<PAGE> 1
As filed with the Securities and Exchange Commission on June 30, 1997
Registration No. 2-97840
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
POST-EFFECTIVE AMENDMENT NO. 14 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /x/
ACT OF 1940
AMENDMENT NO. 17 /x/
------------------------------
NAVIGATOR MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
200 Gibraltar Road
Horsham, Pennsylvania 19044
(Address of Principal Executive Offices)
Registrant's Telephone Number : (215) 443-7850
JAMES W. JENNINGS, ESQUIRE
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, Pennsylvania 19103
(Name and Address of Agent for Service)
-------------------------------
It is proposed that this filing become effective immediately on
June 30, 1997 pursuant to paragraph (b) of Rule 485.
The Registrant has registered an indefinite number of shares pursuant
to Rule 24f-2 under the Investment Company Act of 1940, as amended. The
Registrant filed a Rule 24f-2 notice covering the fiscal year ended February
28, 1997 on April 29, 1997.
<PAGE> 2
CROSS REFERENCE SHEET
FORM N-1A ITEM LOCATION
PART A
Item 1. Cover Page.......................................... Cover Page
Item 2. Synopsis............................................ Fund Expenses
Item 3. Condensed Financial Information..................... Financial
Highlights
Item 4. General Description of Registrant................... The Companies;
Investment
Objective
and Policies;
Investment
Restrictions;
General
Information
Item 5. Management of the Fund.............................. Management
of the Funds
Item 5A. Management's Discussion of
Fund Performance ................................... Incorporated by
Reference in
Annual Report
Item 6. Capital Stock and Other Securities.................. Cover Page; The
Companies; How
To Purchase and
Redeem Shares;
Dividends and
Taxes; Descrip-
tion of Shares;
General
Information
Item 7. Purchase of Securities Being
Offered............................................. Valuation of
Shares; How to
Purchase and
Redeem Shares
Item 8. Redemption or Repurchase............................ How to
Purchase and
Redeem Shares
<PAGE> 3
Item 9. Legal Proceedings................................. *
PART B LOCATION
Item 10. Cover Page........................................ Cover Page
Item 11. Table of Contents................................. Table of
Contents
Item 12. General Information and History................... The Companies
Item 13. Investment Objectives and Policies................ Additional
Investment
Policies
Item 14. Management of the Registrant...................... Directors and
Officers;
Investment
Adviser,
Administrator
and Distributor
Item 15. Control Persons and Principal
Holders of Securities............................. Principal
Holders of
Securities
Item 16. Investment Advisory and Other
Services.......................................... Investment
Adviser,
Administrator
and Distributor
Item 17. Brokerage Allocation and Other
Practices......................................... Portfolio
Transactions
Item 18. Capital Stock and Other Securities................ Description of
Shares
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered....................... Included in
Part A
Item 20. Tax Status........................................ Included in
Part A
Item 21. Underwriters...................................... *
Item 22. Calculation of Performance Data................... Yields
<PAGE> 4
LOCATION
Item 23. Financial Statements............................... Financial
Statements
* Omitted since the answer is negative or the Item is inapplicable.
PART C
Information required to be included in Part C is set forth
under the appropriate item, so numbered, in Part C of this Registration
Statement.
<PAGE> 5
NAVIGATOR MONEY MARKET FUND--PRIME OBLIGATIONS PORTFOLIO
(Navigator Money Market Fund, Inc.)
NAVIGATOR TAX-FREE MONEY MARKET FUND
(Navigator Tax-Free Money Market Fund, Inc.)
- Prospectus -
200 Gibraltar Road For current performance, purchase,
Horsham, PA 19044 redemption, and other information,
call: 1-800-441-3885
Navigator Money Market Fund -- Prime Obligations Portfolio ("Prime
Obligations") is a portfolio offered by Navigator Money Market Fund, Inc.,
("NMM"), and Navigator Tax-Free Money Market Fund ("Tax-Free Money Market") is
a portfolio offered by Navigator Tax-Free Money Market Fund, Inc. ("NTFMM"),
(each separately referred to as a "Fund" and collectively referred to as the
"Funds"). Navigator Money Market Fund, Inc. and Navigator Tax-Free Money
Market Fund, Inc. are no-load, diversified, open-end investment companies.
PRIME OBLIGATIONS' investment objective is to provide its shareholders
with as high a level of current interest income as is consistent with liquidity
and relative stability of principal. The Fund intends to achieve this
objective by investing substantially all of its assets in a diversified
portfolio of money market instruments of the highest quality, with remaining
maturities of 397 days or less.
TAX-FREE MONEY MARKET'S investment objective is to provide its
shareholders with as high a level of current interest income that is exempt
from federal income taxes as is consistent with liquidity and relative
stability of principal. The Fund intends to achieve this objective by
investing substantially all of its assets in a diversified portfolio of
tax-exempt obligations of the highest quality, with remaining maturities of 397
days or less. While the Fund may also invest in short-term taxable
obligations, under normal market conditions, at least 80% of the Fund's net
assets will be invested in obligations exempt from federal income taxes.
THE FUNDS' SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE FDIC, OR
THE U.S. GOVERNMENT OR ANY OF ITS AGENCIES. EACH FUND ATTEMPTS TO MAINTAIN A
STABLE NET ASSET VALUE PER SHARE OF $1.00, BUT THERE CAN BE NO ASSURANCE THAT
THEY WILL BE ABLE TO DO SO. THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, NOR ARE THEY ENDORSED OR GUARANTEED BY ANY BANK.
Shares of each Fund ("Shares") are sold by Fairfield Group, Inc.
("Fairfield") to institutional investors ("Institutions") for investment of
their own funds or funds for which they act in some fiduciary capacity
("Customer Accounts"). Fund Shares may not be purchased by individuals
directly, but institutional investors may purchase Shares for Customer Accounts
maintained for individuals. Fairfield (the "Manager") acts as each Fund's
1
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Investment Adviser, Administrator, and Distributor. Shares are sold and
redeemed without any purchase or redemption charge imposed by the Funds,
although Institutions may charge their Customer Accounts for services provided
in connection with the purchase or redemption of Shares. See "How to Purchase
and Redeem Shares."
This Prospectus sets forth certain information about each Fund that a
prospective investor ought to know before investing. Investors should read
this Prospectus and retain it for future reference.
Additional information about the Funds, contained in the Statement of
Additional Information, has been filed with the Securities and Exchange
Commission and is available upon request without charge by writing to the Funds
at their address. The Statement of Additional Information bears the same date
as this Prospectus and is incorporated by reference in its entirety into this
Prospectus.
----------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------------------------------
The date of this Prospectus is June 30, 1997.
2
<PAGE> 7
THE COMPANIES
NMM was originally organized as a Pennsylvania business trust under a
Declaration of Trust dated May 16, 1985, and Prime Obligations commenced
operations on July 22, 1985. NMM was subsequently reorganized as a Maryland
corporation on December 9, 1986, such reorganization having been effected in
order to enable the Fund to take advantage of certain state tax benefits
accruing therefrom.
NTFMM was organized as a Maryland corporation on January 27, 1986, and
Tax-Free Money Market commenced operations on March 27, 1986.
NMM's and NTFMM's Articles of Incorporation each permit their Board of
Directors ("Navigator's Board") to offer additional, separate classes of shares
of Common Stock ("Portfolios") in the future. However, NMM currently offers
only Shares of Prime Obligations, a money market portfolio and NTFMM currently
offers only Shares of Tax-Free Money Market, a tax-free money market portfolio.
FUND EXPENSES
The table below sets forth information concerning shareholder
transaction expenses and annual operating expenses for each Fund. The expenses
and fees set forth in the table are based on average net assets of each Fund
for the year ended February 28, 1997.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Prime Tax-Free
Obligations Money Market
----------- ------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....................... 0% 0%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)....................... 0% 0%
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)..... 0% 0%
Redemption Fee............................................. None None
Exchange Fee............................................... None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
Prime Tax-Free Money
Obligations Market
-------------- --------------
<S> <C> <C>
12b-1 Fees .00% .00%
Investment Advisory Fees
After Fee Waivers(A) .03% .06%
Other Expenses(B) .14% .27%
---- ----
Net Annual Fund Operating
Expenses(C) .17% .33%
==== ====
</TABLE>
(A) Absent voluntary waivers, Fairfield's investment advisory fees, which
are graduated, would have been calculated at the annual rate of .20%
and .25% of Prime Obligations' and Tax-Free Money Market's average net
assets, respectively.
3
<PAGE> 8
(B) Includes (among others) custodial, transfer agency, administrative,
legal, and auditing fees. Absent voluntary waivers, Fairfield's
administrative fees are calculated at the annual rate of .10% of each
Fund's average net assets.
(C) Fairfield may, from time to time and at its discretion, voluntarily
waive all or a portion of its investment advisory and/or
administrative fees. The expense ratios of .17% and .33% are net of
fee waivers in effect during the fiscal year. Absent any fee waivers,
such expense ratios would have been .41% and .58% for Prime Obligations
and Tax-Free Money Market, respectively.
EXAMPLE OF EFFECT OF FUND EXPENSES(A)
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prime Obligations $2 $5 $10 $22
Tax-Free Money Market $3 $11 $19 $42
</TABLE>
- ------------------------
(A) Financial institutions that are the record owner of Shares on behalf of
their Customer Accounts may impose separate fees for the account services they
provide to their customers.
The purpose of the tables is to assist the investor in understanding
the various costs and expenses that a shareholder in a Fund will bear directly
or indirectly.
This example assumes that all dividends are reinvested and that the
percentage amounts listed under Annual Fund Operating Expenses remain the same
over the time periods shown. The actual expenses will depend upon, among other
things, the level of average net assets, the levels of sales and redemptions of
shares, the extent to which Fairfield waives its fees and the extent to which
each Fund incurs variable expenses, such as transfer agency costs.
THE EXAMPLE SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE FUND EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN
THOSE SHOWN.
4
<PAGE> 9
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial
statements of each Fund and have been audited by Ernst & Young LLP, independent
auditors. This data should be read in conjunction with the financial
statements, related notes, and the report of Ernst & Young LLP, all of which
are incorporated by reference into each respective Fund's Statement of
Additional Information. The annual report for each Fund is available to
shareholders at no charge by calling Fairfield at 1-800-441-3885.
PRIME OBLIGATIONS
<TABLE>
<CAPTION>
3/01/96 6/01/95 6/01/94 6/01/93 6/01/92 6/01/91 6/01/90 6/01/89
TO TO TO TO TO TO TO TO
2/28/97 2/29/96(a) 5/31/95 5/31/94 5/31/93 5/31/92 5/31/91 5/31/90
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- --------- -------- ------- ------- ------- --------- ---------
Income from
Investment Operations: .0523 .0413 .0501 .0314 .0323 .0499 .0728 .0853
Net Gain on Securities
(both realized
and unrealized) . . . . . ___ ___ ___ ___ ___ .0001 ___ ___
-------- --------- -------- ------- ------- -------- -------- ---------
Total Income from
Investment Operations. . .0523 .0413 .0501 0.314 .0323 .0500 .0728 .0853
-------- --------- -------- ------- ------- -------- -------- ---------
Less Distributions:
Dividends from
Net Investment Income . (.0523) (.0413) (.0501) (.0314) (.0323) (.0499) (.0728) (.0853)
Dividends from
Capital Gains . . . . . ___ ___ ___ ___ ___ (.0001) ___ ___
-------- --------- -------- -------- ------- -------- -------- ---------
Total Distributions. . . . (.0523) (.0413) (.0501) (.0314) (.0323) (.0500) (.0728) (.0853)
-------- --------- -------- -------- ------- -------- -------- -------
Net Asset Value,
end of period . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ===== ===== ===== ===== ===== ===== =====
Total Return. . . . . . . . 5.37% 4.21%(b) 5.19% 3.18% 3.28% 5.12% 7.53% 8.87%
Net Assets,
end of period (000) . . . $180,218 $167,732 $238,109 $341,136 $417,1114 $443,368 $563,265 $508,859
Ratios and Supplemental
Data:
Ratio of Expenses
to Average Net Assets . .17% .25%(c) .28% .27% .26% .22% .21% .22%
Ratio of Expenses,
to Average Net Assets
excluding Fee Waivers. . .41% .55%(c) .43% .42% .41% .37% .35% .37%
Ratio of Net Investment
Income to Average Net
Assets . . . . . . . . . 5.23% 5.51%(c) 5.01% 3.14% 3.23% 4.99% 7.28% 8.53%
Ratio of Net Investment
Income to Average Net Assets
excluding Fee Waivers. . 4.99% 5.21%(c) 4.86% 2.99% 3.08% 4.84% 7.14% 8.38%
</TABLE>
5
<PAGE> 10
<TABLE>
<CAPTION>
6/01/88 6/01/87
TO TO
5/31/89 5/31/88
<S> <C> <C>
Net Asset Value,
beginning of period . . . $1.00 $1.00
-------- --------
Income from
Investment Operations: .0859 .0686
Net Gain on Securities
(both realized
and unrealized) . . . . . ___ ___
-------- --------
Total Income from
Investment Operations. . .0859 .0686
-------- --------
Less Distributions:
Dividends from
Net Investment Income . (.0859) (.0686)
Dividends from
Capital Gains . . . . . ___ ___
-------- --------
Total Distributions. . . . (.0859) (.0686)
------- -------
Net Asset Value,
end of period . . . . . . $1.00 $1.00
===== =====
Total Return. . . . . . . . 8.94% 7.08%
Net Assets,
end of period (000) . . . $464,483 $326,406
Ratios and Supplemental
Data:
Ratio of Expenses
to Average Net Assets . .22% .23%
Ratio of Expenses,
to Average Net Assets
excluding Fee Waivers. . .38% .39%
Ratio of Net Investment
Income to Average Net
Assets . . . . . . . . . 8.59% 6.86%
Ratio of Net Investment
Income to Average Net Assets
excluding Fee Waivers. . 8.43% 6.69%
</TABLE>
- --------------------------------------
(a) Fiscal year end was changed to February 29 from May 31.
(b) Not Annualized
(c) Annualized
6
<PAGE> 11
Tax-Free Money Market
<TABLE>
<CAPTION>
3/01/96 3/01/95 3/01/94 3/01/93 3/01/92 3/01/91 3/01/90 3/01/89 3/01/88 3/01/87
TO TO TO TO TO TO TO TO TO TO
2/28/97 2/29/96 2/28/95 2/28/94 2/28/93 2/29/92 2/28/91 2/28/90 2/28/89 2/28/88
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
beginning of period . $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 .0312 .0353 .0286 .0227 .0273 .0407 .0558 .0613 .0532 .0458
Net Gain/(Loss) on Securities
(both realized (.0002) ___ (.0003) ___ ___ .0001 ___ ___ ___ ___
and unrealized). . . .
-------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total Income from
Investment Operations .0310 .0353 .0283 .0227 .0273 .0408 .0558 .0613 .0532 .0458
-------- --------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from
Net Investment Income (.0312) (.0353) (.0286) (.0227) (.0273) (.0407) (.0558) (.0613) (.0532) (.0458)
-------- --------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions . . . (.0312) (.0353) (.0286) (.0227) (.0273) (.0407) (.0558) (.0613) (.0532) (.0458)
------- ------- -------- -------- -------- -------- -------- -------- -------- -------
Net Asset Value, end of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return 3.17% 3.59% 2.94% 2.29% 2.76% 4.15% 5.73% 6.31% 5.45% 4.68%
Net Assets,
end of period (000) . . $54,061 $94,815 $107,357 $152,273 $202,245 $227,249 $255,298 $300,001 $200,396 $194,508
Ratio and Supplemental
Data:
Ratio of Expenses .33% .31% .29% .28% .23% .23% .22% .20% .18% .15%
to Average Net Assets
Ratio of Expenses,
to Average Net Assets
excluding Fee Waivers .58% .51% .49% .48% .43% .45% .44% .43% .45% .45%
Ratio of Net Investment
Income to Average
Net Assets 3.12% 3.53% 2.86% 2.27% 2.73% 4.07% 5.58% 6.13% 5.32% 4.58%
Ratio of Net Investment
Income to Average
Net Assets 2.87% 3.33% 2.66% 2.07% 2.53% 3.85% 5.36% 5.90% 5.05% 4.28%
excluding Fee Waivers
</TABLE>
- --------------------------------------
7
<PAGE> 12
PERFORMANCE INFORMATION
IN GENERAL
The performance of any investment will generally reflect market
conditions, portfolio quality and maturity, type of investment, and operating
expenses. Each Fund's performance will fluctuate and is not necessarily
representative of future results. Any fees charged by Institutions to their
Customers in connection with investments in Fund Shares are not reflected in a
Fund's performance, and such fees, if charged, will reduce the actual return
received by Customers on their investments. Conversely, a Fund's performance
would be favorably affected by any management fee waivers on the part of
Fairfield.
From time to time, in advertisements or reports to shareholders, the
performance of a Fund may be quoted and compared to that of other mutual funds
with similar investment objectives and to relevant indices such as
"IBC/Donoghue's Money Fund Averages."
Shareholders will receive unaudited semi-annual reports describing
each Fund's investment operations and annual financial statements audited by
independent auditors.
YIELDS
Each Fund may advertise its "yield" and "effective yield." Both yield
figures are based on historical earnings and are not intended to indicate
future performance. The "yield" of a Fund refers to the income generated by an
investment in the Fund over a 7-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 "Yields" in the Statement
of Additional Information.
For the 7-day period ended February 28, 1997, Prime Obligations' yield
was 5.24% and its compounded effective yield was 5.38%. During this 7-day
period, 76% of the Fund's investment advisory fees were voluntarily waived by
Fairfield, and 53% of the Fund's administrative fees were voluntarily waived by
Fairfield.
For the 7-day period ended February 28, 1997, Tax-Free Money Market's
yield was 3.17% and its compounded effective yield was 3.22%. During this
7-day period, 80% of the Fund's investment advisory fees were voluntarily
waived by Fairfield. During this 7-day period, 100% of the Fund's
administrative fees were voluntarily waived by Fairfield.
Tax-Free Money Market may also advertise its "taxable equivalent
yield," which is calculated by taking into account the investor's current tax
bracket. This is the yield an investor would need to earn from a taxable
investment in order to realize an "after-tax" benefit equal to the tax-free
yield provided by the Fund. For the 7-day period ended February 28, 1997, the
Fund's taxable equivalent yields for the 15%, 28%, 31%, 36%, and 39.6% tax
brackets were 3.73%, 4.41%, 4.60%, 4.96%, and 5.25%, respectively.
8
<PAGE> 13
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
PRIME OBLIGATIONS' investment objective is to provide as high a level
of current interest income as is consistent with liquidity and relative
stability of principal. The Fund intends to achieve its stated objective by
investing in a diversified portfolio of money market instruments of the highest
quality, including a broad range of U.S. dollar-denominated government, bank,
and commercial paper obligations.
TAX-FREE MONEY MARKET'S investment objective is to provide as high a
level of current interest income that is exempt from federal income taxes as is
consistent with liquidity and relative stability of principal. Although there
can be no assurance that the Fund will meet its stated objective, the Fund
intends, under normal market conditions, to have at least 80% of its net assets
invested in the tax-free securities discussed herein.
The securities held by each Fund will have remaining maturities of 397
days or less, although variable rate demand obligations (with respect to
Tax-Free Money Market), securities subject to repurchase agreements, and
certain other securities may bear longer maturities. In addition, each
respective Fund's average weighted maturity will not exceed 90 days.
Certain investment vehicles utilized by each Fund are subject to the
limitations discussed herein under "Investment Restrictions." The following
descriptions illustrate the types of instruments in which each Fund may invest:
FOR PRIME OBLIGATIONS:
GOVERNMENT OBLIGATIONS
The Fund may invest in obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities. U.S. Treasury bills and
notes and obligations of certain agencies and instrumentalities of the U.S.
Government, such as the Government National Mortgage Association, are supported
by the full faith and credit of the United States; others, such as those of the
Export-Import Bank of the United States, are supported by the right of the
issuer to borrow from the Treasury; others, such as those of Fannie Mae, are
supported by the discretionary authority of the U.S. Treasury to purchase the
agency's obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality.
No assurance can be given that the U.S. Government would provide financial
support to U.S. Government-sponsored instrumentalities if it is not obligated
to do so by law.
BANK OBLIGATIONS
The Fund may purchase the types of bank obligations listed below,
provided they are issued or guaranteed by domestic branches of U.S. commercial
banks having total assets at the time of purchase in excess of $1 billion. The
Fund may also make interest-bearing savings deposits in domestic commercial and
savings banks in amounts not in excess of 5% of the Fund's total assets.
1. CERTIFICATES OF DEPOSIT
Certificates of deposit are negotiable certificates representing a
commercial bank's obligation to repay funds deposited with it, earning
specified rates of interest over given periods. The Fund may invest in
certificates of deposit of banks which are members of the Federal Reserve
System or the deposits of which are insured by the Federal Deposit Insurance
Corporation.
2. BANKERS' ACCEPTANCES
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank; meaning, in effect, that the bank
unconditionally agrees
9
<PAGE> 14
to pay the face value of the instrument upon maturity.
3. TIME DEPOSITS
Time deposits are non-negotiable deposits in a banking institution
earning a specified interest rate over a given period of time. Such deposits
cannot be withdrawn before the date specified at the time of deposit.
COMMERCIAL PAPER
The Fund may invest in commercial paper (short-term promissory notes
issued by corporations), including variable amount master demand notes
(described below), having been assigned short-term ratings at the time of
purchase of "Prime-1" by Moody's and/or "A-1" or better by S&P.
Pursuant to Securities and Exchange Commission ("SEC") regulations
applicable to money market funds, the Fund will only purchase securities that
have no short-term ratings at the time of purchase if they are determined to be
of comparable quality by Fairfield, pursuant to guidelines approved by
Navigator's Board, or if the issuer of such securities has comparable
short-term securities outstanding which are rated "Prime-1" by Moody's or "A-1"
or better by S&P. Any purchases by the Fund of unrated securities must be
approved or ratified by Navigator's Board. To the extent that the ratings
accorded by Moody's or S&P may change as a result of changes in their rating
systems, the Fund will attempt to use comparable ratings as standards for its
investments, in accordance with the investment policies contained herein.
Where necessary to ensure that an instrument meets, or is of comparable quality
to, the Fund's rating criteria, the Fund will require that the issuer's
obligation to pay the principal of, and the interest on, the instrument be
backed by insurance or by an unconditional bank letter or line of credit,
guarantee, or commitment to lend.
All obligations, including any underlying guarantees, must be deemed
by Fairfield to present minimal credit risks, pursuant to guidelines approved
by Navigator's Board. See the "Appendix" to the Statement of Additional
Information for a description of applicable ratings.
Variable amount master demand notes in which the Fund may invest are
unsecured demand notes that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. The rate of interest on such notes is generally based upon the
interest rates for commercial paper issued by the master demand note issuer.
