission.
3. The Fund shall pay all of its expenses, including, without
limitation,
the expenses of organizing the Fund and continuing the Fund's existence;
fees
and expenses of Trustees and officers of the Fund; fees for investment
advisory
services and administrative personnel and services; fees and expenses of
preparing and printing its Registration Statements under the Securities Act
of
1933 and the Investment Company Act of 1940 and any amendments thereto;
expenses
of registering and qualifying the Fund and its shares under Federal and
State
laws and regulations; expenses of preparing, printing and distributing
prospectuses (and any amendments thereto) to shareholders; expenses of
registering, licensing or other authorization of the Fund as a broker-dealer
and
of its officers as agents and salesmen under Federal and State laws and
regulations; interest expense, taxes, fees and commissions of every kind;
expenses of issue (including cost of share certificates), purchase,
repurchase
and redemption of shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer agents,
dividend
disbursing agents, shareholder servicing agents and registrars; printing and
mailing costs, auditing, accounting and legal expenses; reports to
shareholders
and governmental officers and commissions; expenses of meetings of Trustees
and
shareholders and proxy solicitations therefor; insurance expenses;
association
membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the Fund. The
Fund will also pay extraordinary expenses as may arise including expenses
incurred in connection with litigation, proceedings and claims and the legal
obligations of the Fund to indemnify its Trustees, officers, employees,
shareholders, distributors and agents with respect thereto.
4. For all services rendered by Adviser hereunder, the Fund shall pay
to
Adviser and Adviser agrees to accept as full compensation for all services
provided hereunder, an annual gross investment advisory fee equal to .50% of
the
average daily net assets of the Fund, provided, however, that, until May 16,
1993, the Adviser shall reimburse the Fund an amount, not to exceed .15 of
1% of
daily net assets, necessary to maintain during such period a ratio of
expenses
of the Fund at .55 of 1% of average daily net assets, it being understood
and
agreed that the Adviser is under no obligation pursuant to this Section 4 to
reimburse the Fund for any amount of the fee payable to it in excess of .15
of
1% of daily net assets, should Fund expenses as a percentage of average
daily
net assets, after giving effect to reimbursement, exceed .55 of 1% of
average
daily net assets. Such fee shall be accrued and paid daily at the rate of
1/365th of .50%, minus any amount required to be reimbursed (expressed as a
percentage of daily net assets of the Fund), of the daily net assets of the
Fund.
5. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
the
Fund) to the extent that the Fund's expenses exceed such lower expense
limitation as the Adviser may, by notice to the Fund, voluntarily declare to
be
effective.
6. The term of this Contract shall begin on the date of its execution
and
shall continue in effect through March 16, 1994, and from year to year
thereafter, subject to the provisions for termination and all of the other
terms
and conditions hereof if: (a) such continuation shall be specifically
approved
at least annually by the vote of a majority of Trustees of the Fund,
including a
majority of the Trustees who are not parties to this Contract or interested
persons of any such party (other than as Trustees of the Fund) cast in
person at
a meeting called for that purpose; and (b) Adviser shall not have notified
the
Fund in writing at least sixty (60) days prior to the anniversary date of
this
Contract in any year thereafter that it does not desire such continuation.
7. Notwithstanding any provision in this Contract, it may be
terminated at
any time, without the payment of any penalty, by the Trustees of the Fund or
by
a vote of a majority of the outstanding voting securities of the Fund on
sixty
(60) days' written notice to the Adviser.
8. This Contract may not be assigned by Adviser and shall
automatically
terminate in the event of any assignment. Adviser may employ or contract
with
such other person, persons, corporation or corporations at its own cost and
expense as it shall determine in order to assist it in carrying out this
Contract.
9. In the absence of willful misfeasance, bad faith, gross negligence
or
reckless disregard of the obligations or duties under this contract on the
part
of Adviser, Adviser shall not be liable to the Fund or any shareholder for
any
act or omission in the course of or connected in any way with rendering
services
or for any losses that may be sustained in the purchase, holding or sale of
any
security.