The rate will be adjusted automatically at periodic intervals which normally
will not exceed thirty-one days, but may extend longer. Because master demand
notes are direct lending arrangements between the Fund and the issuer, they are
not normally traded. Although there is no secondary market for the notes, the
Fund may demand payment of the principal of and accrued interest on the
instrument at any time. While the notes are not typically rated by credit
rating agencies, issuers of variable amount master demand notes (which are
normally manufacturing, retail, financial, and other business concerns) must
satisfy the same criteria as set forth above for issuers of commercial paper.
Fairfield will consider the earning power, cash flows, and other liquidity
ratios of the issuers of such notes and will continuously monitor their
financial status to meet payment on demand. In determining the Fund's average
weighted portfolio maturity, a variable amount master demand note will be
deemed to have a maturity equal to the longer of the periods remaining to the
next interest rate adjustment or the demand notice period.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with respect to
portfolio securities. Under the terms of a repurchase agreement, the Fund
purchases securities ("collateral") from financial institutions such as banks
and broker-dealers ("seller") which are deemed to be creditworthy under
guidelines approved by the Fund's management, subject to the seller's agreement
to repurchase them at a mutually agreed-upon date and price. The repurchase
price generally equals the price paid by the Fund (plus interest) negotiated on
the basis of current short-term rates (which may be more or less than the rate
on the underlying
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<PAGE> 15
portfolio securities). The seller under a repurchase agreement is required to
maintain the value of the collateral held pursuant to the agreement at not less
than 100% of the repurchase price, and securities subject to repurchase
agreements are held by the Fund's Custodian in the Federal Reserve's book-entry
system. Default by the seller would, however, expose the Fund to possible loss
because of adverse market action or delay in connection with the disposition of
the underlying securities. Repurchase agreements are considered to be loans by
the Fund under the Investment Company Act.
REVERSE REPURCHASE AGREEMENTS
The Fund may borrow funds for temporary purposes by entering into
reverse repurchase agreements. Pursuant to such agreements, the Fund would
sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon date and
price. The Fund enters into reverse repurchase agreements only to avoid
otherwise selling securities during unfavorable market conditions to meet
redemptions. At the time the Fund enters into a reverse repurchase agreement,
it places in a segregated custodial account liquid assets such as U.S.
Government securities or liquid debt securities rated in the highest rating
category and having a value equal to the repurchase price (including accrued
interest), and will subsequently monitor the account to ensure that such
equivalent value is maintained. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Fund may decline below the
price at which it is obligated to repurchase the securities. Reverse
repurchase agreements are considered to be borrowings by the Fund under the
Investment Company Act.
FOR TAX-FREE MONEY MARKET:
MUNICIPAL SECURITIES
The Fund invests substantially all of its assets in a diversified
portfolio consisting of short-term obligations issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and their political subdivisions, agencies, instrumentalities and
authorities, the interest on which, in the opinion of counsel to the issuer, is
exempt from federal income taxes ("Municipal Securities"), except in
extraordinary circumstances (see "Temporary Investments"). Municipal
Securities will include, but not be limited to, the following:
General Obligation Bonds and Notes
Bond and/or Grant Anticipation Notes
Construction Loan Notes
Revenue Bonds and Notes
Tax and/or Revenue Anticipation Notes
Tax-Exempt Commercial Paper
Variable Rate Demand Obligations
Municipal Securities which are rated at the time of purchase must be
rated in the highest short-term rating category of Moody's Investors Service,
Inc. ("Moody's") and/or Standard & Poor's Corporation ("S&P"). Therefore,
Municipal Securities purchased by the Fund must meet or exceed the ratings set
forth below:
<TABLE>
<CAPTION>
MINIMUM RATINGS
MOODY'S S&P
----------------------
<S> <C> <C>
Notes "MIG-1" "SP-1"
Tax-Exempt Commercial Paper "Prime-1" "A-1"
Variable Rate Demand Obligations "VMIG-1" "A-1"
</TABLE>
Securities that have no short-term ratings at the time of purchase
must be determined to be of comparable quality by Fairfield, pursuant to
guidelines approved by Navigator's Board, or must be issued by an issuer having
comparable short-term securities outstanding that satisfy the above rating
criteria. To the extent that the ratings accorded by Moody's or S&P may change
as a result of changes in their rating systems, the Fund will attempt to use
comparable ratings
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<PAGE> 16
as standards for its investments, in accordance with the investment policies
contained herein. Where necessary to ensure that an instrument meets, or is of
comparable quality to, the Fund's rating criteria, the Fund will require that
the issuer's obligation to pay the principal of, and the interest on, the
instrument be backed by insurance or by an unconditional bank letter or line of
credit, guarantee, or commitment to lend.
All obligations, including any underlying guarantees, must be deemed
by Fairfield to present minimal credit risks, pursuant to guidelines approved
by Navigator's Board. See the "Appendix" to the Statement of Additional
Information for a description of applicable ratings.
Opinions relating to the validity of Municipal Securities and to the
exemption of interest thereon from federal income taxes are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Fund
nor Fairfield will review the proceedings relating to the issuance of Municipal
Securities or the basis for such opinions.
From time to time, proposals have been introduced in Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Securities. There can be no assurance that the current
federal income tax treatment accorded an investment in the Fund will not be
adversely affected by changes to statutes, regulations, rulings or judicial
precedents upon which such federal tax treatment is based. In the event of the
enactment of such legislation, which might materially affect the availability
of Municipal Securities for investment by the Fund and hence the value of the
Fund's portfolio, the Fund would re-evaluate its investment objective and
policies and consider changes in its structure or possible dissolution.
In managing the Fund's portfolio, Fairfield does not intend on a
regular basis to invest more than 25% of the Fund's total assets in (i)
Municipal Securities whose issuers are in the same state, (ii) Municipal
Securities, the interest on which is paid solely from revenues of similar
projects, and (iii) industrial development bonds, although it may do so from
time to time. To the extent the Fund's assets are so concentrated, the Fund
would be subject to the peculiar risks presented by the laws and economic
conditions relating to such states, projects, and bonds to a greater extent
than it would be if its assets were not so concentrated.
TYPES OF MUNICIPAL SECURITIES
The two principal classifications of Municipal Securities which may be
held by the Fund are "general obligation" securities and "revenue" securities.
These are discussed below, along with other Municipal Securities in which the
Fund may invest.
1. GENERAL OBLIGATION SECURITIES
"General obligation" securities are secured by the issuer's pledge of
its full faith, credit, and taxing power for the payment of principal and
interest.
2. REVENUE SECURITIES
"Revenue" securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or another specific revenue source such as the user of
the facility being financed. Industrial development and pollution control
bonds held by the Fund are in most cases revenue securities and are not payable
from the unrestricted revenues of the issuer. Consequently, the credit quality
of such revenue bonds is usually directly related to the credit standing of the
corporate user of the facility involved.
3. MORAL OBLIGATION BONDS
The Fund's portfolio may also include "moral obligation" bonds, which
are normally issued by special-purpose public authorities. If the issuer of
moral
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<PAGE> 17
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which
created the issuer.
4. VARIABLE RATE DEMAND OBLIGATIONS
Municipal Securities purchased by the Fund may include "variable rate
demand obligations," which are tax-exempt obligations upon which interest is
payable at a floating or variable rate. While there may be no active secondary
market with respect to a particular variable rate demand obligation purchased
by the Fund, the Fund normally may demand payment of the principal of and
accrued interest on the obligation upon not more than seven days' notice and
may resell the obligation at any time to a third party. The absence of an
active secondary market, however, could make it difficult for the Fund to
dispose of a variable rate demand obligation if the issuer defaulted on its
payment obligation, and the Fund could, for this or other reasons, suffer a
loss to the extent of the default.
5. WHEN-ISSUED SECURITIES
The Fund may also purchase Municipal Securities on a "when-issued"
basis. When-issued securities are securities purchased for delivery beyond the
normal settlement date at a stated price and yield. The Fund will generally
not pay for such securities or start earning interest on them until they are
received. Securities purchased on a when-issued basis are recorded as an asset
and are subject to changes in value based upon changes in the general level of
interest rates. The Fund expects that commitments to purchase when-issued
securities will not exceed 25% of the value of its total assets, absent unusual
market conditions. The Fund does not intend to purchase when-issued securities
for speculative purposes, but only in furtherance of its investment objective.
Because the Fund will set aside cash or liquid assets to satisfy its purchase
commitments in the manner described, the Fund's liquidity and ability to manage
its portfolio might be affected in the event its commitments to purchase
when-issued securities should ever exceed 25% of the value of its total assets.
TEMPORARY INVESTMENTS
The Fund may hold uninvested cash reserves which do not earn income
(pending investment) during temporary defensive periods or if, in the opinion
of Fairfield, suitable tax-exempt obligations are unavailable. There is no
percentage limitation on the amount of assets which may be held uninvested. In
addition, the Fund may invest from time to time, to the extent consistent with
its investment objective, a portion of its assets on a temporary basis or for
temporary defensive purposes in short-term money market instruments ("Temporary
Investments"), the income from which is subject to federal income taxes.
Temporary Investments will not exceed 20% of the total assets of the
Fund except when made for temporary defensive purposes, and may include
obligations of the United States Government or its agencies or
instrumentalities; debt securities (including taxable commercial paper) of
issuers having been assigned, at the time of purchase, the highest short-term
rating of either Moody's or S&P; certificates of deposit or bankers' acceptances
of domestic branches of U.S. banks with total assets at the time of purchase of
$1 billion or more; repurchase agreements with respect to such obligations; or
reverse repurchase agreements.
Under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), repurchase agreements are considered to be loans by the Fund and
conversely, reverse repurchase agreements are considered to be borrowings by
the Fund. See the Statement of Additional Information for further discussion
regarding Temporary Investments.
INVESTMENT RESTRICTIONS
Certain investment policies of each Fund may be changed at any time and
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<PAGE> 18
from time to time by Navigator's Board without shareholder approval, provided
such change is deemed to be consistent with each respective Fund's investment
objective and in the best interests of its shareholders. However, each Fund's
investment objective, along with the investment restrictions and certain
limitations described herein and in the Statement of Additional Information, are
fundamental and may be changed only by the affirmative vote of a majority of
the outstanding Shares of that Fund. See "Description of Shares."
PRIME OBLIGATIONS MAY NOT:
1. Purchase securities of any one issuer (other than
obligations of the U.S. Government, its agencies or instrumentalities)
if, as a result thereof, more than 5% of the value of the Fund's total
assets would be invested in such issuer, except that up to 25% of the
value of its total assets may be invested without regard to such 5%
limitation. There is no limit to the percentage of assets that may be
invested in U.S. Treasury bills and notes, or other obligations issued
or guaranteed by the U.S. Government or its agencies and
instrumentalities.
As a result of the rules described herein under "Portfolio
Valuation" and in the Statement of Additional Information under "Net
Asset Value," the Fund will only exceed the foregoing 5% limitation
(as to securities of a single issuer) under limited circumstances for
periods up to three business days.
2. Purchase any securities which would cause 25% or more of
the value of the Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that: (a)
there is no limitation with respect to obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities, domestic bank certificates of deposit, bankers'
acceptances, and repurchase agreements secured by such obligations;
(b) wholly-owned finance companies will be considered to be in the
industries of their parents if their activities are primarily related
to financing the activities of their parents; and (c) utilities will
be divided according to their services -- for example, gas, gas
transmission, electric, electric and gas, and telephone will each be
considered a separate industry.
3. Make loans, except that the Fund may purchase or hold
certain debt instruments and enter into repurchase agreements, in
accordance with its policies and limitations.
4. Borrow money or issue senior securities, except that the
Fund may borrow from banks and enter into reverse repurchase
agreements for temporary purposes in amounts not to exceed 10% of the
value of its total assets at the time of such borrowing; or mortgage,
pledge or hypothecate any assets, except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar
amounts borrowed or 10% of the value of its total assets at the time
of such borrowing. The Fund will not purchase any securities while
its borrowings (including reverse repurchase agreements) are
outstanding.
5. Invest more than 10% of its net assets in illiquid
securities, including time deposits with maturities longer than seven
days, and repurchase agreements providing for settlement more than
seven days after notice.
TAX-FREE MONEY MARKET MAY NOT:
1. Invest less than 80% of its net assets in securities, the
interest on which is exempt from federal income taxes, except during
temporary defensive periods.
2. Purchase securities of any one issuer (other than
obligations of the U.S. Government, its agencies or instrumentalities)
if, as a result
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<PAGE> 19
thereof, more than 5% of the value of the Fund's total assets would be
invested in such issuer, except that up to 25% of the value of its
total assets may be invested without regard to such 5% limitation.
3. Purchase any securities which would cause 25% or more of
the value of the Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that
there is no limitation with respect to: (a) obligations issued by any
state, territory or possession of the United States, the District of
Columbia or any of their authorities, agencies, instrumentalities or
political subdivisions; (b) obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; (c) domestic bank
certificates of deposit and bankers' acceptances; or (d) repurchase
agreements secured by any of the foregoing obligations.
4. Make loans, except that the Fund may purchase or hold
certain debt instruments and enter into repurchase agreements, in
accordance with its policies and limitations.
5. Borrow money or issue senior securities, except that the
Fund may borrow from banks and enter into reverse repurchase
agreements for temporary purposes in amounts not to exceed 10% of the
value of its total assets at the time of such borrowing; or mortgage,
pledge, or hypothecate any assets, except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar
amounts borrowed or 10% of the value of its total assets at the time
of such borrowing. This borrowing provision is not intended for
investment leverage, but solely to facilitate management of the Fund's
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be disadvantageous or
inconvenient, and hence the Fund will not purchase any securities
while its borrowings (including reverse repurchase agreements) are
outstanding.
6. Invest more than 10% of its net assets in illiquid
securities, including illiquid variable rate demand obligations, and
repurchase agreements providing for settlement more than seven days
after notice.
VALUATION OF SHARES
NET ASSET VALUE
Each Fund's net asset value per Share for purposes of pricing purchase
and redemption orders is normally determined as of 4:00 P.M. (Eastern time)
(the "valuation time") on each business day of the Fund. A "business day" is a
day on which the New York Stock Exchange is open for trading, and any other day
(other than a day on which no Shares of the Fund are tendered for redemption
and no order to purchase any Shares is received) during which there is a
sufficient degree of trading in securities or instruments held by the Fund such
that the Fund's net asset value per Share might be materially affected. Net
asset value per Share is calculated by dividing the value of all of the Fund's
portfolio securities and other assets, less liabilities, by the number of
outstanding Shares of the Fund at the time of the valuation. The result
(adjusted to the nearest cent) is the net asset value per Share.
PORTFOLIO VALUATION
The assets in each Fund are valued based upon the amortized cost
method, pursuant to rules promulgated under the Investment Company Act. Under
this method of valuation, the portfolio value of the assets normally will not
change in response to fluctuating interest rates. In connection with its use
of this valuation method, however, each Fund monitors the deviation between the
amortized cost value of its assets and their market value (which can be
expected to vary inversely with changes in prevailing interest rates).
Although each Fund seeks, through its use of amortized cost valuation, to
maintain its net asset value per
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<PAGE> 20
Share at $1.00, there can be no assurance that the net asset value will not
vary.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in each Fund are sold on a continuous basis by Fairfield, as
each Fund's Distributor. The principal offices of Fairfield are located at 200
Gibraltar Road, Horsham, Pennsylvania 19044.
PURCHASE OF SHARES
In addition to Institutions purchasing Shares directly from Fairfield,
Shares may be purchased through procedures established by Fairfield in
connection with the requirements of Customer Accounts of various Institutions.
Shares of the Funds sold to Institutions acting in some fiduciary
capacity on behalf of persons maintaining Customer Accounts at the Institutions
will normally be held of record by the Institutions. Since it will be
primarily discretionary Customer Accounts at Institutions that are invested in
a Fund, references in this Prospectus to shareholders of a Fund mean the
Institutions rather than their Customers. Institutions purchasing or holding
Fund Shares on behalf of their Customers are responsible for the transmission
of purchase and redemption orders (and the delivery of funds) to the respective
Fund on a timely basis. Confirmations of such Share purchases and redemptions
will be sent to the Institutions. Beneficial ownership of Fund Shares will be
recorded by the Institutions and reflected in the regular account statements
provided by them to their Customers.
Shares of a Fund may be purchased on any business day of the Fund at
the net asset value per Share (see "Valuation of Shares") next determined after
receipt by the Distributor of an order to purchase Shares. An order to
purchase Shares will be deemed to have been received only when federal funds
with respect thereto are available to the Fund's Custodian for investment.
Federal funds are monies transferred from one bank to another through the
Federal Reserve System. Payment for an order to purchase Shares which is
transmitted by federal funds wire will be available that same day for
investment by the Custodian, if received prior to the valuation time on such
day and in accordance with Fairfield's established procedures. Payments
transmitted by other means (such as by check drawn on a member of the Federal
Reserve System) will normally be converted into federal funds within two
banking days after receipt. An order received before the valuation time on any
business day will be executed on the date of receipt at the net asset value
determined on such date. An order received after the valuation time on any
business day will be executed on the next business day of the Fund at the net
asset value determined on such date. The Funds strongly recommend that
investors of substantial amounts use federal funds to purchase Shares.
The minimum investment is $25,000 for the initial purchase of Fund
Shares by an Institution and $1.00 for each subsequent investment. However,
Institutions may set different minimums for their Customers' investments in
Accounts which hold Fund Shares.
No sales charge is imposed by a Fund in connection with the purchase
of its Shares. Depending upon the terms of a particular Customer Account,
however, Institutions may charge their Customers fees for automatic investment
and other cash management services provided in connection with investments in a
Fund. Information concerning these services and any applicable charges will be
provided by the Institutions. This Prospectus should be read by Customers in
connection with any such information received from the Institutions. Any such
fees, charges or other requirements imposed by an Institution upon its
Customers will be in addition to the fees and requirements described in this
Prospectus.
Each Fund reserves the right to reject any order for the purchase of
its Shares in whole or in part, or to waive any minimum investment
requirements.
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<PAGE> 21
Every shareholder of record will receive a confirmation of each new
Share transaction with a Fund, which will also show the total number of Shares
being held in safekeeping by Fund/Plan Services, Inc. ("Transfer Agent") for
the account of the shareholder. Shareholders may rely on these statements in
lieu of certificates. Certificates representing Shares of a Fund will not be
issued to the shareholder but, rather, shareholdings will be recorded on the
books of the respective Fund in non-certificate form and shareholders will be
regularly advised of their ownership position.
TELEPHONE TRANSACTIONS
Each Fund and its Transfer Agent have established reasonable
procedures to confirm that instructions communicated by telephone are genuine.
These procedures require Institutions to provide certain identification
information at the time an account is opened, such as the names of Institution
personnel authorized to effect daily trades with the Fund, as well as specific
instructions as to the wiring of federal funds for redemptions.
Each Fund or its Transfer Agent may be liable for any losses due to
unauthorized or fraudulent telephone instructions if the Fund or its Transfer
Agent do not employ such procedures. However, neither Fund nor the Transfer
Agent will be responsible for any loss, liability, cost or expense for
following instructions received by telephone that it reasonably believes to be
genuine.
REDEMPTION OF SHARES
Shares are ordinarily redeemed by a shareholder via telephone, in
accordance with Fairfield's established procedures. Redemption payments to
shareholders closing their accounts will include any unpaid dividends and
distributions credited to the account as of the date of redemption.
However, with respect to Fund Shares held by Institutions on behalf of
their Customer Accounts, all or part of the Fund Shares beneficially owned by a
Customer must be redeemed in accordance with instructions and limitations
pertaining to his Account at the institution.
Shareholders may have their telephone redemption requests paid by a
direct wire to a domestic commercial bank account previously designated by the
shareholder on the Account Application Form, or by a check mailed to the name
and address in which the shareholder's account is registered with the
respective Fund. Such payments will normally be transmitted on the next
business day following receipt of a valid request for redemption. Telephone
redemption requests may be made by calling Fairfield at 1-800-441-3885.
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per Share next
determined after the Shares are properly tendered for redemption, as described
above. Except as stated in the following paragraph, payment to shareholders
for redeemed Shares will be made not later than seven business days after
receipt by the Fund's Distributor of the request for redemption, absent
extraordinary circumstances. However, to the largest extent possible, each
Fund will attempt to honor requests from shareholders for same-day payment, if
such payment would be consistent with that Fund's need for liquidity and
stability.
Shareholders should note that payment for the redemption of Shares
which were purchased by check may not be made until the Fund can verify that
the payment for such purchase has been, or will be, collected, which may take
up to eight business days after the date of purchase. Each Fund intends to pay
cash for all Shares redeemed, but under abnormal conditions which make payment
in cash unwise, a Fund may make payment wholly or partly in portfolio
securities at their then market value equal to the redemption price. In such
cases, an investor may incur brokerage costs in converting such securities to
cash.
Because of the relatively high cost of handling small investments,
each Fund reserves the right to redeem, at net asset value, the Shares held by
any Institution whose account has a value of less than $25,000. Before a Fund
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<PAGE> 22
redeems such Shares and sends the proceeds to the shareholder, the shareholder
will be given notice that the value of the Shares in the account is less than
the minimum amount and will be allowed sixty days to make an additional
investment in an amount which will increase the value of the account to at
least $25,000. As stated previously, Institutions may establish different
minimum shareholding requirements for their Customers.
Each Fund may redeem Shares involuntarily if it appears appropriate to
do so in light of the Fund's responsibilities under the Investment Company Act.
See the Statement of Additional Information ("Net Asset Value" and "Additional
Purchase and Redemption Information") for examples of when a Fund may
involuntarily redeem Shares, or suspend the right of redemption and refuse to
record the transfer of its Shares.
DIVIDENDS
The net investment income of each Fund is declared daily as a dividend
to its shareholders. Capital gain distributions, if any, will be made at least
annually. Shares begin earning dividends on the day on which the purchase
order for the Shares is executed and continue to earn dividends through, and
including, the day before the redemption order for the Shares is executed.
Dividends are distributable monthly on the first business day of each month in
the form of additional Shares of the respective Fund, or, if specifically
requested (in writing) by the shareholder to the Fund's Distributor prior to
the distribution date, in cash. Dividends are automatically paid in cash
(along with any redemption proceeds) not later than seven business days after a
shareholder closes an account with a Fund.
TAXES
IN GENERAL
The following summary of federal income tax consequences is based on
current tax laws and regulations, which may be changed by legislative,
judicial, or administrative action.
No attempt has been made to present a detailed explanation of the
federal, state, or local income tax treatment of each Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to their own federal, state, and local income tax
situations.
TAX STATUS OF EACH FUND:
1. INTERNAL REVENUE CODE
Each Fund intends to continue to qualify for the favorable tax
treatment afforded a "regulated investment company" under the Internal Revenue
Code of 1986, as amended (the "Code"). This generally requires, among other
things, that each Fund distribute to its shareholders at least 90% of its net
investment income (both taxable and tax-exempt with respect to Tax-Free Money
Market). Provided it meets this 90% distribution requirement, as well as other
requirements discussed in detail in the Statement of Additional Information,
each Fund will be relieved of federal income tax on that part of its net
investment income and on any net capital gain (the excess of net long-term
capital gain over net short-term capital loss) distributed to shareholders.
Each Fund anticipates declaring as dividends 100% of its net
investment income (both taxable and tax-exempt with respect to Tax-Free Money
Market). Each Fund does not expect to realize any net long-term capital gain
and, therefore, does not foresee paying any "capital gain distributions," as
described in the Code.
Tax-Free Money Market also expects to qualify to pay exempt-interest
dividends to its shareholders by satisfying the Code's requirement that at the
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<PAGE> 23
close of each quarter of its taxable year, at least 50% of the value of its
total assets consists of obligations, the interest on which is exempt from
regular federal income taxes.
Dividends declared by a Fund in October, November, or December of any
year and payable to shareholders of record on a date in that month will be
deemed to have been paid by that Fund and received by the shareholders on
December 31 of that year, if paid by the respective Fund during the following
January.
2. FEDERAL EXCISE TAX
A non-deductible, 4% federal excise tax will be imposed on any
"regulated investment company" to the extent that it does not distribute to
investors in each calendar year an amount equal to (i) 98% of its calendar year
ordinary income, (ii) 98% of its capital gain net income (the excess of short-
and long-term capital gains over short- and long-term capital losses) for the
one-year period ending October 31, and (iii) 100% of any undistributed ordinary
income or capital gain net income from the prior year.
Each Fund intends to make sufficient distributions each calendar year
to avoid liability for the federal excise tax.
3. MUNICIPAL SECURITY TAX ISSUES - FOR TAX-FREE MONEY MARKET
Federal tax law may limit the types and volume of bonds qualifying for
the federal income tax exemption of interest, which may have an effect on the
ability of the Fund to purchase sufficient amounts of tax-exempt securities to
satisfy the Code's requirements for the payment of exempt-interest dividends.
In addition, entities or persons who are "substantial users" (or are
related to "substantial users") of facilities financed by "private activity
bonds" or "industrial development bonds" should consult their tax advisers
before purchasing Shares.
TAX STATUS OF THE FUNDS' DISTRIBUTIONS:
Tax-exempt interest dividends paid by Tax-Free Money Market (as
discussed above) may generally be treated by the Fund's shareholders as items
of income excludable from their gross income under the Code unless, under the
circumstances applicable to a particular shareholder, exclusion would be
disallowed. Exempt-interest dividends may also have certain collateral federal
income tax consequences, including Alternative Minimum Tax consequences. Also,
interest on indebtedness incurred or continued by a shareholder in order to
purchase or carry Shares is generally not deductible for federal income tax
purposes.
Corporate investors should note that dividends from each Fund's net
investment income will generally not qualify for the dividends-received
deduction for corporations.
To the extent, if any, that dividends paid to shareholders are derived
from a Fund's taxable income (for example, from interest earned on Temporary
Investments in non-tax-exempt securities), or from long-term or short-term
capital gains, such dividends (whether paid in cash or in the form of
additional, reinvested Shares) will not be exempt from federal income taxes.
Therefore, any dividends from a Fund's investment company taxable income would
be taxable to shareholders as ordinary income to the extent of a shareholder's
ratable share of the Fund's earnings and profits as determined for tax
purposes. Likewise, any capital gain distributions would also be taxable and
would be treated as a long-term capital gain regardless of how long a
shareholder has held Fund Shares.
Except as noted otherwise herein, tax-exempt interest dividends and
other distributions paid by Tax-Free Money Market may be taxable to investors
as dividend income under state or local law even though a substantial portion
of such distributions may be derived from interest on tax-exempt obligations
which, if realized directly, would be exempt from such income taxes.
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<PAGE> 24
In the opinion of counsel, each Fund's Shares are exempt from current
Pennsylvania Personal Property Taxes.
In addition, the sale or redemption of shares of a mutual fund is a
taxable event to the selling or redeeming shareholder. Gains or losses (if
any) may be realized from an ordinary redemption of Shares, as described
herein.
Shareholders of Prime Obligations will be advised at least annually as
to the federal income tax consequences of distributions made during the year.
See the Statement of Additional Information for further information regarding
taxes.
MANAGEMENT OF THE FUNDS
DIRECTORS AND OFFICERS
The business and affairs of the Funds are managed under the direction
of Navigator's Board. The current Directors and Executive Officers of the
Navigator Group of Funds, their addresses, principal occupations during the
past five years, and other affiliations are as follows:
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE COMPANY DURING PAST 5 YEARS
- --------------------- ------------- --------------------
<S> <C> <C>
Robert J. Walker, Jr *(52) Chairman, President, President, Chief
200 Gibraltar Road and Director Executive Officer
Horsham, PA 19044 and a Director
of Fairfield from 1995
to present. Formerly: Senior
Vice President, Fidelity
Investments Institutional
Services Co., 1991 to 1995;
Senior Vice President, SEI
Corporation, 1987 to 1990.
Richard G. Gilmore(70) Director Independent Consultant;
948 Kennett Way Director of CSS Industries,
West Chester, PA Inc.; Director, PECO Energy
formerly (Philadelphia
Electric Co.); Director/
Trustee of nine Legg Mason
funds. Formerly: Senior
Vice President and Chief
Financial Officer,
Philadelphia Electric Co.
1986 to 1991.
Robert E. Keith(55) Director President, Technology
800 Safeguard Building Leaders Management Inc.
435 Devon Park Drive 1996; Managing Director,
Wayne, PA 19087 Radnor Venture Partners,
1989 to 1996; Director
Wave Technolgies Intl,
Safeguard Scientific,
National Media Corp.,
and Cambridge Technology
Partners.
</TABLE>
20
<PAGE> 25
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS COMPANY DURING PAST 5 YEARS
- ---------------- ------------ ---------------------
<S> <C> <C>
Jan J Wieckowski (74) Director Retired; Part-time
504 Meadowbrook Circle consultant to financial
St. Davids, PA 19087 institutions;
Executive Vice President
of Mellon Bank East, from
1983 to 1986; Executive
Vice President of Girard
Bank, prior to 1983.
Gerard J. Wills (52) Vice President and Vice President, CFO,
200 Gibraltar Road Treasurer Treasurer and Secretary
Horsham, PA 19044 of Fairfield since 1996;
Asst. Director, Personal Taxes,
State of Delaware's
Division of Revenue, 1994-1996;
Senior Accountant, Han &
Associates, 1993 to 1994;
Vice President, Operations
& Technology, Meritor Savings
Bank/Philadelphia Savings Fund
Society, 1982-1992.
Robert J. Clark (43) Asst. Treasurer Senior Accountant with
200 Gibraltar Road Fairfield since 1996;
Horsham, PA 19044 Senior Accountant with
Robert Half International
1994-1996; New Jersey
Economic Development Authority,
1992-1994.
James W. Jennings (60) Secretary Partner with the law
2000 One Logan Square firm of Morgan, Lewis
Philadelphia, PA 19103 & Bockius LLP, since 1970.
</TABLE>
- -----------------------
* Mr. Walker, as a Director and Executive Officer of the Manager, is an
"interested person" of NMM and NTFMM, within the meaning of Section
2(a)(19) of the Investment Company Act.
THE MANAGER
As Manager, Fairfield, a wholly-owned subsidiary of Legg Mason, Inc.
serves as each Fund's Investment Adviser, Administrator, and Distributor.
Fairfield is a broker-dealer registered with the Securities and Exchange
Commission, and is a member of the National Association of Securities Dealers,
Inc. Fairfield also provides investment and related financial services to
institutional clients. Fairfield's business address is 200 Gibraltar Road,
Horsham, Pennsylvania 19044.
The management services performed by and the fees payable to Fairfield
are described below.
1. INVESTMENT ADVISORY SERVICES
Investment advisory services are provided to each Fund by Fairfield,
as Manager, pursuant to separate Management Agreements dated April 17, 1993,
between each Fund and Fairfield Group (each a "Management Agreement").
As Investment Adviser, Fairfield manages each Fund's investment
portfolio, makes decisions with respect to and places orders for all purchases
and sales of each Fund's portfolio securities, and maintains each Fund's
records relating to such purchases and sales. Fairfield pays all expenses
incurred by it in connection with its investment advisory activities, other
than the cost of securities (including any brokerage commissions) purchased for
a Fund and the cost of obtaining market quotations for portfolio securities
held by the Funds.
For the investment advisory services provided and expenses assumed
pursuant to the Management Agreement, Fairfield is entitled to receive a fee
from Prime Obligations, computed daily and paid monthly, at the annual rate of
.20% on the first $500 million of the average net assets of the Fund; .15% on
the next $1 billion; and .10% thereafter. Fairfield is entitled to receive a
fee from Tax-Free Money Market, computed daily and paid monthly, at the annual
rate of .25% on the first $1 billion of the average net assets of the Fund;
.20% on the next $1 billion; and .15% thereafter. Fairfield may, from time
to time and at its discretion, voluntarily waive all or a portion of its
investment advisory fees in order to assist the Funds in maintaining a
competitive expense ratio.
With respect to Prime Obligations, for the fiscal year ended February
28, 1997,
21
<PAGE> 26
Fairfield received investment advisory fees totaling $351,362 (prior to
fees waived of $299,751). For the period June 1, 1995 to February 29, 1996 and
the previous year ended May 31, 1995, Fairfield received investment advisory
fees of $387,603 (prior to fees waived of $346,340) and $557,258 (prior to fees
waived of $402,425), respectively.
With respect to Tax-Free Money Market, for the fiscal years ended
February 28, 1997, February 29, 1996 and February 28, 1995, Fairfield received
investment advisory fees of $173,384 (prior to fees waived of $131,791),
$251,408 (prior to fees waived of $200,707) and $316,517 (prior to fees waived
of $253,279), respectively.
Richard A. Myers, in his capacity as Fund Manager with Fairfield, is
primarily responsible for managing each Fund's investment portfolio. Mr. Myers
is a graduate of Bloomsburg State College and has nineteen years of experience
in banking and money management. Prior to joining Fairfield in 1994, he was
responsible for three money market mutual funds with the Provident Institutional
Management Corporation.
2. ADMINISTRATIVE SERVICES
Fairfield also acts as each Fund's Administrator pursuant to each
Management Agreement.
As Administrator, Fairfield generally assists in each Fund's
administration and operations. See "Investment Adviser, Administrator, and
Distributor" in the Statement of Additional Information for a list of
Fairfield's specific administrative services. For the administrative services
it performs pursuant to each Management Agreement , Fairfield is entitled to
receive a fee from Prime Obligations, computed daily and paid monthly, at the
annual rate of .10% on the first $1.5 billion of the average net assets of the
Fund and .05% thereafter. Fairfield is entitled to receive a fee from Tax-Free
Money Market, computed daily and paid monthly, at the annual rate of .10% on
the average net assets of the Fund.
With respect to Prime Obligations, for the fiscal year ended February
28, 1997, Fairfield was paid administrative fees totaling $51,610 after
voluntary fee waivers of $124,071. Absent such fee waivers, the administrative
fees payable by the Fund for the period would have been $175,681. With respect
to the Tax-Free Money Market, Fairfield was paid administrative fees of $30,486
after fee waivers of $38,868. Absent such fee waivers, the administrative fees
payable by the Fund for the period would have been $69,354.
As of the date of this prospectus, Fairfield was waiving a portion of
its administrative fees from Prime Obligations and was waiving all of its
administrative fees from Tax-Free Money Market, in order to assist each Fund in
maintaining a competitive expense ratio. In the future, Fairfield may waive all
or continue to waive a portion of its administrative fees.
In connection with transactions relating to repurchase agreement
activity, Prime Obligations may also utilize the services of Fairfield for a fee
not to exceed 1% of the purchase or sale price of the transaction. During the
fiscal year ended February 28, 1997, the Fund paid fees totaling $933 to
22
<PAGE> 27
Fairfield with respect to such transactions.
EXPENSES
Each Fund's expenses are accrued daily and are deducted from total
income before dividends are paid. Except as noted herein and in the Statement
of Additional Information, each Fund's service contractors bear all expenses
incurred in connection with the performance of their services on behalf of the
respective Fund. Similarly, each Fund bears the expenses incurred in its
operations.
DESCRIPTION OF SHARES
NMM and NTFMM each have currently authorized 2 billion shares of
Common Stock at $.001 par value per share and may in the future reclassify any
authorized but unissued shares into one or more additional "Portfolios," or
into one or more series of shares within a Portfolio. NMM and NTFMM presently
offer only Shares of Class "A" Common Stock, which represent an interest in
Prime Obligations and Tax-Free Money Market, respectively.
Each Fund Share represents an equal proportionate interest in that
Fund with each other Share, and is entitled to such dividends and distributions
out of the income earned on the assets belonging to the respective Fund as are
declared in the discretion of Navigator's Board. Shareholders of each Fund are
entitled to one vote for each full Share held, and fractional votes for
fractional Shares held. Voting rights are not cumulative and, accordingly, the
holders of more than 50% of the aggregate number of Shares of a Fund may elect
all of the Directors if they choose to do so and, in such event, the holders of
the remaining Shares would not be able to elect any person or persons to
Navigator's Board. Customers of Institutions should refer to their agreements
with their institution for information regarding procedures for voting their
Shares.
As used in this Prospectus, a "vote of a majority of the outstanding
Shares" of a Fund means the affirmative vote of the lesser of (a) more than 50%
of the outstanding Shares of a Fund, or (b) at least 67% of the Shares of a
Fund present at a meeting at which the holders of more than 50% of the
outstanding Shares of the respective Fund are represented in person or by
proxy.
GENERAL INFORMATION
In accordance with the Maryland General Corporation Law, each Fund is
not required to hold annual meetings of shareholders unless the Investment
Company Act requires the shareholders to elect members of the Board of
Directors. However, a meeting of shareholders may be called for any purpose
upon the written request of the holders of at least 10% of the outstanding
Shares of a Fund.
Each Fund acknowledges that it is solely responsible for the
information or any lack of information about it in this joint Prospectus and in
the joint Statement of Additional Information, and no other Fund is responsible
therefor. There is a possibility that one Fund might be deemed liable for
misstatements or omissions regarding another Fund in this Prospectus or in the
joint Statement of Additional Information; however, the Funds deem this
possibility slight.
As used in this Prospectus, "assets belonging to the Fund" means the
consideration received by the Company upon the issuance or sale of Shares in
the Fund, together with all income, earnings, profits and proceeds derived from
the investment thereof, including any proceeds from the sale, exchange or
liquidation of such investments, and any funds or payments derived from any
reinvestment of such proceeds, and a portion of any general assets of the
Company not belonging to the Fund or any future additional Portfolios of the
Company. Assets belonging to the Fund are charged with the direct liabilities
in respect of the Fund and with a share of the general liabilities of the
Company allocated in proportion to the relative asset value of the Fund (and
any future additional Portfolios) at the time the expense or liability is
incurred. The management of the Company makes determinations with respect to
the Fund as to liabilities when they are incurred and as to assets when they
are acquired. Such determinations are reviewed and approved annually by
Navigator's Board and are conclusive.
23
<PAGE> 28
NAVIGATOR MONEY MARKET FUND--PRIME OBLIGATIONS PORTFOLIO
(Navigator Money Market Fund, Inc.)
NAVIGATOR TAX-FREE MONEY MARKET FUND
(Navigator Tax-Free Money Market Fund, Inc.)
200 Gibraltar Road
Horsham, PA 19044
1-800-441-3885
INVESTMENT ADVISER,
ADMINISTRATOR,
AND DISTRIBUTOR
Fairfield Group, Inc.
Horsham, PA 19044
-------------------------
LEGAL COUNSEL PROSPECTUS
Morgan, Lewis & Bockius LLP
Philadelphia, PA 19103 -------------------------
AUDITORS
Ernst & Young LLP
Philadelphia, PA 19103
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Companies............................. 3
Fund Expenses............................. 3
Financial Highlights...................... 5
Performance Information................... 7
Investment Objective and Policies......... 9
Investment Restrictions................... 13
Valuation of Shares....................... 15
How to Purchase and Redeem Shares......... 16
Dividends................................. 19
Taxes..................................... 20
Management of the Funds................... 23
Description of Shares..................... 26
General Information....................... 27
</TABLE>
24
<PAGE> 29
NO PERSON HAS BEEN AUTHORIZED --------------------------
TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS NOT CONTAINED JUNE 30, 1997
IN THIS PROSPECTUS, OR THE FUNDS'
STATEMENT OF ADDITIONAL INFORMATION --------------------------
INCORPORATED HEREIN BY REFERENCE,
IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY
EITHER FUND OR ITS DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY EITHER FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
25
<PAGE> 30
NAVIGATOR MONEY MARKET FUND, INC.
(Prime Obligations Portfolio)
NAVIGATOR TAX-FREE MONEY MARKET FUND, INC.
(Tax-Free Money Market Portfolio)
- STATEMENT OF ADDITIONAL INFORMATION -
JUNE 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Companies............................................. B-2
Additional Investment Policies............................ B-2
Additional Investment Restrictions and Limitations........ B-7
Additional Purchase and Redemption Information............ B-10
Net Asset Value........................................... B-11
Dividends................................................. B-12
Yields.................................................... B-12
Additional Information Concerning Taxes................... B-13
Description of Shares..................................... B-16
Directors and Officers.................................... B-17
Principal Holders of Securities........................... B-17
Investment Adviser, Administrator, and Distributor........ B-18
Portfolio Transactions.................................... B-19
Custodian and Transfer Agent.............................. B-20
Expenses.................................................. B-21
Financial Statements...................................... B-22
Independent Auditors...................................... B-22
Legal Counsel............................................. B-22
Miscellaneous............................................. B-22
Appendix.................................................. B-23
</TABLE>
This Statement of Additional Information is meant to be read in
conjunction with the Prospectus for Navigator Money Market Fund -- Prime
Obligations Portfolio ("Prime Obligations") offered by Navigator Money Market
Fund, Inc. ("NMM") and Navigator Tax-Free Money Market Fund (the "Tax-Free
Money Market") offered by Navigator Tax-Free Money Market Fund, Inc.
("NTFMM")(each separately referred to as a "Fund" and collectively referred to
as the "Funds"), dated June 30, 1997 and is incorporated by reference in its
entirety into that Prospectus. Because this Statement of Additional
Information is not itself a prospectus, no investment in Shares of either Fund
should be made solely upon the information contained herein. Copies of the
Prospectus for the Funds may be obtained by writing the Funds at 200 Gibraltar
Road, Horsham, Pennsylvania 19044, or by telephoning 1-800-441-3885.
Capitalized terms used but not defined herein have the same meanings as in the
Prospectus.
B-1
<PAGE> 31
THE COMPANIES
NMM was originally organized as a Pennsylvania business trust under a
Declaration of Trust dated May 16, 1985, and Prime Obligations commenced
operation on July 22, 1985. NMM was subsequently reorganized as a Maryland
corporation on December 9, 1986, such reorganization having been effected in
order to enable the Fund to take advantage of certain state tax benefits
accruing therefrom.
NTFMM was organized as a Maryland corporation on January 27, 1986, and
Tax-Free Money Market commenced operations on March 27, 1986.
NMM's and NTFMM's Articles of Incorporation each permit their Board of
Directors ("Navigator's Board") to offer additional, separate classes of shares
of Common Stock ("Portfolios") in the future. However, NMM currently offers
only shares of Prime Obligations, a money market portfolio and NTFMM currently
offers only shares of Tax-Free Money Market, a tax-free money market portfolio.
Shares of each Fund are sold by Fairfield only to Institutions for
investment of their own monies or monies for which they act in some fiduciary
capacity. As Manager, Fairfield performs investment advisory, administrative,
and distribution services to the Funds.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE FUNDS' PROSPECTUS
RELATE PRIMARILY TO THE FUNDS AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE AND
POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS RELATING TO THE FUNDS.
ADDITIONAL INVESTMENT POLICIES
IN GENERAL
The following policies supplement each Fund's investment objective and
policies as set forth in the Prospectus.
FOR TAX-FREE MONEY MARKET:
ADDITIONAL INFORMATION ON MUNICIPAL SECURITIES
Municipal Securities include: debt obligations issued by or on behalf
of governmental entities or public authorities to obtain funds for various
purposes, including the construction of a wide range of public and
privately-operated facilities; the refunding of outstanding obligations; the
payment of general operating expenses; and the extension of loans to public
institutions and facilities.
There are, of course, variations in the quality of Municipal Securities
both within a particular classification and between
B-2
<PAGE> 32
classifications, and the yields on Municipal Securities depend upon a variety of
factors, including general money market conditions, the financial condition of
the issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligation, and the rating of the
issue. The ratings of Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P") described in the Prospectus and the "Appendix" to
this Statement of Additional Information represent their opinions as to the
quality of Municipal Securities. It should be emphasized, however, that ratings
are general and are not absolute standards of quality, and Municipal Securities
with the same maturity, interest rate and rating may have different yields,
while Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to its purchase by the Fund, an
issue of Municipal Securities may cease to be rated or its rating may be reduced
below the minimum rating required for purchase by the Fund. As Investment
Adviser, Fairfield, subject to Board of Directors determination, will consider
such an event in determining whether the Fund should continue to hold the
obligation.
The payment of principal and interest on most Municipal Securities
purchased by the Fund will depend upon the ability of the issuers to meet their
obligations. An issuer's obligations under its Municipal Securities are
subject to the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors, such as the Federal Bankruptcy Code, and
laws, if any, which may be enacted by Federal or state legislatures extending
the time for payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on and principal of its Municipal
Securities may be materially adversely affected by litigation or other
conditions. For purposes of this Statement of Additional Information and the
Fund's Prospectus, the District of Columbia, each state, each of their
political subdivisions, agencies, instrumentalities and authorities, and each
multi-state agency of which a state is a member is considered to be an
"issuer." Further, the non-governmental user of facilities financed by
industrial development bonds is considered to be an "issuer." With respect to
those Municipal Securities that are supported by a bank guarantee or other
credit facility, the bank or other institution (or governmental agency)
providing the guarantee or credit facility may also be considered to be an
"issuer" in connection with the guarantee or facility.
Among other types of Municipal Securities, the Fund may purchase
short-term general obligation notes, tax anticipation notes, bond anticipation
notes, revenue anticipation notes, tax-exempt commercial paper, construction
loan notes, and other forms of short-term loans. Such instruments are issued
with a short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements, or other revenues. In addition, the Fund may
invest in other types of tax-exempt instruments such as municipal
B-3
<PAGE> 33
bonds, industrial development bonds and pollution control bonds, provided they
have remaining maturities of 397 days or less at the time of purchase.
SPECIAL CONSIDERATIONS
From time to time, proposals have been introduced in Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Securities, and the Fund cannot predict what legislation
relating to Municipal Securities, if any, may be introduced in Congress in the
future. It may be noted, however, that the Treasury Department has in the past
proposed, as a part of general tax reform, to limit the exemption for state and
local bonds to those issued for governmental purposes. Such proposals, if
enacted, might materially adversely affect the availability of Municipal
Securities for investment by the Fund and hence the value of the Fund's
portfolio. In such an event, the Fund would re-evaluate its investment
objective and policies and consider changes in its structure or possible
dissolution.