10. This Contract may be amended at any time by agreement of the
parties,
provided that the amendment shall be approved both by the vote of a majority
of
the Trustees of the Fund, including a
majority of the Trustees who are not parties to this Contract or interested
persons of any such party to this Contract (other than as Trustees of the
Fund)
cast in person at a meeting called for that purpose, and by the holders of a
majority of the outstanding voting securities of the Fund.
11. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article III of the Declaration of Trust and agrees
that the obligations assumed by the Fund pursuant to this Contract be
limited in
any case to the Fund and its assets and Adviser shall not seek satisfaction
of
any such obligation from the shareholders of the Fund, the Trustees,
officers,
employees or agents of the Fund, or any of them.
12. This Contract shall be construed in accordance with and governed
by
the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this Contract to be
executed
on their behalf by their duly authorized officers and their seals to be
affixed
hereto this 7th day of January, 1993.
Attest: SOCIETY ASSET MANAGEMENT,
INC.
/s/ PAUL NEIDHARDT By:/s/ RICHARD C. HYDE
Secretary Chairman
Attest: FINANCIAL RESERVES FUND
/s/ JAY S. NEUMAN By:/s/ E. C. GONZALES
Secretary President
EXHIBIT B
("NEW CONTRACT")
FINANCIAL RESERVES FUND
INVESTMENT ADVISORY CONTRACT
This Contract is made between SOCIETY ASSET MANAGEMENT, INC., a
registered
investment adviser having its principal place of business in Cleveland, Ohio
(hereinafter referred to as "Adviser"), and FINANCIAL RESERVES FUND, a
Massachusetts Business Trust having its principal place of business in
Pittsburgh, Pennsylvania (hereinafter referred to as the "Fund") and is
based on
the following premises:
(a) That the Fund is an open-end management investment company as
that
term is defined in the Investment Company Act of 1940 and is registered
as
such with the Securities and Exchange Commission;
(b) That Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby
agree as follows:
1. The Fund hereby appoints Adviser as investment adviser and Adviser
accepts the appointment. Subject to the direction of the Trustees of the
Fund,
Adviser shall provide investment research and supervision of the investments
of
the Fund and conduct a continuous program of investment, evaluation and of
appropriate sale or other disposition and reinvestment of the Fund
portfolio.
2. Adviser, in its supervision of the investments of the Fund will be
guided by the Fund's fundamental investment policies and the provisions and
restrictions contained in the Declaration of Trust and By-Laws of the Fund
and
as set forth in the Registration Statements and exhibits as may be on file
with
the Securities and Exchange Commission.
3. The Fund shall pay all of its expenses, including, without
limitation,
the expenses of organizing the Fund and continuing the Fund's existence;
fees
and expenses of Trustees and officers of the Fund; fees for investment
advisory
services and administrative personnel and services; fees and expenses of
preparing and printing its Registration Statements under the Securities Act
of
1933 and the Investment Company Act of 1940 and any amendments thereto;
expenses
of registering and qualifying the Fund and its shares under Federal and
State
laws and regulations; expenses of preparing, printing and distributing
prospectuses (and any amendments thereto) to shareholders; expenses of
registering, licensing or other authorization of the Fund as a broker-dealer
and
of its officers as agents and salesmen under Federal and State laws and
regulations; interest expense, taxes, fees and commissions of every kind;
expenses of issue (including cost of share certificates), purchase,
repurchase
and redemption of shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer agents,
dividend
disbursing agents, shareholder servicing agents and registrars; printing and
mailing costs, auditing, accounting and legal expenses; reports to
shareholders
and governmental officers and commissions; expenses of meetings of Trustees
and
shareholders and proxy solicitations therefor; insurance expenses;
association
membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the Fund. The
Fund will also pay extraordinary expenses as may arise including expenses
incurred in connection with litigation, proceedings and claims and the legal
obligations of the Fund to indemnify its Trustees, officers, employees,
shareholders, distributors and agents with respect thereto.