ADDITIONAL INFORMATION ON INVESTMENT PRACTICES
1. VARIABLE RATE DEMAND OBLIGATIONS
Variable rate demand obligations held by the Fund may have maturities
of more than 397 days, provided (i) the Fund is entitled to the payment of
principal and accrued interest at specified intervals not exceeding 397 days
and upon not more than 30 days' notice, or (ii) the rate of interest on such
obligations is adjusted automatically at periodic intervals, which normally
will not exceed 31 days but may extend up to 397 days.
2. WHEN-ISSUED SECURITIES
As stated in the Prospectus, the Fund may purchase Municipal
Securities on a "when-issued" basis (i.e., for delivery beyond the normal
settlement date at a stated price and yield). When the Fund agrees to purchase
when-issued securities, its Custodian will set aside cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the Custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case, the Fund may be required subsequently
to place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitment. It
may be expected that the Fund's net assets will fluctuate to a greater degree
when it sets aside portfolio securities to cover such purchase commitments than
when it sets aside cash. In addition, because the Fund will set aside cash or
liquid assets to satisfy its purchase commitments in the manner described, the
Fund's liquidity and ability to manage its portfolio might be affected in the
event its commitments to purchase when-issued securities ever exceeded 25% of
the value of its total assets. Fairfield intends, however, to take reasonable
precautions
B-4
<PAGE> 34
in connection with the Fund's investment practices with respect to when-issued
securities to avoid any adverse effect on the Fund's policy of maintaining its
net asset value per Share at $1.00.
For example, when acquiring when-issued securities, Fairfield will
assess such factors as the stability or instability of prevailing interest
rates, the amount and period of the Fund's commitment with respect to the
when-issued securities being acquired, the interest rate to be paid on those
securities, and the length of the Fund's average weighted portfolio maturity at
the time.
When the Fund engages in when-issued transactions, it relies upon the
seller to consummate the trade. Failure of the seller to do so may result in
the Fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
ADDITIONAL INFORMATION ON TEMPORARY INVESTMENTS
As stated in the Prospectus, Tax-Free Money Market may invest a
portion of its assets on a temporary basis or for temporary defensive purposes
in short-term taxable money market instruments ("Temporary Investments").
Temporary Investments in which the Fund may invest include instruments
which are described below. Tax-Free Money Market has retained the flexibility
of investing up to 20% of its total assets in Temporary Investments on a
temporary basis during non-defensive periods (and greater amounts during
defensive periods).
For Each Fund:
CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES
Certificates of deposit are negotiable certificates representing a
commercial bank's obligation to repay funds deposited with it, earning
specified rates of interest over given periods. Each Fund may invest
in certificates of deposit of domestic branches of U.S. commercial banks which
are members of the Federal Reserve System or the deposits of which are insured
by the Federal Deposit Insurance Corporation, and which have total assets at
the time of purchase in excess of $1 billion.
Banker's acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank; meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument upon maturity.
Each Fund may invest in bankers' acceptances guaranteed by domestic
branches of U.S. commercial banks having total assets at the time of purchase
in excess of $1 billion.
B-5
<PAGE> 35
COMMERCIAL PAPER
Each Fund may invest in taxable commercial paper (short-term
promissory notes issued by corporations), provided it is rated at the
time of purchase "Prime-1" by Moody's and/or "A-1" or better by S&P or, if not
rated, determined by Fairfield to be of comparable quality, pursuant to
guidelines approved by Navigator's Board. See the "Appendix" to this Statement
of Additional Information for a description of applicable ratings.
U.S. GOVERNMENT OBLIGATIONS
Each Fund may invest in obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities. U.S. Treasury bills and notes
and obligations of certain agencies and instrumentalities of the U.S.
Government, such as the Government National Mortgage Association, are supported
by the full faith and credit of the United States; others, such as those of the
Export-Import Bank of the United States, are supported by the right of the
issuer to borrow from the U.S. Treasury; others, such as those of the Fannie
Mae, are supported by the discretionary authority of the U.S. Treasury to
purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the agency or
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements with respect to
portfolio securities. Under the terms of a repurchase agreement, a Fund
purchases securities ("collateral") from financial institutions such as banks
and broker-dealers ("seller") which are deemed to be creditworthy under
guidelines approved by each Fund's management, subject to the seller's
agreement to repurchase them at a mutually agreed-upon date and price. The
repurchase price generally equals the price paid the Fund (plus interest)
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the underlying portfolio securities). The seller under a
repurchase agreement is required to maintain the value of the collateral held
pursuant to the agreement at not less than 100% of the repurchase price, and
securities subject to repurchase agreements are held by the Fund's Custodian in
the Federal Reserve's book-entry system. Default by the seller would, however,
expose the Fund to possible loss because of adverse market action or delay in
connection with the disposition of the underlying securities. Repurchase
agreements are considered to be loans by a Fund under the Investment Company
Act of 1940, as amended (the "Investment Company Act").
B-6
<PAGE> 36
REVERSE REPURCHASE AGREEMENTS
Each Fund may borrow funds for temporary purposes by entering into
reverse repurchase agreements. Pursuant to such agreements, a Fund would sell
portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed upon date and
price. A Fund enters into reverse repurchase agreements only to avoid
otherwise selling securities during unfavorable market conditions to meet
redemptions. At the time the Fund enters into a reverse repurchase agreement,
it places in a segregated custodial account liquid assets such as U.S.
Government securities or liquid debt securities rated in the highest rating
category and having a value equal to the repurchase price (including accrued
interest), and will subsequently monitor the account to ensure that such
equivalent value is maintained. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Fund may decline below the
price at which it is obligated to repurchase the securities. Reverse
repurchase agreements are considered to be borrowings by the Fund under the
Investment Company Act.
ADDITIONAL INVESTMENT RESTRICTIONS AND LIMITATIONS
IN GENERAL
The following policies supplement the Fund's investment objective and
policies as set forth in the Prospectus.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Funds' Prospectus lists certain investment restrictions that may
be changed only by a vote of a majority of the outstanding Shares of the
respective Fund, as defined in the Prospectus. The additional investment
restrictions listed below supplement those contained in the Prospectus and may
be changed only by such a shareholder vote.
PRIME OBLIGATIONS MAY NOT:
1. Purchase securities on margin, sell securities short, or
participate on a joint or joint and several basis in any securities
trading account.
2. Purchase or sell commodities, commodity contracts
(including futures contracts), oil, gas or mineral exploration or
development programs, or real estate (although investments in
marketable securities of companies engaged in such activities are not
hereby precluded).
3. Purchase securities of other investment companies, except
as they may be acquired as part of a merger, consolidation,
reorganization, acquisition of assets, or where otherwise permitted by
the Investment Company Act of 1940.
B-7
<PAGE> 37
4. Write or purchase options, including puts, calls,
straddles, spreads, or any combination thereof.
5. Buy common stocks or voting securities, or state,
municipal or industrial revenue bonds.
6. Invest in any issuer for purposes of exercising control or
management.
7. Purchase securities with legal or contractual
restrictions.
8. Purchase or retain securities of any issuer, if the
Officers or Directors of the Company or its Manager owning
beneficially more than one-half of 1% of the securities of such issuer
together own beneficially more than 5% of such securities.
9. Invest more than 10% of its total assets in the securities
of issuers which together with any predecessors have a record of less
than three years continuous operation.
10. Underwrite the securities of other issuers, except to the
extent that the purchase of debt obligations directly from an issuer
thereof, in accordance with the Fund's investment objective, policies
and restrictions, may be deemed to be an underwriting.
TAX-FREE MONEY MARKET MAY NOT:
1. Invest less than 80% of its net assets in securities, the
interest on which is exempt from federal income taxes, except during
temporary defensive periods.
2. Purchase the securities of any issuer if, as a result
thereof, more than 5% of the value of the Fund's total assets would be
invested in the securities of such issuer, except that this 5%
limitation does not apply to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, and except that up
to 25% of the value of the Fund's total assets may be invested without
regard to this 5% limitation.
For purposes of this limitation, a security is considered to
be issued by the governmental entity (or entities) whose assets and
revenues back the security, or, with respect to an industrial
development bond that is backed only by the assets and revenues of a
non-governmental user, such non-governmental user. The guarantor of a
guaranteed security may also be considered to be an issuer in
connection with such guarantee, except that a guarantee of a security
shall not be deemed to be a security issued by the guarantor when the
value of all securities issued or guaranteed by the guarantor, and
owned by the Fund, does not exceed 10% of the value of the Fund's
total assets.
B-8
<PAGE> 38
3. Purchase securities on margin, sell securities short, or
participate on a joint or joint and several basis in any securities
trading account.
4. Purchase or sell commodities, commodity contracts
(including futures contracts), oil, gas or mineral exploration or
development programs, or real estate (although investments in
marketable securities of companies engaged in such activities are not
hereby precluded).
5. Purchase securities of other investment companies, except
as they may be acquired as part of a merger, consolidation,
reorganization, acquisition of assets, or where otherwise permitted by
the Investment Company Act.
6. Write or purchase options, including puts, calls,
straddles, spreads, or any combination thereof.
7. Buy common stocks or voting securities.
8. Invest in any issuer for purposes of exercising control or
management.
9. Purchase securities with legal or contractual
restrictions.
10. Purchase or retain securities of any issuer, if the
Officers or Directors of the Company or its Manager owning
beneficially more than one-half of 1% of the securities of such issuer
together own beneficially more than 5% of such securities.
11. Invest more than 10% of its total assets in the
securities of issuers which together with any predecessors have a
record of less than three years continuous operation.
12. Underwrite the securities of other issuers, except to the
extent that the purchase of debt obligations directly from an issuer
thereof, in accordance with the Fund's investment objective, policies
and restrictions, may be deemed to be an underwriting.
The foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of a purchase of such
security.
NON-FUNDAMENTAL INVESTMENT LIMITATIONS
The following are non-fundamental investment limitations that may be
changed by a majority of Navigator's Board.
1. With regard to Restriction #2 (for Prime Obligations) and #4 (for
Tax-Free Money Market) above, each Fund has a non-
B-9
<PAGE> 39
fundamental investment limitation which precludes investments in oil,
gas, or other mineral leases; as well as investments in real estate
limited partnerships, except for readily marketable interests in real
estate investment trusts.
2. Notwithstanding the language in Restriction #9 (for Prime
Obligations) and #11 (for Tax-Free Money Market) above, each Fund
currently has no intention of investing more than 5% of its total
assets in the securities of issuers which together with any
predecessors have a record of less than three years continuous
operation.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The various types of Customer Accounts (in addition to qualified
Individual Retirement and Keogh Plan Accounts with respect to Prime
Obligations) maintained by Institutions which may be used to purchase Fund
Shares include: trust accounts; managed agency accounts; custodial accounts;
and various other depository accounts. Information on the types of Customer
Accounts which may be used should be obtained from the Institutions to which
the respective Fund is marketed. Investors purchasing Fund Shares may include
officers, directors, or employees of a particular Institution.
Each Fund may suspend the right of redemption or postpone the date of
payment for Shares during any period when: (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission; (b) the Exchange is closed for other
than customary weekend and holiday closings; (c) the Securities and Exchange
Commission has by order permitted such suspension; or (d) an emergency exists
as determined by the Securities and Exchange Commission. Upon the occurrence
of any of the foregoing conditions, each Fund may also suspend or postpone the
recordation of the transfer of its Shares.
In addition, each Fund may compel the redemption of, reject any order
for, or refuse to give effect on its books to the transfer of, its
Shares in an effort to prevent personal holding company status within the
meaning of the Internal Revenue Code of 1986, as amended (the "Code"). Each
Fund may also redeem Shares involuntarily or make payment for redemption in
portfolio securities if it otherwise appears appropriate to do so in light of
the respective Fund's responsibilities under the Investment Company Act. See
"Net Asset Value."
B-10
<PAGE> 40
NET ASSET VALUE
RULE 2a-7
The Fund has elected to use the amortized cost method of valuation
pursuant to Rule 2a-7, as amended, under the Investment Company Act ("Rule
2a-7"). This involves valuing an instrument at its cost initially and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. This method may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the Fund
would receive if it sold the instrument. The value of securities held by the
Fund can be expected to vary inversely with changes in prevailing interest
rates.
Pursuant to Rule 2a-7 the Fund will maintain a dollar-weighted average
portfolio maturity appropriate to its objective of maintaining a stable net
asset value per Share, provided that the Fund will neither purchase any
security with a remaining maturity of more than 397 days (securities subject to
repurchase agreements and certain other securities may bear longer maturities)
nor maintain a dollar-weighted average portfolio maturity which exceeds 90
days.
In addition, the Fund may acquire only U.S. dollar-denominated
obligations that present minimal credit risks and that are "First Tier
Securities" at the time of investment. First Tier Securities are those that
are rated in the highest rating category by at least two nationally recognized
security rating organizations ("NRSROs") or by one if it is the only NRSRO
rating such obligation or, if unrated, determined to be of comparable quality.
A security is deemed to be rated if the issuer has any security outstanding of
comparable priority and security which has received a short-term rating by an
NRSRO. Fairfield will determine that an obligation presents minimal credit
risks or that unrated investments are of comparable quality, in accordance with
guidelines established by Navigator's Board. Navigator's Board must approve or
ratify the purchase of any unrated obligations or obligations rated by only one
NRSRO.
Navigator's Board has also undertaken to establish procedures
reasonably designed, taking into account current market conditions and each
Fund's investment objective, to stabilize each Fund's net asset value per Share
for purposes of sales and redemptions at $1.00. These procedures include
review by such Board, at such intervals as it deems appropriate, to determine
the extent, if any, to which either Fund's net asset value per Share calculated
by using available market quotations deviates from $1.00 per Share.
In the event such deviation exceeds one-half of one percent, the Rule
requires that Navigator's Board promptly consider what action, if any, should
be initiated. If the Board believes that the extent of any deviation from
either Fund's $1.00 amortized cost
B-11
<PAGE> 41
price per Share may result in material dilution or other unfair results to new
or existing investors, it will take such steps as it considers appropriate to
eliminate or reduce to the extent reasonably practicable any such dilution or
unfair results. These steps may include: selling portfolio instruments prior
to maturity; shortening the average portfolio maturity; withholding or reducing
dividends; or redeeming Shares in kind.
DIVIDENDS
The policy of each Fund is to generally declare its net investment
income on a daily basis and to make distributions to shareholders in the form
of monthly dividends.
Net income for dividend purposes includes (i) interest and dividends
accrued (whether taxable or tax-exempt) and discount earned on a Fund's assets
(including both original issue and market discount), less (ii) amortization of
any premium on such assets, and accrued expenses. Capital gain distributions
(if any) would be calculated separately and distributed to shareholders on an
annual basis.
YIELDS
SEVEN-DAY YIELD
Each Fund's standardized 7-day yield is computed by determining the
net change, exclusive of capital changes, in the value of a hypothetical
pre-existing account in the Fund having a balance of one Share at the beginning
of the period, dividing the net change in account value by the value of the
account at the beginning of the base period to obtain the base period return,
and multiplying the base period return by 365/7. The net change in the value
of an account in the Fund includes the value of additional Shares purchased
with dividends from the original Share and any such additional Shares, and all
fees, other than non-recurring account or sales charges, that are charged to
all shareholder accounts in proportion to the length of the base period and the
Fund's average account size. The capital changes to be excluded from the
calculation of the net change in account value are realized gains and losses
from the sale of securities and unrealized appreciation and depreciation. A
Fund's effective annualized yield is computed by compounding the unannualized
base period return (calculated as above) by adding 1 to the base period return,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from
the result.
TAXABLE EQUIVALENT YIELD (For Tax-Free Money Market)
The Fund's taxable equivalent yield is determined by dividing its
current tax-free yield (net of any fees charged by Institutions) by the sum of
one minus the investor's current tax bracket (e.g., 15%, 28%, 31%, 36%, and
39.6%).
B-12
<PAGE> 42
The resulting yield is what an investor would need to earn from a
taxable investment in order to realize an "after-tax" benefit equal to the
tax-free yield provided by the Fund.
ADDITIONAL INFORMATION CONCERNING TAXES
IN GENERAL
The following discussion of federal income tax consequences is based
on the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
TAX STATUS OF EACH FUND
1. INTERNAL REVENUE CODE
Each Fund intends to continue to qualify and elect to be treated for
each taxable year as a "regulated investment company" ("RIC") under Subchapter
M of the Code. Accordingly, a Fund must, among other things: (a) derive at
least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities or foreign currencies, and certain other
related income, generally including gains from options, futures and forward
contracts; (b) derive less than 30% of its gross income each taxable year from
the sale or other disposition of the following items if held less than three
months -- (A) stock or securities, (B) options, futures or forward contracts
(other than options, futures or forward contracts on foreign currencies), and
(C) foreign currencies (or options, futures or forward contracts on foreign
currencies), that are not directly related to the Fund's principal business of
investing in stocks or securities (or options or forward contracts with respect
to stock or securities); and (c) diversify its holdings so that at the end of
each fiscal quarter of the Fund's taxable year, (i) at least 50% of the market
value of the Fund's total assets is represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities,
with such other securities limited in respect to any one issuer, to an amount
not greater than 5% of the value of the Fund's total assets and not greater
than 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its total assets is invested in the securities (other
than U.S. Government securities or securities of other RICs) of any one issuer
or two or more issuers which the Fund controls and which are engaged in the
same, similar, or related trades or businesses.
In addition to the requirements described above, in order to qualify
as a RIC, a Fund must distribute at least 90% of its net investment income
(which generally includes dividends, taxable
B-13
<PAGE> 43
interest, and net short-term capital gains less operating expenses) and at
least 90% of its tax-exempt interest income to shareholders. If a Fund meets
all of the RIC requirements, it will not be subject to federal income tax on
any of its net investment income or capital gains that it distributes to
shareholders.
2. FEDERAL EXCISE TAX
A non-deductible, 4% federal excise tax will be imposed on any
RIC to the extent that it does not distribute to investors in each calendar year
an amount equal to (i) 98% of its calendar year ordinary income, (ii) 98% of its
capital gain net income (the excess of short- and long-term capital gains over
short- and long-term capital losses) for the one-year period ending October 31,
and (iii) 100% of any undistributed ordinary income or capital gain net income
from the prior year.
As discussed herein, each Fund intends to declare and pay dividends
and any capital gain distributions so as to avoid imposition of the federal
excise tax.
FOR TAX-FREE MONEY MARKET:
3. MUNICIPAL SECURITY TAX ISSUES
As the Fund is designed to provide investors with current tax-exempt
interest income, it is not intended to constitute a balanced investment
program. Shares of the Fund would not be suitable for tax-exempt shareholders
and plans, since such shareholders and plans would not gain any additional
benefit from certain of the Fund's dividends being tax-exempt.
In addition, the Fund may not be an appropriate investment for
entities which are "substantial users" (or "related persons" thereof) of
facilities financed by "industrial development bonds" or "private activity
bonds." "Substantial user" is defined under U.S. Treasury Regulations to
include a non-exempt person who regularly uses a part of such facilities in his
trade or business and (a) whose gross revenues derived with respect to such
facilities are more than 5% of the total revenues derived by all users of such
facilities; (b) who occupies more than 5% of the usable area of such
facilities; or (c) for whom such facilities or a part thereof were specifically
constructed, reconstructed or acquired. "Related persons" include certain
related natural persons, affiliated corporations, a partnership and its
partners, and an S Corporation and its shareholders.
TAX STATUS OF EACH FUND'S DISTRIBUTIONS
Although each Fund does not expect to realize any net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
such gain, if any, will be distributed at least annually. Each Fund will have
no tax liability with respect to such distributions and they will be taxable to
Fund shareholders as
B-14
<PAGE> 44
a long-term capital gain, regardless of how long a shareholder has held Fund
Shares. Such distributions will be designated as "capital gain distributions"
in a written notice mailed by the Fund to shareholders not later than sixty days
after the close of each Fund's taxable year.
While each Fund expects to qualify as a RIC and to be relieved of all
or substantially all federal income taxes, depending upon the extent of its
activities in states and localities in which its offices are maintained, in
which its agents or independent contractors are located, or in which it is
otherwise deemed to be conducting business, each Fund may be subject to the tax
laws of such states or localities.
If for any taxable year either Fund does not qualify for the special
tax treatment afforded to RICs, all of that Fund's taxable income will be
subject to federal income tax at regular corporate rates (without any deduction
for distributions to Fund shareholders), and all of that Fund's distributions
will be taxable to shareholders as ordinary income. Such dividends would then
be eligible for the dividends-received deduction for corporate shareholders.
For Tax-Free Money Market:
Similarly, while the Fund will seek to invest substantially all of its
assets in tax-exempt obligations (except on a temporary basis or for temporary
defensive periods), any investment company taxable income earned by the Fund
will be distributed. In general, the Fund's investment company taxable income
would include interest income received from Temporary Investments (as defined
herein), plus any net short-term capital gain realized by the Fund.
The percentage of total dividends paid by the Fund with respect to any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all shareholders receiving dividends during such year. If a
shareholder receives exempt-interest dividends with respect to any Share and
such Share is held for six months or less, any loss on the sale or exchange of
such Share will be disallowed to the extent of the amount of such dividends.
Also, if a shareholder receives a capital gain distribution with respect to
Shares that are subsequently sold after being held for six months or less, such
loss will be treated as a long-term capital loss to the extent of the capital
gain distribution.
AMT OBLIGATIONS
While the Fund is permitted to purchase "private activity bonds" that
are subject to the Alternative Minimum Tax imposed by Section 55 of the Code
(the "AMT"), the Fund does not currently hold or anticipate purchasing such
bonds. However, if it did so, a portion of the dividends received would be
subject to the AMT. The purchase of such bonds by the Fund could have a
material effect on the AMT liability of all investors, and hence the Fund does
not intend to invest any portion of its assets in such bonds.
B-15
<PAGE> 45
Corporate shareholders in particular should note that all
exempt-interest dividends are includable in the computation of "adjusted
current earnings" for AMT purposes, regardless of when the bonds from which
they are derived were issued or whether they are derived from "private activity
bonds." Accordingly, corporate shareholders should consult their tax advisers
regarding the impact that holding such Shares would have on their own AMT
liability.
DESCRIPTION OF SHARES
IN GENERAL
NMM's and NTFMM's Articles of Incorporation each authorize Navigator's
Board to issue up to 2 billion full and fractional shares of Common Stock. NMM
and NTFMM each presently offers one class of Common Stock, as defined in the
Prospectus.
Navigator's Board may classify or reclassify any authorized but
unissued shares of NMM or NTFMM into one or more additional Portfolios, or
series of shares within a Portfolio.
Shares have no subscription or pre-emptive rights and only such
conversion or exchange rights as Navigator's Board may grant in its discretion.
When issued for payment as described in the Funds' Prospectus and this
Statement of Additional Information, each Fund's Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of NMM or NTFMM,
Shares of the respective Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the Fund and any future additional
Portfolios, of any general assets not belonging to any particular Portfolio
which are available for distribution.
RULE 18f-2
Rule 18f-2 under the Investment Company Act provides that any matter
required to be submitted to the holders of the outstanding voting securities of
an investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each Portfolio affected by the matter. A Portfolio is
affected by a matter unless it is clear that the interests of each Portfolio in
the matter are identical or that the matter does not affect any interest of the
Portfolio. Under Rule 18f-2, the approval of an investment advisory agreement
or any change in a fundamental investment policy would be effectively acted
upon with respect to a Portfolio only if approved by a majority of the
outstanding shares of such Portfolio. However, Rule 18f-2 also provides that
the ratification of independent auditors, the approval of principal
underwriting contracts, and the election of Directors may be effectively acted
upon by shareholders of the Company voting together without regard to class.
Notwithstanding any provision of Maryland law requiring a greater vote
of the Company's shares (or of any class voting as a class) in connection with
any corporate action, unless otherwise provided by law (for example, by Rule
18f-2) or by NMM's or NTFMM's Articles of Incorporation, NMM and NTFMM may take
or authorize such
B-16
<PAGE> 46
action upon the favorable vote of the holders of more than 50% of the
outstanding Common Stock of the respective Fund and any future additional
Portfolios (voting together without regard to class).
DIRECTORS AND OFFICERS
The Funds' Prospectus contains the names and general background
information concerning the Directors and Executive Officers of Navigator's
Board. The "non-interested" Directors receive fees and expenses for each
meeting of Navigator's Board, and an annual retainer. No officer or employee of
Fairfield receives any compensation from NMM and NTFMM for acting as a Director
of the Company (although they are reimbursed for expenses incurred in connection
with their attendance at Board meetings), and the Officers of NMM and NTFMM
receive no compensation for performing the duties of their offices. Fairfield,
of which Mr. Walker is an officer, receives fees from NMM and NTFMM for acting
as Manager. Morgan, Lewis & Bockius LLP, of which Mr. Jennings is a partner,
receives legal fees as counsel to NMM and NTFMM and as counsel to the Manager.
The Directors and Officers of NMM and NTFMM as a group own less than 1% of the
outstanding Shares of either Fund.
The following table provides certain information relating to the
compensation of the Funds' directors for the fiscal year ended February 28,
1997. Neither Fund has any retirement plan for its directors.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL COMPENSATION FROM
CORPORATION AND FUND
AGGREGATE COMPENSATION COMPLEX PAID TO
NAME OF PERSON AND POSITION FROM CORPORATION(A) DIRECTORS(B)
- --------------------------- ---------------------- -----------------------
<S> <C> <C>
Robert J. Walker, Jr. - None None
Chairman, President and Director
Richard G. Gilmore -
Director $6,000 $6,000
Robert E. Keith -
Director $5,000 $5,000
Jan J. Wieckowski -
Director $6,000 $6,000
Philip D. Croll* $1,000 $1,000
</TABLE>
(A) Represents fees paid to each director during the fiscal year ended
February 28, 1997.
(B) Represents aggregate compensation paid to each director during the
fiscal year ended February 28, 1997.
* Effective June 20, 1996, Philip D. Croll resigned as director.
PRINCIPAL HOLDERS OF SECURITIES
Each Fund believes that as of June 4, 1997, the following nominee
accounts may have been beneficial owners of 5% or more of the outstanding Shares
of each Fund because they possessed voting or investment power with respect to
such Shares:
Prime Obligations:
<TABLE>
<CAPTION>
AMOUNT OF PERCENT OF TOTAL
NAME AND ADDRESS BENEFICIAL OWNERSHIP SHARES OUTSTANDING
- ---------------- -------------------- ------------------
<S> <C> <C>
Fetter & Co.
Steve Bonewicz
c/o CoreStates Bank N.A.
530 Walnut St
Philadelphia, PA 19105 . . . . . . . . . . . . . . . . . . . 97,321,201 . . . . . . . . . . . . 54.04%
First National Bank & Trust
40 S State St
PO Box 158
Newtown, PA 18940 . . . . . . . . . . . . . . . . . . . 16,912,075 . . . . . . . . . . . . 9.39%
National City Bank
4100 W 150th St
Cleveland, Ohio 44135 . . . . . . . . . . . . . . . . . . . 16,838,288 . . . . . . . . . . . . 9.35%
ORT & Co.
P.O. Box 250
Shippensburg, PA 17257 . . . . . . . . . . . . . . . . . . . 11,897,780 . . . . . . . . . . . . 6.60%
Croghan
c/o Croghan Colonial Bank
323 Croghan St
Fremont, OH 43420 . . . . . . . . . . . . . . . . . . . 9,120,033 . . . . . . . . . . . . 5.06%
</TABLE>
B-17
<PAGE> 47
Tax-Free Money Market:
<TABLE>
<CAPTION>
AMOUNT OF PERCENT OF TOTAL
NAME AND ADDRESS BENEFICIAL OWNERSHIP SHARES OUTSTANDING
- ---------------- -------------------- ------------------
<S> <C> <C>
Donald & Co.
c/o Dauphin Deposit
Bank & Trust
213 Market Street
Harrisburg, PA 17101 . . . . . . . . . . . . . . . . . . . 10,459,571 . . . . . . . . . . . . 23.06%
Legg Mason, Inc.
C.J. Daley
111 S. Calvert Street
Baltimore, MD 21203 . . . . . . . . . . . . . . . . . . . 10,138,024 . . . . . . . . . . . . 22.36%
Calhoun & Co.
c/o Comerica Bank
411 W Lafayette
Detroit MI 48275 . . . . . . . . . . . . . . . . . . . 8,878,237 . . . . . . . . . . . . 19.58%
Trusty
c/o American Trust &
Savings Bank
P.O. Box 938
Dubuque, IA 52004-0938 . . . . . . . . . . . . . . . . . . . 5,598,907 . . . . . . . . . . . . 12.34%
Fetter & Co.
c/o CoreStates Bank N.A.
530 Walnut St
Philadelphia, PA 19105 . . . . . . . . . . . . . . . . . . . 3,951,968 . . . . . . . . . . . . 8.71%
United Jersey Bank
c/o Securities Operations
PO Box 821
Hackensack NJ 07602 . . . . . . . . . . . . . . . . . . . 2,612,555 . . . . . . . . . . . . 5.76%
Howard Weil Labouise Friedrichs
Attn Yolanda Wessel
1100 Poydras St
New Orleans, LA 70163 . . . . . . . . . . . . . . . . . . . 2,298,223 . . . . . . . . . . . . 5.06%
</TABLE>
INVESTMENT ADVISER, ADMINISTRATOR, AND DISTRIBUTOR
THE MANAGEMENT AGREEMENT
Investment advisory and administrative services are provided by
Fairfield, as Manager, pursuant to separate "Management Agreements" discussed
in the Prospectus. Fairfield, a wholly-owned subsidiary of Legg Mason, is a
broker-dealer registered with the Securities and Exchange Commission, and is a
member of the National Association of Securities Dealers, Inc. Fairfield also
provides investment and related financial services to institutional clients.
The investment advisory services performed by and the investment
advisory fees payable to Fairfield are described in each Funds' Prospectus.
In addition to serving as Investment Adviser under the Management
Agreements, Fairfield also provides administrative services to each Fund. As
Administrator, Fairfield has agreed to (i) monitor the computation by the
Funds' Transfer Agent of the net asset value per Share, (ii) maintain office
facilities for each Fund, (iii) maintain certain financial accounts and
records, (iv) furnish each Fund statistical and research data, data processing,
clerical, accounting and bookkeeping services, and (v) furnish certain other
services required by each Fund. Fairfield prepares annual and other reports to
the Securities and Exchange Commission, compiles data for and arranges for the
preparation of federal and state tax returns and filings with state securities
commissions, and generally assists in each Fund's operations.
B-18
<PAGE> 48
The administrative fees payable to the Manager for the above services are
described in the Funds' Prospectus.
The Management Agreement between each Fund and Fairfield provides
that Fairfield shall not be liable for any error of judgment or mistake of law
or for any loss suffered by either Fund in connection with its performance
under the Management Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of Fairfield in the performance of its duties, or from reckless disregard by it
of its duties and obligations thereunder.
Unless sooner terminated, each Management Agreement will continue in
effect from year to year if such continuance is approved at least annually by
Navigator's Board, or by vote of a majority of the outstanding Shares of each
Fund (as defined in the Prospectus), and by a majority of the Directors who are
not parties to either Management Agreement or interested persons (as defined in
the Investment Company Act) of any party to the Management Agreement, by vote
cast in person at a meeting called for such purpose. Each Management Agreement
is terminable at any time on sixty days' written notice without penalty by the
Directors, by vote of a majority of the outstanding Shares of either Fund, or
by Fairfield. Each Management Agreement also terminates automatically in the
event of its assignment, as defined in the Investment Company Act.
THE DISTRIBUTION AGREEMENT
In addition to providing management services, Fairfield also acts as
the Distributor of each Fund's Shares. Shares of each Fund are sold on a
continuous basis by Fairfield as agent, although Fairfield is not obliged to
sell any particular amount of Shares. As Distributor, Fairfield pays the costs
of printing and distributing prospectuses to persons who are not shareholders
of either Fund (excluding preparation and printing expenses necessary for the
continued registration of each Fund's Shares) and of preparing, printing and
distributing all sales literature. No compensation is payable by either Fund
to Fairfield for its distribution services.
Unless sooner terminated, each "Distribution Agreement" between the
Funds and Fairfield, dated April 17, 1993, will remain in effect from year to
year if such continuance is approved at least annually by Navigator's Board, or
by vote of a majority of the outstanding Shares of each Fund, and by a majority
of the Directors who are not parties to the Distribution Agreement or
interested persons of any such party, by vote cast in person at a meeting
called for the purpose of voting on such approval.
PORTFOLIO TRANSACTIONS
Pursuant to each Management Agreement, Fairfield (as Investment
Adviser) determines which securities are to be purchased and sold by each Fund
and which brokers are to be eligible to execute the Funds' portfolio
transactions. Portfolio securities are normally purchased directly from the
issuer or from an underwriter or market maker for the securities. Purchases
from underwriters of portfolio securities include
B-19
<PAGE> 49
a commission or concession paid by the issuer to the underwriter,and purchases
from dealers serving as market makers may include the spread between the bid
and asked price. While Fairfield generally seeks competitive spreads or
commissions, each Fund may not necessarily pay the lowest spread or commission
available on each transaction for reasons discussed below.
Allocation of security transactions, including their frequency, to
various dealers is determined by Fairfield in its best judgment and in a manner
deemed fair and reasonable to shareholders. The primary consideration is the
prompt execution of orders in an effective manner at the most favorable price.
Subject to this consideration, dealers who provide supplemental investment
research to Fairfield may receive orders for transactions by each Fund.
Information so received is in addition to and not in lieu of services required
to be performed by Fairfield, nor would the receipt of such information reduce
Fairfield's investment advisory fees. Such information may be useful to
Fairfield in serving both the Funds and their other clients, and conversely,
supplemental information obtained by the placement of business of other clients
may be useful to Fairfield in carrying out its obligations to the Funds.
Each Fund will not acquire portfolio securities issued by, make
savings deposits in, or enter into repurchase or reverse repurchase agreements
with Fairfield or its affiliates, or any Institution owning more than 5% of
either Fund's total assets, and will not give preference to any Institutions
investing in either Fund with respect to such transactions, securities, savings
deposits, repurchase agreements, and reverse repurchase agreements.
CUSTODIAN AND TRANSFER AGENT
CUSTODIAN AGREEMENT
Cash and securities owned by each Fund are held by CoreStates Bank,
N.A. ("CoreStates Bank") as NMM's and NTFMM's Custodian pursuant to separate
Custodian Agreements. Under each Custodian Agreement, CoreStates Bank (i)
holds each Fund's portfolio securities and cash items, (ii) makes receipts and
disbursements of money on behalf of each Fund, (iii) collects and receives all
income and other payments and distributions on account of each Fund's portfolio
securities, and (iv) performs other related services. CoreStates Bank may, in
its discretion and at its own expense, appoint another qualified bank or trust
company to act as its agent in carrying out the provisions of each Custodian
Agreement. Such appointment will not, however, relieve CoreStates Bank of its
responsibilities or liabilities under each Custodian Agreement. Each Fund has
also, from time to time, appointed other custodians to hold its cash and
securities in connection with the investment in repurchase agreements.
TRANSFER AGENCY AGREEMENT
FPS Services Inc. ("FPS"), as NMM's and NTFMM's Transfer Agent,
provides each Fund with transfer agency, dividend disbursing, and accounting
services pursuant to separate Transfer Agency Agreements. Under each Transfer
Agency Agreement, Fund/Plan has agreed to (i) issue and redeem Shares of each
Fund, (ii) forward dividends and distributions to shareholders, (iii) maintain
each Fund's books of original entry, (iv) maintain shareholder accounts,
(v) compute each
B-20
<PAGE> 50
Fund's net asset value per Share and calculate each Fund's net income, and (vi)
perform other related services. FPS' business address is 3200 Horizon Drive,
King of Prussia, Pennsylvania 19406-0903.
FEES
For the services provided under their respective Agreements,
CoreStates Bank (as Custodian) and Fund/Plan (as Transfer Agent) may receive
fees from each Fund. Such fees are based upon relative asset values and
shareholder accounts, and may include certain transaction charges and
out-of-pocket expenses.
EXPENSES
Except as noted herein and in the Funds' Prospectus, each Fund's
service contractors bear all expenses incurred in connection with the
performance of their services. Similarly, each Fund bears the expenses
incurred in its operations. Expenses borne by each Fund include: taxes
(including preparation of returns); interest; brokerage fees and commissions,
if any; fees of the "non-interested" Navigator Directors; Securities and
Exchange Commission fees; state securities qualification fees (including
preparation of filings); costs of preparing and printing prospectuses for
regulatory purposes and for distribution to current Fund shareholders; charges
of the Custodian and the Transfer Agent; auditing and legal expenses;
management fees (investment advisory and administrative); certain insurance
premiums; costs of maintenance of each Fund's existence; costs of shareholder
reports and shareholder meetings; and any extraordinary expenses incurred in
each Fund's operations.
The aggregate rate of the investment advisory fees payable to
Fairfield is subject to reduction as each Fund's net assets increase. The
aggregate rate of Fairfield's administrative fees is not subject to such
reduction. However, if total expenses borne by a Fund in any fiscal year
exceed expense limitations imposed by applicable state securities regulations,
Fairfield will reimburse that Fund by the amount of such excess.
B-21
<PAGE> 51
FINANCIAL STATEMENTS
The financial statements for each Fund for the fiscal year ended
February 28, 1997 and the report of Ernst & Young LLP, independent auditors,
all of which are included in the Funds' 1997 Annual Report to Shareholders,
are hereby incorporated by reference in this Statement of Additional
Information. Copies of the Funds' 1997 Annual Report to Shareholders may be
obtained without charge by contacting Fairfield.
INDEPENDENT AUDITORS
Ernst & Young LLP, Two Commerce Square, Suite 4000, 2001 Market Street,
Philadelphia, PA 19103, has been selected by the Board of Directors to serve as
the Funds' independent auditors.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP, (of which Mr. Jennings, Secretary of the
Company, is a partner), 2000 One Logan Square, Philadelphia, Pennsylvania 19103,
serves as counsel to the Funds. From time to time, Morgan, Lewis &
Bockius LLP has rendered legal services to Fairfield.
MISCELLANEOUS
NMM and NTFMM are each registered with the Securities and Exchange
Commission as a management investment company. Such registration does not
involve supervision by the Commission of the management or policies of either
Fund.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in NMM's and NTFMM's Registration
Statements filed with the Securities and Exchange Commission. Copies of such
information may be obtained from the Commission upon payment of the prescribed
fee.
The Prospectus and this Statement of Additional Information do not
constitute an offering of the securities herein described in any state in which
such offering may not lawfully be made. No salesman, dealer, or other person
is authorized to give any information or make any representations other than
those contained in the Prospectus and this Statement of Additional Information.
B-22
<PAGE> 52
APPENDIX
- RATED INVESTMENTS -
FOR TAX-FREE MONEY MARKET:
NOTES AND VRDOS
The following summarizes the highest ratings assigned by MOODY'S to
municipal notes and variable rate demand obligations:
"MIG-1"/"VMIG-1": Obligations bearing these designations are of the
best quality, enjoying strong protection by established cash flows,
superior liquidity support, or demonstrated broad-based access to the
market for refinancing.
The following summarizes the highest rating assigned by S&P to
municipal notes:
"SP-1": This is the highest rating assigned by S&P to municipal notes
and indicates very strong or strong capacity to pay interest and repay
principal. Those issues determined to possess overwhelming safety
characteristics are given a PLUS (+) designation.
FOR EACH FUND:
COMMERCIAL PAPER
Commercial paper ratings of MOODY'S are current assessments of the
ability of issuers to repay punctually senior debt obligations which have an
original maturity of no more than one year.
"PRIME-1": The rating "Prime-1," or "P-1," is the highest commercial
paper rating assigned by Moody's. These issues (or related supporting
institutions) are considered to have a superior capacity for repayment
of short-term debt obligations.
Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.
"A-1": This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted "A-1+."
- UNRATED INVESTMENTS -
Prior to the purchase of any unrated security or instrument by a Fund, the
Manager shall evaluate the creditworthiness of the issuer of the security or
instrument, considering all factors deemed relevant, which may include: a
review of the issuer's financial statements; a comparison of the issuer's
financial position with those of other companies in the same industry and a
review of the general outlook of the issuer's industry; a review of the
profitability, capital adequacy, quality of assets, liquidity, interest
sensitivity, and financial
B-23
<PAGE> 53
reports of the institution involved; and the paper rating of such institution's
holding company, if any. Based upon the foregoing evaluation, the Manager
shall determine whether the unrated security or instrument is of "comparable
investment quality" to securities or instruments having been assigned at least
the minimum ratings described herein and in the Funds' Prospectus. In the
event that subsequent to the purchase of a rated (or unrated) security or
instrument for a Fund, such security or instrument falls below the minimum
standards required for purchase by the respective Fund, the Manager shall
consider such an event in determining whether that Fund should continue to hold
the security or instrument in question, and shall report to the Directors of
Navigator's Board any securities or instruments which are held subsequent to
such an event.
B-24
<PAGE> 54
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) The following financial statements are incorporated by reference
into Parts A and B of the Registration Statement from the
Registrant's 1997 Annual Report to Shareholders filed on
April 28, 1997.
- Report of Independent Auditors dated April 11, 1997.
- Statement of Net Assets - February 28, 1997.
- Statement of Operations for the fiscal year ended
February 28, 1997.
- Statement of Changes in Net Assets for the fiscal year
ended February 28, 1997 and the nine-month period
ended February 29, 1996.
- Notes to Financial Statements.
(2) All required financial statements are incorporated by reference
from the Registrant's 1997 Annual Report to Shareholders and
included in Parts A and B hereof. All other financial
statements and schedules are inapplicable.
(b) Exhibits:
(1)(a) Articles of Incorporation of Registrant dated October 31,
1986, originally filed on September 28, 1987 as Exhibit (1) of
Post-Effective Amendment No. 4 to Registrant's Registration
Statement--filed herewith.
(b) Articles Supplementary dated December 9, 1986--filed
herewith.
(2) By-Laws, as amended by Registrant's Directors on March 6,
1990 originally filed on August 9, 1990 as Exhibit (2) of
Post-Effective Amendment No. 7 to Registrant's Registration
Statement--filed herewith.
(3) None.
(4) None.
(5) Management Agreement between Registrant and Fairfield Group,
Inc., dated April 17, 1993 originally filed as Exhibit 5 to
Post-Effective Amendment No. 10 of Registrant's Registration
Statement--filed herewith.
<PAGE> 55
(6) Distribution Agreement, dated April 17, 1993, between
Registrant and Fairfield Group, Inc. originally filed as
Exhibit 6 to Post-Effective Amendment No. 10 of
Registrant's Registration Statement--filed herewith.
(7) None.
(8) (a) Custody Agreement between Registrant and CoreStates Bank,
N.A. dated June 23, 1997--filed herewith.
(b) Transfer Agency Agreement between Registrant and Fund/Plan
Services Inc., dated December 9, 1986--filed herewith.
<PAGE> 56
(9) None
(10) (a) Opinion of Morgan, Lewis & Bockius LLP, originally
filed as Exhibit 10 to Pre-Effective Amendment No. 1
to Registrant's Registration Statement filed on July 3,
1985 -- filed herewith.
(b) Opinion of Morgan, Lewis & Bockius LLP, -- filed under Rule
24f-2 as part of Registrant's Rule 24f-2 Notice.
(11) Consent of Ernst & Young LLP -- filed herewith.
(12) None.
(13) None.
(14) None.
(15) None.
(16) Schedules for Computation of Performance Quotations provided in
this Post-Effective Amendment -- filed herewith.
(24) Powers of Attorney, dated June 27, 1995 incorporated by
reference to Exhibit 24 of Post-Effective Amendment No. 12 to
Registrant's Registration Statement on filed on August 18,
1995.
(27) Financial Data Schedule -- filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
<PAGE> 57
The following information is as of June 11, 1997:
(1) (2)
Title of Class Number of Recordholders
Shares of Common Stock, 25
$0.001 par value
Item 27. Indemnification
Article VII of the Articles of Incorporation of the Fund provides for
the indemnification of the directors and the officers of the Fund to the full
extent permitted by the laws of the State of Maryland and by the Investment
Company Act. Under the Maryland law pertaining to corporations and associations,
a corporation may indemnify any director made a party to any proceeding by
reason of service in such capacity if the director acted in good faith and (i)
in the case of conduct in the director's official capacity with the corporation,
reasonably believed that the conduct was in the best interests of the
corporation, (ii) in the case of any criminal proceeding, had no reasonable
cause to believe that the conduct was unlawful and (iii) in all other cases,
reasonably believed that the conduct was at least not opposed to the best
interests of the corporation.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant by the Registrant pursuant to such By-Laws or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by directors, officers or controlling
persons of the Registrant in connection with the successful defense of any act,
suit or proceeding) is asserted by such directors, officers or controlling
persons in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Advisor
Fairfield Group, Inc. (the "Manager"), Registrant's manager and
distributor, was organized on September 21, 1983. The Manager is a wholly-owned
subsidiary of Legg Mason, Inc. Legg Mason, Inc., headquartered in Baltimore, is
a holding
<PAGE> 58
company which provides securities brokerage, investment advisory, investment
banking and mortgage banking services through its wholly-owned subsidiaries.
Information about the Manager and its officers and directors is contained in the
response to Item 29 hereof.
Item 29. Principal Underwriter
(a) Fairfield Group, Inc. also acts as investment advisor,
distributor, administrator for Navigator Tax-Free Money Market Fund, Inc., a
management investment company registered under the Investment Company Act of
1940.