4. For all services rendered by Adviser hereunder, the Fund shall pay
to
Adviser and Adviser agrees to accept as full compensation for all services
provided hereunder, an annual gross investment advisory fee equal to .50% of
the
average daily net assets of the Fund. Such fee shall be accrued and paid
daily
at the rate of 1/365th of .50%, of the daily net assets of the Fund.
5. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
the
Fund) to the extent that the Fund's expenses exceed such lower expense
limitation as the Adviser may, by notice to the Fund, voluntarily declare to
be
effective.
6. The term of this Contract shall begin on the date of its execution
and
shall continue in effect for two years from its execution and from year to
year
thereafter, subject to the provisions for termination and all of the other
terms
and conditions hereof if: (a) such continuation shall be specifically
approved
at least annually by the vote of a majority of Trustees of the Fund,
including a
majority of the Trustees who are not parties to this Contract or interested
persons of any such party (other than as Trustees of the Fund) cast in
person at
a meeting called for that purpose; and (b) Adviser shall not have notified
the
Fund in writing at least sixty (60) days prior to the anniversary date of
this
Contract in any year thereafter that it does not desire such continuation.
7. Notwithstanding any provision in this Contract, it may be
terminated at
any time, without the payment of any penalty, by the Trustees of the Fund or
by
a vote of a majority of the outstanding voting securities of the Fund on
sixty
(60) days' written notice to the Adviser.
8. This Contract may not be assigned by Adviser and shall
automatically
terminate in the event of any assignment. Adviser may employ or contract
with
such other person, persons, corporation or corporations at its own cost and
expense as it shall determine in order to assist it in carrying out this
Contract.
9. In the absence of willful misfeasance, bad faith, gross negligence
or
reckless disregard of the obligations or duties under this contract on the
part
of Adviser, Adviser shall not be liable to the Fund or any shareholder for
any
act or omission in the course of or connected in any way with rendering
services
or for any losses that may be sustained in the purchase, holding or sale of
any
security.
10. This Contract may be amended at any time by agreement of the
parties,
provided that the amendment shall be approved both by the vote of a majority
of
the Trustees of the Fund, including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Fund) cast in person at a meeting
called
for that purpose, and by the holders of a majority of the outstanding voting
securities of the Fund.
11. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article III of the Declaration of Trust and agrees
that the obligations assumed by the Fund pursuant to this Contract be
limited in
any case to the Fund and its assets and Adviser shall not seek satisfaction
of
any
such obligation from the shareholders of the Fund, the Trustees, officers,
employees or agents of the Fund, or any of them.
12. This Contract shall be construed in accordance with and governed
by
the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this Contract to be
executed
on their behalf by their duly authorized officers and their seals to be
affixed
hereto this day of , 1994.
Attest: SOCIETY ASSET MANAGEMENT,
INC.
By:
Director Chairman
Attest: FINANCIAL RESERVES FUND
By:
Secretary President
EXHIBIT C
BALANCE SHEET
SOCIETY ASSET MANAGEMENT, INC.
DECEMBER 31, 1992
- ----------------------------------------------------------------------------
- ----
ASSETS
<TABLE>
<S>
<C>
Cash and cash
equivalent..................................................................
......... $ 244,038
Marketable securities available for sale (market value:
$977,421).................................. 950,628
Equipment, net of accumulated
depreciation.........................................................
46,285
Fees
receivable..................................................................
.................. 59,403
Accrued
interest....................................................................
............... 13,926
Receivable from Society
Corporation................................................................
192,130
Deferred income
taxes.......................................................................
....... 72,053
Other
assets......................................................................
................. 12,268
-------------
TOTAL
ASSETS......................................................................
.. $ 1,590,731
-------------
-------------
<CAPTION>
LIABILITIES
<S>
<C>
Accrued incentive
compensation................................................................
..... $ 175,000
Other accrued
liabilities.................................................................
......... 73,308
-------------
TOTAL
LIABILITIES.................................................................