(b) Directors and executive officers of Fairfield Group, Inc., as of
June 1, 1997, were as follows:
<TABLE>
<CAPTION>
Positions Positions and
Name and Principal and Offices Offices
Business Addresses with Fairfield with Registrant
- ------------------ -------------- ---------------
<S> <C> <C>
Robert J. Walker, Jr.* President, Chief Chairman,
Executive Officer President and
and Director Director
John F. Curley, Jr. Director None
211 S. Calvert Street
Baltimore, MD 21203
Edward A. Taber Director None
211 S. Calvert Street
Baltimore, MD 21203
Gerard J. Wills* Chief Financial Vice President
Officer, Vice and Treasurer
President, Secretary
and Treasurer
</TABLE>
- -----------------
*200 Gibraltar Road, Horsham, PA 19044
Item 30. Location of Accounts and Records
Books or other documents required to be maintained by Section 31(a)
of the Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records are
maintained at the offices of Registrant's Custodian:
<PAGE> 59
CoreStates Bank, N.A.
1500 Market Street
Philadelphia, PA 19101
(b) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(C) and (D);
(4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required
books and records are maintained at the offices of Registrant's
Manager:
Fairfield Group, Inc.
200 Gibraltar Road
Horsham, PA 19044
(c) With respect to Rules 31a-1(b)(4), and certain other documents,
the required books and records are maintained at the
Registrant's principal office:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
(d) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and
31a-1(f), the required books and records are maintained at the
principal offices of the Registrant's Administrator:
Fairfield Group, Inc.
200 Gibraltar Road
Horsham, PA 19044
Item 31. Management Services
None.
Item 32. Undertakings
Not applicable.
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirments for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 14 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Horsham and Commonwealth of
Pennsylvania on the 27th day of June, 1997 and hereby certifies that this
Amendment No. 14 meets all the requirements for effectiveness pursuant to
paragraph (b) of Rule 485.
NAVIGATOR MONEY MARKET FUND, INC.
/s/ Robert J. Walker, Jr.
---------------------------------------------
President
ATTEST:
/s/ James W. Jennings
- ----------------------------------
Secretary
Pursuant to the requirements of the Securities Act of 1933,
Post-Effective Amendment No. 14 to the Registration Statement of Navigator Money
Market Fund, Inc. has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert J. Walker, Jr. Chairman, June 27, 1997
- ------------------------- President and
Robert J. Walker, Jr. Director
* Director June 27, 1997
- ------------------------
Richard G. Gilmore
* Director June 27, 1997
- ------------------------
Robert E. Keith
* Director June 27, 1997
- ------------------------
Jan J. Wieckowski
/s/ Gerard J. Wills Vice President June 27, 1997
- ------------------------ and Treasurer
Gerard J. Wills (Principal
Financial and
Accounting Officer)
*By: /s/ Robert J. Walker, Jr.
---------------------------
Robert J. Walker, Jr.
Attorney-In-Fact
<PAGE> 61
NAVIGATOR MONEY MARKET FUND, INC.
EXHIBIT INDEX
EDGAR
Exhibit No. Description of Exhibit
- ----------- ----------------------
Ex-99.B1a Articles of Incorporation
Ex-99.B1b Articles Supplementary
Ex-99.B2 By-laws
Ex-99.B5 Management Agreement
Ex-99.B6 Distribution Agreement
Ex-99.B8a Custodian Agreement
Ex-99.B8b Transfer Agent Agreement
Ex-99.B10 Consent of Morgan, Lewis & Bockius
Ex-99.B11 Consent of Ernst & Young LLP
Ex-99.B16 Schedule for Computation of Performance Quotations
provided in the Post-Effective Amendment
Ex-27 Financial Data Schedule
<PAGE> 1
Ex. 1
ARTICLES OF INCORPORATION
OF
NAVIGATOR TAX-FREE MONEY MARKET FUND, INC.
*****
ARTICLE I
THE UNDERSIGNED, James W. Jennings, Esquire, whose post office address
is 2000 Logan Square, Philadelphia, Pennsylvania 19103, being at least eighteen
years of age, does hereby act as incorporator, under and by virtue of the
General Laws of the State of Maryland authorizing the formation of corporations
and with the intention of forming a corporation.
ARTICLE II
The name of the Corporation is:
NAVIGATOR TAX-FREE MONEY MARKET FUND, INC.
ARTICLE III
The purpose for which the Corporation is formed is to act as an
open-end diversified management investment company under the Investment Company
Act of 1940.
ARTICLE IV
The Corporation is expressly empowered as follows:
(1) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(2) To issue and sell shares of its capital stock in such amounts and
on such terms and conditions and for such purposes and for such amount or kind
of consideration as may now or hereafter be permitted by law.
(3) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholder
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by law and by the Charter of the Corporation.
<PAGE> 2
(4) To enter into a written contract or contracts with any person or
persons providing for a delegation of the management of all or part of the
Corporation's securities portfolio(s) and also for the delegation of the
performance of various administrative or corporate functions, subject to the
direction of the Board of Directors. Any such contract or contracts may be made
with any person even though such person may be an officer, other employee,
director or stockholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
stockholder may be interested.
(5) To enter into a written contract or contracts appointing one or
more distributors or agents or both for the sale of the shares of the
Corporation on such terms and conditions as the Board of Directors of this
Corporation may deem reasonable and proper, and to allow such person or persons
a commission on the sale of such shares. Any such contract or contracts may be
made with any person even though such person may be an officer, other employee,
director or stockholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
stockholder may be interested.
(6) To enter into a written contract or contracts employing such
custodian or custodians for the shares, such dividend disbursing agent or
agents, and such transfer agent or agents, and registrar or registrars for its
shares, on such terms and conditions as the Board of Directors of this
Corporation may deem reasonable and proper for the conduct of the affairs of the
Corporation, and to pay the fees and disbursements of such custodians, dividend
disbursing agents, transfer agents, and registrars out of the income and/or any
other property of the Corporation. Notwithstanding any other provisions of these
Articles of Incorporation or the By-Laws of the Corporation, the Board of
Directors may cause any or all of the property of the Corporation to be
transferred to, or to be acquired and held in the name of, a custodian so
appointed or any nominee or nominees of this Corporation or nominee or nominees
of such custodian satisfactory to the Board of Directors.
(7) To employ the same person, partnership (general or limited),
association, trust or corporation in any multiple capacity under Sections (4),
(5) and (6) of this Article, who may receive compensation from the Corporation
in as many capacities in which such person, partnership (general or limited),
association, trust or corporation shall serve the Corporation.
(8) To do any and all such further acts or things and to exercise any
and all such further powers or rights as may be
2
<PAGE> 3
necessary, incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of the purposes stated in Article III
thereof.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Law of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE V
The post office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in this State is the Corporation Trust Incorporated, a corporation
of this State, and the post office address of the resident is 32 South Street,
Baltimore, Maryland 21202.
ARTICLE VI
(1) The total number of shares of capital stock which the Corporation
shall have authority to issue is Two billion (2,000,000,000) shares, of the par
value of One Mill ($0.001) per share and of the aggregate par value of Two
Million Dollars ($2,000,000), all of which Two Billion (2,000,000,000) shares
are designated Common Stock.
(2) The Corporation may issue shares of any class or series in
fractional denominations to the same extent as whole shares. Any fractional
share shall carry proportionately all the rights of a whole share of the same
class or series, excepting any right to receive a certificate evidencing such
fractional share, but including, without limitation, the right to vote and the
right to receive dividends.
(3) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of the Charter and the By-laws of the
Corporation.
(4) The Board of Directors shall have authority by resolution to
classify and reclassify any authorized but unissued shares of capital stock from
time to time by setting or changing in any one or more respects the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms to the provisions of Sections 5,6, and 7
3
<PAGE> 4
of this Article IV and applicable law. The power of the Board of Directors to
classify or reclassify the shares of capital stock shall include, without
limitation, authority to classify or reclassify any such stock into a class or
classes of capital stock and to divide and classify shares of any class into one
or more series of such class, by determining, fixing or altering one or more of
the following:
(i) The distinctive designation of such class or series; provided that,
unless otherwise prohibited by the terms of such class or series, the number of
shares of any class or series may be decreased by the Board of Directors in
connection with any classification or reclassification of unissued shares and
the number of shares of any class or series which have been redeemed, purchased
or otherwise acquired by the Corporation shall remain part of the authorized
capital stock and be subject to classification and reclassification as provided
herein.
(ii) Whether or not, and, if so, the rates, amounts and times at which,
and the conditions under which, dividends shall be payable on shares of such
class or series.
(iii) Whether or not shares of such class or series shall have voting
rights, in addition to any voting rights provided by law and, if so, the terms
of such voting rights.
(iv) The rights of the holders of shares of such class or series upon
the liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation.
(v) Any other rights, restrictions on transferability, and
qualifications of shares of such class or series, not inconsistent with law and
the Charter of the Corporation.
(5) All consideration received by the Corporation for the issue or sale
of stock of any class, together with all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the class of shares
of stock with respect to which such assets, payments, or funds were received by
the Corporation for all purposes, and shall be subject only to the rights of
creditors, and shall be so handled upon the books of account of the Corporation.
Such assets, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, any assets
derived from any reinvestment of such proceeds in whatever form, and a portion
of any general assets of the Corporation not belonging to a
4
<PAGE> 5
particular class, are herein referred to as "assets belonging to" such class.
(6) In the event of the liquidation or dissolution of the Corporation,
stockholders of each class shall be entitled to receive, as a class, out of the
assets of the Corporation available for distribution to stockholders, but other
than general assets not belonging to any particular class of stock, the assets
belonging to such class, such assets to be distributed among such stockholders
in proportion to the number of shares of such class held by them and recorded on
the books of the Corporation. In the event that there are any general assets not
belonging to any particular class of stock and available for distribution,
distribution of such assets shall be made to the holders of stock of all classes
in proportion to the asset value of the respective classes determined as
hereinafter provided.
(7) The assets belonging to any class of stock shall be charged with
the liabilities in respect of such class, and shall also be charged with such
class's share of the general liabilities of the Corporation, in proportion to
the asset value of the respective classes determined as hereinafter provided.
The determination of the Board of Directors shall be conclusive as to the amount
of such liabilities, including the amount of accrued expenses and reserves; as
to any allocation of the same expenses and reserves; as to any allocation of the
same to a given class; and as to whether the same, or any general assets of the
Corporation, are allocable to one or more classes. The liabilities so allocated
to a class are herein referred to as "liabilities belonging to" such class.
ARTICLE VII
(1) The number of directors of the Corporation shall be four (4), which
number may be increased or decreased pursuant to the By-laws of the Corporation
but shall never be less than three (3), unless there is not stock of the
Corporation outstanding, in which case the number of directors of the
Corporation may be less than three(3) but shall not be less than one(1). The
names of the directors who shall act until the first annual meeting of
stockholders or until their successors are duly elected and qualified are:
Francis J. Bruzda and Richard B. Seidel.
(2) No holder of stock of the Corporation shall, as such holder, have
any right to purchase or subscribe for any shares of the capital stock of the
Corporation or any other security of the Corporation which it may issue or sell
(whether out of the number of shares unauthorized by the Charter, or out of any
shares of the capital stock of the Corporation acquired by
5
<PAGE> 6
it after the issue thereof or otherwise) other than such right, if any, as the
Board of Directors, in its discretion, may determine.
(3) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General laws
of the State of Maryland and the Investment Company Act of 1940, now or
hereafter in force, including advance of related expenses.
ARTICLE VIII
(1) To the extent that the Corporation has funds or other property
legally available therefor, each holder of shares of capital stock of the
Corporation shall be entitled to require the Corporation to redeem all or any
part of the shares of capital stock of the Corporation standing in the name of
such holder on the books of the Corporation, and all shares of capital stock
issued by the Corporation shall be subject to redemption by the Corporation, at
the redemption price of such shares as in effect from time to time as may be
determined by the Board of Directors of the Corporation in accordance with the
provisions hereof, subject to the right of the Board of Directors of the
corporation to suspend the right of redemption of shares of capital stock of the
Corporation or postpone the date of payment of such redemption price in
accordance with the provisions of applicable law, and the Corporation shall have
the right at any time to redeem the shares owned by any holder of capital stock
of the Corporation (i) if such redemption is, in the opinion of the Board of
Directors of the Corporation, desirable in order to prevent the Corporation from
being deemed as a "personal holding company" within the meaning of the Internal
Revenue code of 1954, as amended, (ii) if the value of such shares in the
account maintained by the Corporation or its transfer agent for any class of
stock is less than $500; provided, however, that each stockholder shall be
notified that the value of his account is less than such amount and allowed
sixty days to make additional purchases of shares which will increase the value
of his account to at least $1,000 before such redemption is processed by the
Corporation, or (iii) if the net income with respect to any particular class of
shares should be negative or it should otherwise be appropriate to carry out the
Corporation's responsibilities under the Investment Company Act of 1940, in each
case subject to such further terms and conditions as the Board of Directors of
the Corporation may from time to time adopt. The redemption price of shares of
capital stock of the Corporation shall, except as otherwise provided in this
section be the net asset value thereof as determined by the Board of Directors
of the Corporation from time to time in accordance with
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<PAGE> 7
the provisions of applicable law, less such redemption fee or other charge, if
any, as may be fixed by resolution of the Board of Directors of the Corporation.
Payment of the redemption price shall be made in cash by the Corporation at such
time and in such manner as may be determined from time to time by the Board of
Directors of the Corporation unless, in the opinion of the board of Directors,
which shall be conclusive, conditions exist which make payment wholly in cash
unwise or undesirable; in such event the Corporation may make payment wholly or
partly be securities or other property included in the assets belonging or
allocable to the class of the shares redemption which is being or allocable to
the class of the shares redemption of which is being sought, the value of which
shall be determined as provided herein.
(2) Each holder of any class of stock of the Corporation who surrenders
his certificate in good delivery form to the Corporation or, if the shares in
question are not represented by certificates, who delivers to the Corporation a
written request in good order signed by the stockholder, shall, to the extent
permitted by the By-laws or by resolution of the Board of Directors, be entitled
to convert the shares in question, on the basis hereinafter set forth, into
shares of stock of any class of the Corporation. The Corporation shall determine
the net asset value, as provided herein, of the shares to be converted and may
deduct therefrom a conversion cost, in any amount determined within the
discretion of the board of Directors. Within five(5) business days after such
surrender and payment of any conversion cost, the Corporation shall issue to the
stockholder such number of shares of stock of the class desired as, taken at the
net asset value thereof determined as provided herein the same manner and at the
same time as that of the shares surrendered, shall equal the net asset value of
the shares surrendered, less any conversion cost as aforesaid. Any amount
representing a fraction of a share may be paid in cash at the option of the
Corporation. Any conversion cost may be paid in cash at the option of the
Corporation. Any conversion cost may be paid and/or assigned by the Corporation
to the underwriter and/or to any other agency, as it may elect.
ARTICLE IX
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practices by or pursuant to the
direction of the Board of Directors, as to the amount of assets, obligations or
liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payments of dividends, as to the amount at any time
legally available for the
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payments of dividends, as to the amount of any reserves or charges set up and
the propriety thereof, as to the time of or purpose for creating reserves or as
to the use, alteration or cancellation of any reserves or charges (whether or
not any obligation or liability for which such reserves or charges shall have
been created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged), as to the value of any security owned by the
Corporation or as to any other matters relating to the issuance, sale,
redemption or other acquisition or disposition of securities or shares of
capital stock of the Corporation, and any reasonable determination made in good
faith by the Board of Directors as to whether any transaction constitutes a
purchase of securities on "margin," a sale of securities "short," or an
underwriting of the sale of, or a participation in any underwriting or selling
group in connection with the public distribution of, any securities, shall be
final and conclusive, and shall be binding upon the Corporation and all holders
of its capital stock, past, present and future, and shares of the capital stock
or acceptance of share certificates, that any and all such determinations shall
be binding as aforesaid. No provision of the Charter of the Corporation shall be
effective to (i) require a waiver of compliance with any provision of the
Securities Act of 1933, as amended, or the Investment Company Act of 1940, as
amended, or of any valid rule, regulation or order of the Securities and
Exchange Commission thereunder or (ii) protect or purpose to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
ARTICLE X
The duration of the Corporation shall be perpetual.
ARTICLE XI
(1) The Corporation reserves the right from time to time to make any
amendments to its Charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly set
forth in its Charter, of any of its outstanding stock by classification,
reclassification or otherwise, but no such amendment which changes such terms or
contract rights of any of its outstanding stock shall be valid unless such
amendment shall have been
8
<PAGE> 9
authorized by not less than a majority of the aggregate number of the votes
entitled to be case thereon by a vote at a meeting of shareholders.
(2) Notwithstanding any provision of the General Laws of the State of
Maryland requiring any action to be taken or authorized by the affirmative vote
of the holders of a designated proportion of the votes of all classes or of any
class of stock of the Corporation, such action shall be effective and valid if
taken or authorized by the affirmative vote of the holders of a majority of the
total number of shares outstanding and entitled to vote thereon, except as
otherwise provided herein.
(3) So long as permitted by Maryland law, the books of the Corporation
may be kept outside of the State of Maryland at such place or places as may be
designated from time to time by the Board of Directors or in the By-Laws of the
Corporation.
(4) In furtherance, and not in limitation, of the Powers conferred by
the laws of the State of Maryland, the Board of Directors is expressly
authorized:
(i) To make, alter or repeal the By-laws of the Corporation, except
where such power is reserve by the By-Laws to the stockholders, and except as
otherwise required by the Investment Company Act of 1940.
(ii) From time to time to determine whether and to what extent and at
what times and places and under what conditions and regulations the books and
accounts of the Corporation, or any of the other than the stock ledger, shall be
open to the inspection of the stockholder, and no stockholder shall have any
right to inspect any account or book or document of the Corporation, except as
conferred by law or authorized by resolution of the Board of Directors or of the
stockholders.
(iii) Without the assent or vote of the stockholders, to authorize the
issuance from time to time of shares of the stock of any class of the
Corporation, whether now or thereafter authorized, and securities convertible
into shares of its stock of any class or classes, whether now or hereafter
authorized, for such consideration as the Board of Directors may deem advisable.
(iv) Without the assent or vote of the stockholders, to authorize and
issue obligation of the Corporation, secured and unsecured, as the Board of
Directors may determine, and to authorize and cause to be executed mortgages and
liens upon the property of the Corporation, real or personal.
9
<PAGE> 10
(v) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or net
assets in excess of capital, and to determine what accounting periods shall be
used by the Corporation for any purpose, whether annual or any other period,
including daily; to set apart out of any funds of the Corporation such reserves
for such purposes as it shall determine and to abolish the same; to declare and
pay any dividends and distributions in cash, securities of other property from
surplus or any funds legally available therefor, at such intervals (which may be
as frequently as daily) or on such other periodic basis, as it shall determine;
to declare such dividends or distributions by means of a formula or other method
of determination, at meetings held less frequently than the frequency of the
effectiveness of such declarations to establish payment dates for dividends or
any other distributions on any basis, including dates occurring less frequently
than the effectiveness of declarations thereof; and to provide for the payment
of declared dividends on a date earlier or later than the specified payment date
in the case of stockholders of the Corporation redeeming their entire ownership
of shares of any class of the Corporation.
(vi) In addition to the powers and authorities granted herein and by
the statute expressly conferred upon it, the Board of Directors is authorized to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of Maryland
law, this Charter and the By-Laws of the Corporation.
IN WITNESS WHEREOF, the undersigned incorporator of NAVIGATOR TAX-FREE
MONEY MARKET FUND, INC. hereby executes the foregoing Articles of Incorporation
and acknowledges the same to be his act and further acknowledges that, to the
best of his knowledge, the matters and facts set forth therein are true in all
material respects under the penalties of perjury.
Dated the 27th day of January , 1986.
/s/James W. Jennings
-----------------------------------
James W. Jennings
10
<PAGE> 11
I HEREBY CERTIFY THAT on the 27th day of January, 1986, before me, a
Notary Public of the Commonwealth of Pennsylvania, personally appeared James W.
Jennings, who acknowledged the foregoing Articles of Incorporation to be his
act.
WITNESSED my hand and Notarial Seal.
/s/Florine Watson
--------------------------------------------
Notary Public
My Commission Expires: Florine Watson, Notary Public
Philadelphia, Philadelphia County
My commission expires Jan. 24, 1987
Member, Pennsylvania Association of Notaries
11
<PAGE> 1
Ex. 1b
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
NAVIGATOR MONEY MARKET FUND, INC.
NAVIGATOR MONEY MARKET FUND, INC., a Maryland corporation having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to Section 2-208 of the Maryland General Corporation
Law, the Board of Directors of the Corporation has classified all of the Two
Billion (2,000,000,000) authorized, unissued and unclassified shares of capital
stock of the Corporation (par value One Mill ($.001) per share), as Class A
Common Stock pursuant to the following resolutions adopted by the directors of
the Corporation by written unanimous consent dated December 9, 1986:
RESOLVED, that pursuant to Article VI of the Articles of Incorporation
of the Corporation, all of the Two Billion (2,000,000,000) authorized,
unissued and unclassified shares of capital stock of the Corporation
(of the par value of One Mill ($.001) per Share and the aggregate par
value of Two Million Dollars ($2,000,000)) be, and hereby are,
classified and designated as Class A Common Stock;
<PAGE> 2
FURTHER RESOLVED, that each share of Class A Common Stock
shall have all of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption that are set forth in the Articles
of Incorporation of the Corporation with respect to its shares of
capital stock.
SECOND: The shares of Class A Common Stock of the Corporation
classified pursuant to the resolutions set forth in Article FIRST of these
Articles Supplementary have been classified by the Corporation's Board of
Directors under the authority contained in the charter of the Corporation.
IN WITNESS WHEREOF, NAVIGATOR MONEY MARKET FUND, INC. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunto affixed and attested by its Secretary on this 9th
day of December, 1986.
NAVIGATOR MONEY MARKET FUND, INC.
By: /s/Frank J. Bruzda
---------------------------------
President
[seal]
Attest:
/s/ James W. Jennings
- --------------------------------
Secretary
<PAGE> 3
CERTIFICATE
THE UNDERSIGNED, President of NAVIGATOR MONEY MARKET FUND, INC., who
executed on behalf of said Corporation the attached Articles Supplementary to
Articles of Incorporation of said Corporation, of which this certificate is made
a part, hereby acknowledges, in the name and on behalf of said Corporation, the
attached Articles Supplementary to be the corporate act of said Corporation, and
certifies that to the best of this knowledge, information and belief the matters
and facts set forth in the attached Articles Supplementary with respect to
authorization and approval are true in all material respects, under the
penalties for perjury.
/s/Frank J. Bruzda
------------------------------
Dated: December 9, 1986
<PAGE> 1
Ex. 2
NAVIGATOR MONEY MARKET FUND, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the stockholders of
the Corporation shall be held at the registered office of the Corporation, or at
such other place, within or without the State of Maryland, as may be determined
by the Board of Directors and as shall be designated in the notice of said
meeting, on such day during the month of April and at such time as shall be
specified by the Board of Directors for the purpose of electing directors and
for the transaction of such other business as may properly be brought before the
meeting.