.. 248,308
<CAPTION>
STOCKHOLDER'S EQUITY
<S>
<C>
Common stock--no par value; 500 shares authorized issued and
outstanding........................... 351,670
Retained
earnings....................................................................
.............. 990,753
-------------
TOTAL STOCKHOLDER'S
EQUITY..........................................................
1,342,423
-------------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY.......................................... $ 1,590,731
-------------
-------------
</TABLE>
See notes to the financial statement.
NOTES TO FINANCIAL STATEMENT
SOCIETY ASSET MANAGEMENT, INC.
DECEMBER 31, 1992
- ----------------------------------------------------------------------------
- ----
NOTE A--ORGANIZATION AND DESCRIPTION OF BUSINESS
Society Asset Management, Inc. (the "Company"), is a wholly-owned subsidiary
of
Society National Bank (the "Bank"), which is a wholly-owned subsidiary of
Society Corporation ("Society"). Prior to September 1992, the Company was
known
as SeaGate Capital Management Company. The Company was formed to conduct
business as a registered investment advisor pursuant to the Investment
Advisors
Act of 1940.
On March 16, 1992, Society consummated a merger with Ameritrust Corporation
which was accounted for using the pooling of interests method of accounting.
The
Ameritrust investment advisor subsidiary, Ameritrust Securities Corp.
("ASC"),
was merged with and into the Company on December 1, 1992. The merger with
ASC
was accounted for at historical cost in a manner similar to that in pooling
of
interests accounting.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company conform with generally accepted
accounting principles. The following is a summary of the Company's
significant
accounting policies.
Fee Income Recognition: Fee income is recognized as earned over the
contractual
period as stipulated in the investment advisory contract.
Marketable Securities: Marketable securities, which consist principally of
United States Treasury Notes, are valued at the lower of aggregate cost or
market value.
Equipment: Equipment is stated at cost less accumulated depreciation.
Provision
for the depreciation of equipment is determined using the straight-line
method
over the estimated useful lives of the respective assets.
Income Taxes: The Company is included in the consolidated tax return of
Society
Corporation. Society's policy under its tax sharing agreement is to allocate
income taxes to its subsidiaries on a separate-return basis, which includes
any
tax credit or carryovers and carrybacks subject to recognition of such items
on
a consolidated basis. Deferred income taxes relate primarily to accrued
incentive compensation and accrued pension liabilities. Effective January 1,
1992 Society and all related subsidiaries prospectively adopted SFAS No.
109,
"Accounting for Income Taxes." The adoption of this new standard did not
have a
material impact on the Company's financial condition.
Cash Equivalents: The Company's policy is to treat all of its short-term
highly
liquid investments, with a maturity of three months or less as cash
equivalents.
NOTES TO FINANCIAL STATEMENT
SOCIETY ASSET MANAGEMENT, INC.
DECEMBER 31, 1992
- ----------------------------------------------------------------------------
- ----
NOTE C--RELATED PARTY TRANSACTIONS
A significant portion of the Company's expenses are the result of
allocations or
billings from Society and its subsidiaries. The allocation of such costs are
based on management's estimate of the Company's proportionate share of
related
costs. In the opinion of the Company's management, such allocations are
reasonable.
Substantially all of the Company's employees are eligible for benefits under
a
non-contributory retirement plan and a stock purchase and savings plan
established by Society. Costs related to the plans incurred by Society on
behalf
of the Company's employees are allocated to the Company and are included in
the
allocations described above.
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Society Asset Management, Inc.
We have audited the accompanying balance sheet of Society Asset Management,
Inc.
as of December 31, 1992. This balance sheet is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards.
Those standards require that we plan and perform the audit to obtain
reasonable
assurance about whether the balance sheet is free of material misstatement.
An
audit includes examining, on a test basis, evidence supporting the amounts
and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well
as evaluating the overall balance sheet presentation. We believe that our
audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Society Asset Management, Inc.
at
December 31, 1992, in conformity with generally accepted accounting
principles.