SECTION 2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Charter, may be held at any place, within or without the State of Maryland, and
may be called at any time by the Board of Directors or by the President, and
shall be called by the President or Secretary at the request in writing of a
majority of the Board or at the request in writing of stockholders entitled to
be cast at such meeting. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 3. Notice of Meetings and Stockholder List. Written or printed
notice of the purpose or purposes and of the time and place of every meeting of
the stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing such notice in
the mail at least ten days, but not more than ninety (90) days, and in any event
within the period prescribed by law. prior to the date named for the meeting
addressed to each stockholder at his address appearing on the books of the
Corporation or supplied by him to the Corporation for the purpose of notice. The
notice of every meeting of stockholders may be accompanied by a form of proxy
approved by the Board of Directors in favor of such actions or persons as the
Board of Directors may select.
At least five (5) days prior to each meeting of stockholders, the
officer or agent having charge of the share transfer books of the Corporation
shall make a complete list of stockholders entitled to vote at such meeting, in
alphabetical order with the address of and the number of shares held by each
stockholder.
<PAGE> 2
SECTION 4. Record Date. The Board of Directors may fix a date not more
than ninety (90) days preceding the date of any meeting of stockholders, or the
date fixed for the payment of any dividend, or the date of the allotment of
rights or the date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of stockholders entitled to
notice of, or to vote at, any such meeting (or any adjournment thereof) or
entitled to receive payment of any dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be. In such case, only
stockholders of record at the close of business on the date so fixed shall be
entitled to vote, to receive notice or receive rights, or to exercise rights,
notwithstanding any subsequent transfer on the books of the Corporation. The
Board of Directors shall not close the books of the Corporation against
transfers of shares during the whole or any part of such period. In the case of
a meeting of stockholders, the record date shall be fixed not less than ten (10)
days prior to the date of the meeting.
SECTION 5. Quorum and Stockholder Action. Except as otherwise provided
by statute or by the Charter, the presence in person or by proxy of stockholders
of the Corporation entitled to cast at least a majority of the votes to be cast
shall constitute a quorum at each meeting of the stockholders, and all questions
shall be decided by majority vote of the shares so represented in person or by
proxy at the meeting and entitled to vote. In the absence of a quorum, the
stockholders present in person or by proxy, by majority vote and without notice
other than by announcement, may adjourn the meeting from time to time as
provided in Section 7 of this Article I until a quorum shall attend. The
stockholders present at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, if one has been selected and is present or, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by the stockholders, shall act as
chairman; and the Secretary, or in his absence, an Assistant Secretary, or in
the absence of the Secretary and all the Assistant Secretaries, a person
appointed by the chairman, shall act as secretary.
SECTION 7. Adjournment. Any meeting of the stockholders may be
adjourned from time to time, without notice other than by announcement at the
meeting at which such adjournment is taken, and at any such adjourned meeting at
which
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a quorum shall be present any action may be taken that could have been taken at
the meeting originally called; provided that the meeting may not be adjourned to
a date more than the number of days after the original record date for the
meeting permitted by law, and if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Election and Powers. The number of director shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the directors then in office; provided, however, that the number of directors
shall in no event be less than three nor more than fifteen, unless there is no
stock of the Corporation outstanding, in which case the number of directors may
be less than three but shall not be less than one. The business affairs and
property of the Corporation shall be managed by the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not be statute or by the Charter or by these By-Laws required to
be exercised or done by the stockholders. The members of the Board of Directors
shall be elected by the stockholders at their annual meeting and each Director
shall hold office until the annual meeting next after his election and until his
successor shall have been duly chosen and qualified, until he shall have
resigned, or until he shall have been removed as provided in Section 10 hereof.
SECTION 2. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice on such dates as the Board may from time to time
determine.
SECTION 3. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, President or by a
majority of the directors either in writing or by vote at a meeting.
SECTION 4. Notice of Special Meetings. Notice of the place, day and
hour of every special meeting shall be delivered personally to each director or
mailed, telegraphed or cabled to his address on the books of the Corporation at
least one day before the meeting. It shall not be requisite to the validity of
any meeting of the Board of Directors that notice thereof shall have been given
to any director who is present thereat, or, if absent, waives notice thereof in
writing filed with the records of the meeting either before or after the holding
thereof.
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<PAGE> 4
SECTION 5. Place of Meetings. The Board of Directors may hold its
regular and special meetings at such place or places within or without the State
of Maryland as the Board may from time to time determine.
SECTION 6. Quorum and Board Action. Except as otherwise provided by
statute or by the Charter: (a) one-third (1/3) of the members of the Board of
Directors then in office, but in no case less than two (2) directors, shall be
necessary to constitute a quorum for the transaction of business at every
meeting of the Board; (b) the action of a majority of the directors present at a
meeting at which a quorum is present shall be the action of the Board; and (c)
if at any meeting there be less than a quorum present, a majority of those
present may adjourn the meeting from time to time, but not for a period greater
than thirty (30) days at any one time, without notice other than by announcement
at the meeting, until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally scheduled.
SECTION 7. Chairman. The Board of Directors may at any time appoint one
of its members as Chairman of the Board, who shall serve at the pleasure of the
Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be deemed an
officer or employee of the Corporation.
SECTION 8. Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if one has been selected and is present, and, if not,
the President, or in the absence of the Chairman of the Board and the President,
a Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by a majority of the directors
present, shall preside; and the Secretary, or in his absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant Secretaries,
a person appointed by the chairman, shall act as secretary.
SECTION 9. Vacancies. Any vacancy occurring by reason of any increase
in the number of directors may be filled by a majority of the entire Board of
Directors. Any vacancy occurring for any other cause may be filled by a majority
of the remaining members of the Board of Directors, whether or not these members
constitute a quorum under Section 6 of this Article. Any vacancy occurring by
reason of removal of a director may be filled by the stockholders. Any director
chosen to fill a vacancy shall hold office until the next annual meeting of
stockholders and until his successor shall have been duly elected and qualified.
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<PAGE> 5
SECTION 10. Removal. At any meeting of the stockholders called for that
purpose, any director may, by vote of stockholders entitled to cast a majority
of the votes, be removed from office, with or without cause, and another may be
elected in the place of the person so removed, to serve for the remainder of his
term.
SECTION 11. Resignations. Any director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time of the receipt of such notice or
at any later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 12. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board, designate one or more committees of
the Board, each consisting of two (2) or more directors. To the extent provided
in such resolution, and permitted by law, such committee or committees shall
have and may exercise the powers of the Board of Directors in the management of
the business and affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member.
SECTION 13. Telephone Conference. Members of the Board of Directors or
any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time, and participation by such means shall constitute presence in
person at the meeting.
SECTION 14. Compensation of Directors. Any director, whether or not he
is a salaried officer, employee or agent of the Corporation, may be compensated
for his services as director or as a member of a committee, or as Chairman of
the Board or chairman of a committee, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts as the
directors may from time to time determine.
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<PAGE> 6
ARTICLE III
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a
President, a Secretary, and a Treasurer, and may include one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers,
and such other officers as the Board of Directors may from time to time
determine. Any officer may hold more than one office in the Corporation, except
that an officer may not serve concurrently as both the President and Vice
President.
SECTION 2. Election and Term of Office. The officers of the Corporation
shall be elected by the Board of Directors and, subject to earlier termination
of office, each officer shall hold office for one year and until his successor
shall have been elected and qualified.
SECTION 3. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, the President, or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4. Removal. If the Board of Directors in its judgment finds
that the best interests of the Corporation will be served, the Board may remove
any officer of the Corporation at any time.
SECTION 5. President. The President shall be the chief executive
officer of the Corporation and shall have general supervision over the business
and operations of the Corporation, subject, however, to the control of the Board
of Directors. He, or such persons as he shall designate, shall sign, execute,
acknowledge, verify, deliver and accept, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments authorized by the Board of
Directors, except in the case where the signing, execution, acknowledgement,
verification, delivery or acceptance thereof shall be delegated by the Board to
some other officer or agent of the Corporation; and, in general he shall have
general executive powers as well as other powers and duties as from time to time
may be conferred upon or assigned to him by the Board.
SECTION 6. The Vice Presidents. In the absence or disability of the
President, or when so directed by the President, any Vice President designated
by the Board of Directors may perform any or all of the duties of the President,
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<PAGE> 7
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President; provided, however, that no Vice President
shall act as a member of or as chairman of any committee of which the President
is a member or chairman by designation of ex-officio, except when designated by
the Board. Each Vice President shall perform such other duties as from time to
time may be conferred upon or assigned to him by the Board or the President.
SECTION 7. The Secretary. The Secretary shall record all the votes of
the stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the stockholders and the
Board of Directors are given and that all records and reports are properly kept
and filed by the Corporation as required by law; he shall be the custodian of
the seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal, provided that in lieu
of affixing the corporate seal to any document, it shall be sufficient to meet
the requirements of any law rules or regulation relating to a corporate seal to
affix the word "(SEAL)" adjacent to the signature of the authorized officer of
the Corporation; and, in general, he shall perform all duties incident to the
office of Secretary, and such other duties as from time to time may be conferred
upon or assigned to him by the Board or the President.
SECTION 8. Assistant Secretaries. In the absence or disability of the
Secretary, or when so directed by the Secretary, any Assistant Secretary may
perform any or all of the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
Each Assistant Secretary shall perform such other duties as from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
SECTION 9. The Treasurer. Subject to the provisions of any contract
which may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
its funds and securities; he shall have full authority to receive and give
receipts for all money due and payable to the Corporation, and to endorse
checks, drafts and warrants, in its name and on its behalf, and to give full
discharge for the same; he shall deposit all funds of the Corporation, except
such as may be required for current use, in such banks or other places of
deposit as the Board of Directors may from time to time designate; and, in
general, he shall perform all duties incident
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<PAGE> 8
to the office of Treasurer and such other duties as from time to time may be
conferred upon or assigned to him by the Board or the President.
SECTION 10. Assistant Treasurers. In the absence or disability of the
Treasurer, or when so directed by the Treasurer, any Assistant Treasurer may
perform any or all of the duties of the Treasurer, and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Treasurer. Each Assistant Treasurer shall perform all such other duties as from
time to time may be conferred upon or assigned to him by the Board of Directors,
the President or the Treasurer.
SECTION 11. Compensation of Officers. The compensation of all officers
shall be fixed from time to time by the Board of Directors, or any committee or
officer authorized by the Board so to do. No officer shall be precluded from
receiving such compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE IV
STOCK
SECTION 1. Certificates. Each stockholder shall be entitled, upon
request, to a stock certificate or certificates, certifying the number and kind
of full shares owned by him, signed by the President, a Vice President or the
Chairman of the Board and countersigned by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, which signatures may be
either manual or facsimile signatures, and sealed with the seal of the
Corporation, which seal may be either facsimile or any other form of seal. Stock
certificates shall be in such form, not inconsistent with law or with the
Charter, as shall be approved by the Board of Directors.
SECTION 2. Transfer of Shares. Transfers of shares shall be made on the
books of the Corporation at the direction of the person named on the
Corporation's books or named in the certificate or certificates for such shares
(if issued, or by his attorney lawfully constituted in writing, upon surrender
of such certificate or certificates (if issued) properly endorsed, together with
a proper request for redemption, to the Corporation's transfer agent, with such
evidence of the authenticity of such transfer, authorization and such other
matters as the Corporation or its agents may reasonably require, and subject to
such other reasonable terms and conditions as may be required by the Corporation
or its agents; or, if the Board of Directors shall by resolution so provide,
transfer of shares may be made in any other manner provided by law.
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<PAGE> 9
SECTION 3. Transfer Agents and Registrars. The Corporation may have one
or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent, or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
SECTION 4. Mutilated, Lost or Destroyed Certificates. The Board of
Directors, by standing resolution or by resolutions with respect to particular
cases, may authorize the issue of a new stock certificate in lieu of any stock
certificate lost, destroyed or mutilated, upon such terms and conditions as the
Board may direct. The Board may in its discretion refuse to issue such a new
certificate, unless ordered to do so by a court of competent jurisdiction.
SECTION 5. Stock Ledgers. The Corporation shall not be required to keep
original or duplicate stock ledgers at its registered office in the City of
Baltimore, Maryland, but stock ledges shall be kept at the respective officers
of the Transfer Agents of the Corporation's capital stock.
ARTICLE V
SEAL
The seal of the Corporation shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VI
SUNDRY PROVISIONS
SECTION 1. Amendments. (a) By Stockholders. By-Laws may be adopted,
altered, amended or repealed in the manner provided in Section 5 of Article I
hereof at any annual or special meeting of the stockholders.
(b) By Directors. By-Laws may be adopted, altered, amended or
repealed in the manner provided in Section 6 of Article II hereof by the Board
of Directors at any regular or special meeting of the Board.
SECTION 2. Indemnification Of Directors and Officers. (a)
Indemnification. Any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such
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<PAGE> 10
person is a current or former director or officer of the Corporation, or is or
was serving while a director or officer of the Corporation at the request of the
Corporation as a director officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by the Corporation against
judgments, penalties, fines, excise taxes, settlements and reasonable expenses
(including attorney's fees) actually incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under the General
Laws of the State of Maryland and the Investment Company Act of 1940, as such
statues are now or hereafter in force, except that such indemnity shall not
protect any such person against any liability to the Corporation or any
stockholder thereof to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
(b) Advances. Any current or former director or officer of the
Corporation claiming indemnification within the scope of this Section 2 shall be
entitled to advances from the Corporation for the payment of the reasonable
expenses incurred by him in connection with proceedings to which he is a party
in the manner and to the full extent permissible under the General Laws of the
State of Maryland and the Investment Company Act of 1940, as such statutes are
now or hereafter in force.
(c) Procedure. On the request of any current or former
director or officer requesting indemnification or an advance under this Section
2, the Board of Directors shall determine, or cause to be determined, in a
manner consistent with the General Laws of the State of Maryland and the
Investment Company Act of 1940, as such statutes are now or hereafter in force,
whether the standards required by this Section 2 have been met.
(d) Other Rights. The indemnification provided by this Section
2 shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of shareholders or
disinterested directors or otherwise, both as to action by a director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
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<PAGE> 1
Ex. 5
MANAGEMENT AGREEMENT
AGREEMENT made as of April 17, 1993 between NAVIGATOR MONEY MARKET
FUND, INC., a Maryland corporation (the "Fund"), successor by reorganization to
Navigator Money Money Market Fund, a Pennsylvania business trust, and FAIRFIELD
GROUP, INC., a Pennsylvania corporation (the "Manager").
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain the Manager to furnish investment
advisory and administrative services with respect thereto to the Fund, and the
Manager is willing to so furnish such services;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Manager to act as
investment adviser to the Fund for the period and on the terms set forth in this
Agreement. The Manager accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Manager with
copies properly certified or authenticated of each of the following:
(a) The Fund's Articles of Incorporation;
(b) The Fund's By-Laws and all amendments thereto;
(c) Resolutions of the Fund's Directors authorizing the
appointment of the Manager and approving this Agreement;
(d) The Fund's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission;
(e) The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 2-97840) and
under the 1940 Act as filed with the Securities and Exchange Commission
and all amendments thereto; and
(f) The Fund's most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements thereto are
herein called the "Prospectus").
<PAGE> 2
The Fund will furnish the Manager from time to time with copies of all
amendments of or supplements to the foregoing.
3. Investment Management. Subject to the supervision of the Fund's
Directors, the Manager will provide a continuous investment program for the
Fund, including investment research and management with respect to all
securities and investments and cash equivalents in the Fund. The Manager will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Fund. The Manager will provide the services
under this Agreement in accordance with the Fund's investment objective,
policies and restrictions as stated in the Prospectus and resolutions of the
Fund's Directors. The Manager further agrees that it:
(a) will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission;
(b) will not make loans to any person for the purpose of
purchasing Fund Shares or make loans to the Fund;
(c) will place orders pursuant to its investment determination
for the fund either directly with the issuer or with any broker or
dealer. In placing orders with brokers and dealers the Manager will
attempt, under the circumstances, to obtain the execution of orders in
an effective manner at the most favorable price. Consistent with this
obligation, when the execution and price offered by two or more brokers
or dealers are comparable, the Manager may, in its discretion, purchase
and sell portfolio securities to and from brokers and dealers who
provide the Manager with research advice and other services. In no
instance will portfolio securities be purchased from or sold to the
Manager, or any affiliated person of either the Fund or the Manager;
and
(d) will maintain all books and records with respect to the
Fund's securities transactions and will furnish to the Fund's Directors
such periodic and special reports as the Directors may request.
4. Administrative Services. Subject to the direction and control of the
Directors of the Fund, the Manager will assist in supervising all aspects of the
Fund's operations.
The Manager will maintain office facilities (which may be in offices of
the Manager or a corporate affiliate but shall be in such location as the Fund
shall reasonably determine); furnish statistical and research data, clerical,
accounting and bookkeeping services and stationery and office supplies; prepare
the Fund's Annual Report to the Securities and Exchange on Form N-1R and its
Quarterly Reports on Form N-1Q;
2
<PAGE> 3
compile data for, prepare for execution by the Fund and file all the Fund's
federal and state tax returns and required tax filings other than those required
to be made by the Fund's custodian and transfer agent; prepare compliance
filings pursuant to state securities laws with the advice of the Fund's counsel;
assist to the extent requested by the Fund with the Fund's preparation of its
Annual and Semi-Annual Reports to shareholders and its Registration Statements
(on Form N-1A or any replacement therefor); compile data for, prepare and file
timely Notices to the Securities and Exchange Commission required pursuant to
Rule 24f-2 under the 1940 Act; verify the daily computation of the net asset
value and the net income of the Fund in accordance with the Fund's Prospectus
and resolutions of the Fund's Directors; keep and maintain the Fund's financial
accounts and records; and generally assist in all aspects of the Fund's
operations. The Manager may delegate in its sole discretion all or any part of
its duties and responsibilities under this Section 4.
5. Fees; Expenses; Expense Reimbursement.
(a) In consideration of investment advisory services rendered
pursuant to this Agreement, the Fund will pay the Manager on the first
business day of each month a fee calculated at an annual rate of .20%
of the first $500 million of average daily net assets of the Fund; .15%
of the next $1 billion of average daily net assets of the Fund; and
.10% of the average daily net assets of the Fund in excess of $1.5
billion.
(b) In consideration of administration services rendered
pursuant to this Agreement, the Fund will pay Manager on the first
business day of each month a fee calculated at an annual rate of 0.10%
of the first $1.5 billion of average daily net assets of the Fund and
.05% of average daily net assets of the Fund in excess of $1.5 billion.
(c) For purposes of this Agreement, net asset value shall be
computed at least once a day. The fees for the period from the day of
the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion which such period bears
to the full monthly period. Upon any termination of this Agreement
before the end of any month, the fees for such part of a month shall be
pro-rated according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to Manager, the value of
the net assets of the Fund shall be computed in the manner described in the
Fund's Prospectus for the computation of
3
<PAGE> 4
the value of such net assets in connection with the determination of the
liquidity value of the Fund's shares.
The Manager will from time to time employ or associate with itself such
person or persons as the Manager may believe to be particularly fitted to assist
it in the performance of this Agreement. Such person or persons may be officers
and employees who are employed by both the Manager and the Fund. The
compensation of such person or persons shall be paid by the Manager and no
obligation may be incurred on behalf of the Fund in such respect.
The Manager will bear all expenses in connection with the performance
of its services under this Agreement. Other expenses to be incurred in the
operation of the Fund including taxes, interest, brokerage fees and commissions,
if any, fees of employees of the Manager, Securities and Exchange Commission
fees and state Blue Sky qualification fees, investment advisory and
administration fees pursuant to this Agreement, charges of custodians, transfer
and dividend disbursing agents' fees, certain insurance premiums, outside
auditing and legal expenses, costs of maintenance of corporate existence,
typesetting and printing prospectuses for regulatory purposes and for
distribution to current shareholders of the Fund, costs of shareholders' reports
and corporate meetings and any extraordinary expenses will be borne by the Fund,
provided, however, that the Fund will not bear the cost of any activity which is
primarily intended to result in the distribution of Shares of the Fund.
(d) If in any fiscal year the aggregate expenses of the Fund
(as defined under the securities regulation in any state having
jurisdiction over the Fund) exceed the expense limitations of any such
state, the Manager will reimburse the fund for a portion of such excess
expenses. The expense reimbursement obligation of the Manager is
limited to the aggregate amount of its fees hereunder for such fiscal
year, provided however, that notwithstanding the foregoing, the Manager
shall reimburse the Fund for such proportions of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to
the extent that the securities regulations of any state having
jurisdiction over the Fund so require. Such expense reimbursement, if
any, will be estimated daily and reconciled and paid on a monthly
basis.
6. Proprietary and Confidential Information. The Manager agrees on
behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund
and prior, present or potential shareholders, and not to use such records
4
<PAGE> 5
and information for any purpose other than performance of its responsibilities
and duties hereunder. Notwithstanding the foregoing, the Manager may, after
prior notification to and approval in writing by the Fund, use such records and
other information relative to the Fund and prior, present or potential
shareholders if the Manager may be exposed to civil or criminal contempt
proceedings for failure to comply or when requested to divulge such information
by duly constituted authorities. The Manager may also use such records and other
information when so requested by the Fund.
7. Services Not Exclusive. The services furnished by the Manager
hereunder are not to be deemed exclusive, and the Manager shall be free to
furnish similar services to others whether or not for compensation so long as
its services under this Agreement are not impaired thereby.
8. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Manager further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required by Rule 31a-1 to be maintained under the
1940 Act.
9. Limitation of Liability. The Manager shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Manager in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
10. Duration and Termination. This Agreement will become effective
April 20, 1993, provided that it shall have been approved by the shareholders of
the Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until June 30,
1994. Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months each ending on June 30 each year, provided
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Directors who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by the
Fund's Directors or by vote of a majority of the outstanding voting securities
of the Fund. Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Fund (by
5
<PAGE> 6
vote of the Fund's Directors or by vote of a majority of the outstanding voting
securities of the Fund) or by the Manager on sixty days' written notice. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning of such terms
in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the outstanding voting
securities of the Fund.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
NAVIGATOR MONEY MARKET FUND, INC.
(seal) By: /s/ Frank J. Bruzda
Attest: /s/ James W. Jennings
FAIRFIELD GROUP, INC.
(seal) By: /s/ R.B. Siedel
Attest:
6
<PAGE> 1
Ex. 6
DISTRIBUTION AGREEMENT
April 17, 1993
Fairfield Group, Inc.
200 Gibraltar Road
Horsham, PA 19044
Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Navigator Money Market Fund, Inc., a Maryland
corporation ("the Fund"), successor by reorganization to Navigator Money Market
Fund, a Pennsylvania business trust, has agreed that Fairfield Group, Inc.