ERNST & YOUNG
February 26, 1993
EXHIBIT D
BALANCE SHEET (UNAUDITED)
SOCIETY ASSET MANAGEMENT, INC. AND SUBSIDIARY
NOVEMBER 30, 1993
<TABLE>
<S>
<C>
ASSETS
Cash and cash
equivalents.................................................................
........ $ 2,446,696
Marketable securities available for
sale..................................................... 600,611
Investment in mutual
funds...................................................................
325,001
Equipment and leasehold improvements
net of accumulated
depreciation..............................................................
239,576
Fees
receivable..................................................................
............ 285,121
Accrued
interest....................................................................
......... 9,660
Receivable from Society
Corporation..........................................................
1,022,715
Goodwill....................................................................
................. 11,479,241
Deferred income
taxes.......................................................................
. 107,954
Other
assets......................................................................
........... 124,306
--------------
Total
Assets......................................................................
. $ 16,640,881
--------------
--------------
LIABILITIES
Deferred fee
income......................................................................
.... $ 619,215
Accrued
taxes.......................................................................
......... 812,298
Accrued incentive
compensation...............................................................
564,278
Other accrued
liabilities.................................................................
... 682,285
--------------
Total
Liabilities.................................................................
. 2,678,076
STOCKHOLDER'S EQUITY
Common stock--no par value; 500 shares authorized, issued and
outstanding.................... 350,000
Paid in
capital.....................................................................
......... 11,501,670
Retained
earnings....................................................................
........ 2,111,135
--------------
Total Stockholder's
Equity.........................................................
13,962,805
--------------
Total Liabilities and
Stockholder's
Equity............................................................... $
16,640,881
--------------
--------------
</TABLE>
NOTE: In October 1993, Society Asset Management, Inc. completed its
acquisition
of Schaenen Wood & Associates, Inc. ("SWA"), a New York City-based
investment management firm. SWA manages approximately $1.3 billion in
assets. The purchase price of $11,500,000 for SWA was paid in cash
and,
after recording miscellaneous reserves relating to the transaction,
$11,609,442 in goodwill was generated, which will be amortized over a
15-year life. The acquisition was funded using an $11,500,000 equity
contribution to SAMI from Society National Bank.
FINANCIAL RESERVES FUND FOR SPECIAL MEETING OF SHAREHOLDERS FEBRUARY 24,
1994
Know All Persons By These Presents that the undersigned shareholders of
Financial Reserves Fund hereby appoint Eve Brunswick, Edward C. Gonzales,
Karen
Haber, Jay S. Neuman, Jeffrey W. Sterling, and Mary K. Stern, or any one of
them
true and lawful attorneys, with power of substitution of each, to vote all
shares of Financial Reserves Fund, which the undersigned is entitled to
vote, at
the Special Meeting of Shareholders to be held on February 24, 1994, at the
offices of Society National Bank, Cleveland, Ohio, at 1:45 p.m. and at any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The attorneys
named
will vote the shares represented by this proxy in accordance with the choice
made on this card. IF NO CHOICE IS INDICATED FOR ANY MATTER, THIS PROXY WILL
BE
VOTED AFFIRMATIVELY ON THE MATTER PRESENTED.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
PROPOSALS
(1) TO APPROVE OR DISAPPROVE A PROPOSED INVESTMENT ADVISORY CONTRACT
BETWEEN
THE FUND AND SOCIETY ASSET MANAGEMENT, INC.
PLEASE DO NOT USE BLUE PEN WHEN MARKING THIS BALLOT.
FINANCIAL RESERVES FUND
<TABLE>
<S> <C> <C>
<C>
PROPOSAL 1: Approve Disapprove
e Abstain
</TABLE>
Please sign EXACTLY as your name appears hereon. If Shares are held jointly,
all
holders must sign. Corporate proxies should be signed by an authorized
officer.
Please return ALL proxy cards that you may receive.
Dated.......................... ,
1994
.....................................
.....................................
Signature(s) of Shareholders(s)