("Fairfield") shall be, for the period of this Agreement, the distributor of the
Fund's shares of common stock ("Shares").
1. Services as Distributor.
1.1 Fairfield will act as agent for the distribution of the
Shares covered by the registration statement and prospectus then in effect under
the Securities Act of 1933.
1.2 Fairfield agrees to use appropriate efforts to solicit
orders for the sale of the Shares and will undertake such advertising and
promotion as it believes reasonable in connection with such solicitation. The
Fund understands that Fairfield is the distributor, and may in the future be the
distributor, of the shares of several investment companies ("Companies")
including Companies having investment objectives similar to those of the Fund.
The Fund further understands that investors and potential investors in the Fund
may invest in shares of such other Companies. The Fund agrees that Fairfield's
duties to such Companies shall not be deemed in conflict with its duties to the
Fund under this paragraph 1.2.
Fairfield shall, at its own expense, finance appropriate activities
which it deems reasonable which are primarily intended to result in the sale of
the Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature.
1.3 All activities by Fairfield and its agents and employees
as distributor of the Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940 (the "1940 Act") by the
Securities and Exchange Commission or any securities association registered
under the Securities Exchange Act of 1934.
1.4 Fairfield will provide an adequate number of
<PAGE> 2
persons, during normal business hours, to respond to telephone questions with
respect to the Fund.
1.5 Fairfield will transmit any orders received by it for
purchase or redemption of the Shares to the Fund's transfer agent and custodian.
1.6 Fairfield understands and agrees that whenever in its
judgment such action is warranted by unusual market, economic or political
conditions, or by abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of the Shares until, such
time as those officers deem it advisable to accept such orders and to make such
sales.
1.7 Fairfield will act only on its own behalf as principal if
it chooses to enter into selling agreements with selected dealers or others.
1.8 The Fund agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Fairfield may designate.
1.9 The Fund shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Fund and the Shares as Fairfield may reasonably request; and the Fund warrants
that the statements contained in any such information shall fairly show or
represent what they purport to show or represent. The Fund shall also furnish
Fairfield upon request with: (a) unaudited semiannual statements of the Fund's
books and accounts prepared by the Fund, (b) quarterly earnings statements
prepared by the Fund, (c) a monthly itemized list of the securities in the Fund,
(d) monthly balance sheets as soon as practicable after the end of each month,
and (e) from time to time such additional information regarding the Fund's
financial condition as Fairfield may reasonably request.
1.10 The Fund represents to Fairfield that all registration
statements and prospectuses filed by the Fund with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Shares have been carefully prepared in conformity with the requirements of said
Act and rules and regulations of the Securities and Exchange Commission
thereunder. As used in this Agreement the terms "registration statement" and
"prospectus" shall mean any registration statement and prospectus filed with the
Securities and Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with the same Commission. The Fund
represents and warrants to Fairfield that
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<PAGE> 3
any registration statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be stated therein in
conformity with said Act and the rules and regulation of said Commission; that
all statements of facts contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of the Shares. The Fund may but shall not be obligated to propose from
time to time such amendment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Fund's counsel, be necessary or
advisable. If the Fund shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Fund or a
written request from Fairfield to do so, Fairfield may, at its option, terminate
this Agreement. The Fund shall not file any amendment to any registration
statement or supplement to any prospectus without giving Fairfield reasonable
notice thereof in advance; provided, however, that nothing contained in this
agreement shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to any prospectus,
of whatever character, as the Fund may deem advisable, such right being in all
respects absolute and unconditional.
1.11 The Fund authorizes Fairfield and dealers to use any prospectus in
the form furnished from time to time in connection with the sale of the Shares.
The Fund agrees to indemnify, defend and hold Fairfield, its several officers
and directors, and any person who controls Fairfield within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which Fairfield, its officers and
directors, or any such controlling person, may incur under the Securities Act of
1933, as amended, or under common law or otherwise, arising out of or based upon
any omission, or alleged omission, to state a material fact required to be
stated in either any registration statement or any prospectus or necessary to
make the statements in either thereof not misleading; provided, however, that
the Fund's agreement to indemnify Fairfield, its officers or Directors, and any
such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any statements or representations as are
contained in any prospectus
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<PAGE> 4
and in such financial and other statements as are furnished in writing to the
Fund by Fairfield and used in the answers to the registration statement or in
the corresponding statements made in the prospectus, or arising out of or based
upon any omission or alleged omission to state a material fact in connection
with the giving of such information required to be stated in such answers or
necessary to make the answers not misleading; and further provided that the
Fund's agreement to indemnify Fairfield and the Fund's representations and
warranties hereinbefore set forth in paragraph 1.10 shall not be deemed to cover
any liability to the Fund or its shareholders to which Fairfield would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of Fairfield's reckless disregard of
its obligations and duties under this agreement. The Fund's agreement to
indemnify Fairfield, its officers and directors, and any such controlling
person, as aforesaid, is expressly conditioned upon the Fund's being notified of
any action brought against Fairfield, its officers or directors, or any such
controlling person, such notification to be given by letter or by telegram
addressed to the Fund at its principal office in Horsham, Pennsylvania and sent
to the Fund by the person against whom such action is brought, within 10 days
after the summon or other first legal process shall have been served. The
failure to so notify the Fund of any such action shall not relieve the Fund from
any liability which the Fund may have to the person against whom such action is
brought by reason of any such untrue, or allegedly untrue, statement or
omission, or alleged omission, otherwise than on account of the Fund's indemnity
agreement contained this paragraph 1.11. The Fund will be entitled to assume the
defense of any suit brought to enforce any such claim, demand or liability, but,
in such case, such defense shall be conducted by counsel of good standing chosen
by the Fund and approved by Fairfield, which approval shall not unreasonably be
withheld. In the event the Fund elects to assume the defense of any such suit
and retain counsel of good standing approved by Fairfield, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not elect to assume
the defense of any such suit, or in case Fairfield reasonably does not approve
of counsel chosen by the Fund, the Fund will reimburse Fairfield, its officers
and directors, or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained by
Fairfield or them. The Fund's indemnification agreement contained in this
paragraph 1.11 and the Fund's representations and warranties in this agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Fairfield, its officers and directors, or
any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to Fairfield's benefit, to the
benefit of its several officers and directors, and their respective estates, and
to the
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<PAGE> 5
benefit of the controlling persons and their successors. The Fund agrees
promptly to notify Fairfield of the commencement of any litigation or
proceedings against the Fund or any of its officers or directors in connection
with the issue and sale any Shares.
1.12 Fairfield agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Fund, its officers or directors or any such controlling person, may incur under
the Securities Act of 1933, as amended, or under common law or otherwise, but
only to the extent that such liability or expense incurred by the Fund, its
officers or directors, or such controlling person resulting from such claims or
demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
Fairfield to the Fund and used in the answers to any of the items of the
registration statement or in the corresponding statements made in the
prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Fairfield to the Fund required to be stated in such answers or
necessary to make such information not misleading. Fairfield's agreement to
indemnify the Fund, its officers and directors, and any such controlling person,
as aforesaid, is expressly conditioned upon Fairfield's being notified of any
action brought against the Fund, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to Fairfield at its principal office in Horsham, Pennsylvania, and
sent to Fairfield by the person against whom such action is brought, within 10
days after the summons or other first legal process shall have been served.
Fairfield shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on Fairfield's part, and
in any other event the Fund, its officers or directors or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify Fairfield of any such
shall not relieve Fairfield from any liability which Fairfield may have to the
Fund, its officers or directors, or to such controlling person by reason of any
such untrue or alleged untrue statement, or omission or alleged omission,
otherwise than on account of Fairfield's indemnity agreement contained in this
paragraph 1.12.
1.13 No Shares shall be offered by either
5
<PAGE> 6
Fairfield or the Fund under any of the provisions of this Agreement, and no
orders for the purchase or sale of Shares hereunder shall be accepted by the
Fund, if and so long as the effectiveness of the registration statement then in
effect or any necessary amendments thereto shall be suspended under any of the
provisions of the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10(b)(2) of said Act, as amended, is
not on file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Fund's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the Fund's prospectus.
1.14 The Fund agrees to advise Fairfield as soon as reasonably
practical by a notice in writing delivered to Fairfield or its counsel:
(a) of any request by the Securities and Exchange Commission
for amendments to the registration statement or prospectus then in
effect or for additional information;
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the effectiveness of
the registration statement or prospectus then in effect or the
initiation by service of process on the Fund of any proceeding for that
purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement or
prospectus then in effect or which requires the making of a change in
such registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and Exchange Commission
with respect to any amendment to any registration statement or
prospectus which may from time to time be filed with the Securities and
Exchange Commission.
For purposes of this section, informal requests by or acts of the Staff
of the Securities and Exchange Commission shall not be deemed actions of or
requests by the Securities and Exchange Commission.
1.15 Fairfield agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Fund all records and other
information relative to the Fund and its prior, present or potential
shareholders, and not to
6
<PAGE> 7
use such records and information for any purpose other than performance of its
responsibilities and duties thereunder. Notwithstanding the foregoing, Fairfield
may, after prior notification to and approval in writing by the Fund, use such
records and other information relative to the Fund and prior, present or
potential shareholders if Fairfield may be exposed to civil or criminal contempt
proceedings for failure to comply or when requested to divulge such information
by duly constituted authorities. Fairfield may also use such records and other
information when so requested by the Fund.
2. Term.
This agreement shall become effective April 20, 1993, and, unless
sooner terminated as provided herein, shall continue until June 30, 1994 and
thereafter shall continue automatically for successive annual periods ending on
June 30 of each year, provided such continuance is specifically approved at
least annually by (i) the Fund's directors or (ii) by a vote of a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities, provided
that in either event the continuance is also approved by the majority of the
Fund's directors who are not parties to the Agreement or interested persons (as
defined in the 1940 Act) of any party to this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. This agreement
is terminable without penalty, on not less than sixty days' notice, by the
Fund's directors, by vote of a majority (as defined in the 1940 Act) of the
Fund's outstanding voting securities, or by Fairfield. This agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act).
3. Governing Law.
This agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
7
<PAGE> 8
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Yours very truly,
NAVIGATOR MONEY MARKET FUND, INC.
By: /s/ Frank J. Bruzda
---------------------------------
Accepted:
FAIRFIELD GROUP, INC.
By: /s/ R.B. Siedel
- -----------------------
8
<PAGE> 1
EXHIBIT 8A
CUSTODY AGREEMENT
This agreement made this 23rd day of June , 1997 between Navigator Money
Market Fd. (hereinafter called "Customer") and CoreStates Bank, N.A.
(hereinafter called "Agent").
WITNESSETH:
1. Appointment of Agent
Customer hereby appoints Agent as its agent and custodian, and Agent hereby
accepts such appointment and agrees to act as agent and custodian on the terms
hereinafter specified.
2. Custody of Assets
Agent shall act as custodian of all cash, securities, evidences of indebtedness
and other property, including all income thereon and proceeds from the sale or
maturity thereof (collectively, the "Assets") from time to time delivered to or
received by it for Customer. The Assets shall be held in the appropriate
custodial account established from time to time upon Customer's written request
and shall be segregated at all times (except for cash and Assets held in book
entry form which shall be appropriately designated as property of Customer) from
the securities and property of any other person or entity. If any of the assets
are securities eligible for deposit in a central depository system, Agent is
hereby authorized to deposit those securities in that system.
3. Reports
Agent shall forward or cause to be forwarded to Customer any financial reports,
proxy statements, tender offers or other materials received by it with respect
to Assets registered in the name of the Nominees. Agent shall promptly forward
or cause to be forwarded to Customer all proxies with respect to such Assets
executed in blank by the appropriate Nominees together with all pertinent
information and documents received by Agent in connection with such proxies.
4. Income of Assets
Agent will collect the income and after deducting any charges and expenses,
remit the net income to the Customer or reinvest the income or transfer the net
income to principal periodically in accordance with the Customer's instructions.
<PAGE> 2
(a) Unless otherwise instructed in writing, Agent shall retain in the
appropriate account of Customer any stock dividends, subscription rights and
other non-cash distributions on the Assets, or the proceeds from the sale of any
distributions.
(b) Agent or its Nominee is hereby authorized to sign any declarations,
endorsements, affidavits, certificates of ownership or other documents which may
be required with respect to all coupons, registered interest, dividends or other
income on the Assets.
5. Purchases and Sales of Assets
Agent shall promptly effect purchases and sales of the Assets in accordance with
Customer's instructions from time to time, and shall take all steps necessary or
advisable to collect the proceeds of any Assets which are sold, redeemed or
which have matured and shall promptly deposit said proceeds in the appropriate
account designated by Customer from time to time, provided that Agent shall not
be responsible for the collection of Assets called for redemption or otherwise
payable (other than by reason of sale or other disposition by Agent) unless
notice thereof is published in national financial reporting services to which
Agent subscribes, or notice is otherwise received by Agent. Agent shall not be
under any duty to advise or recommend any sales or purchases of Assets for
Customer's account.
6. Limitation of Liability; Responsibilities
(a) Agent shall not be liable for any loss or damage suffered by Customer as the
result of any act or omission of any broker or other agent engaged by Customer
in effecting purchases, sales or exchanges of Assets except to the extent of any
liability caused by (i) the negligent, reckless or willful conduct of Agent or
its subagent or subcustodian, or (ii) the failure of Agent or its subagent or
subcustodian to perform any act required in this Agreement. Agent shall not be
liable for loss or damage caused directly or indirectly by invasion,
insurrection, riot, war, nuclear disaster, order of civil authority or any other
causes beyond its control.
(b) Agent shall not be responsible to file any tax returns or pay any taxes due
in connection with the Assets held hereunder and the income therefrom.
(c) Agent shall be under no obligation to advise the Customer of due or tender
dates for those Assets which have tender options attached to, stamped on, or
incorporated in the Asset itself.
7. Statements
Agent shall deliver to Customer a monthly statement of all accounts maintained
hereunder showing all receipts, disbursements and other transactions affecting
the Assets during the preceding month and a statement of the cost and market
value of each of the Assets at the end of the preceding month. The scope,
content and frequency of the statements required be changed from time to time
upon the mutual written agreement of the parties hereto.
<PAGE> 3
8. Withdrawal of Assets
(a) Any securities and evidences of indebtedness included in the Assets may be
withdrawn from Agent in accordance with Customer's Instructions; provided,
however, that except as provided below, such Instructions shall direct that the
delivery of any such securities and evidences of indebtedness by Agent shall be
made only to (i) a bank shown in Exhibit 1, or its Nominee, (ii) a broker, shown
in Exhibit 1, or its Nominee, (iii) in the case of commercial paper, to the
obligor upon payment. In the event the Instructions direct the delivery of
Assets to any person or entity other than as set forth above, such Instructions
shall be in writing and countersigned by a President, Vice President, Secretary
or Treasurer of Customer or otherwise be authorized pursuant to a resolution
duly adopted and provided to Agent in accordance with paragraph 10(c) below.
(b) Upon receipt of such Instructions and subject to the terms and conditions
thereof, Agent shall deliver the items specified therein to the person or entity
designated and shall obtain a proper receipt therefore.
(c) In connection with the sale of any Assets, Agent shall make delivery of such
Assets only against payment therefore, in federal funds or by certified check or
bank cashier's check, provided that, consistent with customary practice at the
place of delivery, Agent may (i) make delivery for inspection prior to sale at
buyer's location, upon delivery to Agent of a proper receipt therefore, to a
member of registered national securities exchange or bank or trust company. In
no event shall Agent be liable hereunder for not delivering Assets in accordance
with Customer's Instructions where such delivery is withheld by reason of the
purchaser's inability or unwillingness to make a payment therefore in federal
funds or by certified or bank cashier's check or as otherwise provided in this
paragraph 8(c).
(d) Any cash included in the Assets may be withdrawn from Agent in accordance
with written Instructions provided, however, that subject to a transfer or other
disposition of securities by bookkeeping entry in connection with Agent's
participation (through its agent) the Federal Reserve/Treasury book-entry
system, Agent shall make payments of cash to, or from the account of, Customer
only (i) upon the purchase of securities or other Assets and delivery of such
securities or other Assets to Agent in proper form for transfer; (ii) to
Customer's account with CoreStates Bank, N.A. or with such other bank as
Customer may designate by written Instructions from time to time; (iii) for the
payment of Agent's expenses and fees authorized in this Agreement; (iv) for
payments in connection with the conversion, exchange or surrender of securities
included in the Assets; or (v) for other proper purposes. In making any cash
payments, Agent shall first receive Instructions requesting such payment and
stating the purpose therefore, and in the case of a payment under clause (v)
above, such Instructions shall, except as otherwise authorized pursuant to a
resolution duly adopted by the Customer or provided to Agent in accordance with
paragraph 10 (c) below, be in writing and shall be countersigned by the
President, Vice President, Secretary or Treasurer of Customer.
(e) Agent shall promptly notify the Treasurer of the Customer of all withdrawals
from or deliveries to Agent for Customer's account hereunder.
<PAGE> 4
9. Indemnity
With respect to any Assets received by Agent and registered in the name of Agent
or Agent's subagent or subcustodian or nominee or held on behalf of Customer in
Book Entry at a central depository system, Agent shall be fully responsible and
liable for and shall indemnify and hold Customer harmless against any loss,
damage or expense (including attorney's fees and amounts paid with Agent's
consent in settlement of any claim or action) which Customer may sustain
resulting from (i) any act of Agent, its subagent or subcustodian or nominee, or
any employee or other agent of any of them which has not been authorized
hereunder, or (ii) any failure by Agent, or its subagent or subcustodian or
nominee, to perform any of its obligations under this Agreement. Except with
respect to the extent same may result, directly or indirectly from any negligent
act or omission or willful or reckless misconduct of Agent, its subagent or
subcustodian or nominee, or any employee or other agent or any of them or any
failure of Agent or its subagent or subcustodian or nominee, to perform any of
Agent's obligations under this Agreement, Customer shall indemnify and hold
Agent or any subagent, subcustodian or nominee harmless against any loss, damage
or expense (including attorney's fees and amounts paid, with Customer's consent,
in settlement of any claim or action) which Agent or any subagent, subcustodian
or nominee may sustain resulting from its performance in accordance with this
Agreement.
10. Instructions, Notices and Authorized Persons
(a) As used in this Agreement, the term "Instructions" or "Instructed" means a
request or order given or delivered to Agent by the President, Vice President,
Secretary Treasurer, or a duly appointed investment advisor of Customer. Unless
specifically required herein to be in writing, Instructions may be oral or
written; provided, that any oral Instructions shall be promptly confirmed in
writing. Failure to provide a written confirmation of oral Instruction shall not
validate any such Instructions.
(b) Any notices, confirmations and receipts required hereunder to be delivered
by Agent to Customer, unless otherwise specifically provided, shall be delivered
by Agent to the Treasurer of Customer.
(c) Customer will from time to time file with Agent a certified copy of a
Corporate Resolution authorizing person or persons to give proper instructions
and specifying the class of instructions that may be given by each person to
Agent under this Agreement.
(d) Agent may rely and shall be protected in acting upon any oral or written
(including telegraph and other mechanical) instructions, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument, report,
notice, consent, order or other paper or document reasonably believed by it to
be genuine and to have been signed, forwarded, or presented by Customer.
<PAGE> 5
11. Fees and Expenses
As compensation for its services under this Agreement, Agent may retain those
fees which are specified in its published or otherwise generally applicable fee
schedule in effect at the time its services are being rendered. Customer
recognizes that this schedule might be changed from time to time with prior
notice to Customer.
12. Amendments or Termination
This Agreement contains the entire understanding between Customer and Agent
concerning the subject matter of this Agreement, supersedes all other Custody
Agreements of dates previous and may be amended only in writing signed by both
parties. No term or provision of this Agreement may be modified or waived unless
in writing and signed by the party against whom such waiver or modification is
sought to enforce. Either party's failure to insist at any time upon strict
compliance with this Agreement or with any of the terms hereunder, or any
continued course of such conduct on the part of either party shall in no event
constitute or be considered a waiver by either party of any of its rights
hereunder. This Agreement may be terminated at any time provided such effective
time shall be not less than 30 days from the date of written notice of
termination.
13. Applicable Law
The Agent represents that it has all the necessary power and authority to
perform its obligations under this Agreement, that the execution and delivery by
it of this Agreement and the performance by it of its obligations hereunder have
been duly authorized by all necessary action and will not violate any law,
regulation or other restriction or provision applicable to it or by which it is
bound, and that this Agreement constitutes a legal, valid and binding obligation
enforceable against Agent in accordance with its terms. This agreement shall be
interpreted and enforced in accordance with the laws of the Commonwealth of
Pennsylvania.
Navigator Money Market Fd.
Attest: /s/ R.J. Walker
--------------------------
/s/ Gerard J. Wills
CoreStates Bank, N.A.
Attest: /s/ Paul Cahill
--------------------------
/s/ John Moderski
<PAGE> 1
Ex. 8b
TRANSFER AGENCY AGREEMENT
This Agreement, dated as the 9th day of December, 1986, made by and
between NAVIGATOR MONEY MARKET FUND, INC. a Maryland corporation (the "Fund"),
successor by reorganization to Navigator Money Market Fund, a Pennsylvania
business trust, operating as an open-end investment company, and FUND/PLAN
SERVICES, INC. ("Fund/Plan"), a corporation duly organized and existing under
the laws of the Commonwealth of Pennsylvania:
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint Fund/Plan as Transfer Agent of the
Fund as its Dividend Disbursing Agent; and
WHEREAS, the Fund also desires to appoint Fund/Plan as its Accounting
Services Agent to maintain and keep current the books, accounts, records
journals or other records of original entry relating to the business of the Fund
as set forth in Section 15 of this Agreement (the "Accounts and Records") and to
perform certain other functions in connection with such Accounts and Records;
and
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:
<PAGE> 2
Section 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified unless the context otherwise requires.
The Fund: The term Fund shall mean the Navigator Money Market Fund,
Inc.
Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and investments
from time to time owned by the Fund.
Share Certificates: The term Share Certificates shall mean the stock
certificates for the Shares of the Fund.
Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares of the Fund in accordance with the stock
registry records of the Fund.
Share: The term Shares shall mean the issued and outstanding shares of
beneficial interest of the Fund.
Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Fund/Plan in person or by telephone, telegram, telecopy, or
other mechanical or documentary means lacking original signature, by a person or
- 2 -
<PAGE> 3
persons authorized by a resolution of the Board of Directors of the Fund to give
Oral Instructions on behalf of the Fund.
Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Fund/Plan in original writing containing original signatures
or a copy of such document transmitted by telecopy including transmission of
such signature, believed in good faith by Fund/Plan to be the signature of a
person authorized by a resolution of the board of Directors of the Fund to given
Written Instructions on behalf of the Fund.
Section 2. The Fund hereby appoints Fund/Plan as its Transfer, Dividend
Disbursing, and Accounting Services Agent and Fund/Plan accepts such
appointments and agrees to act in such capacities upon the terms set forth in
this Agreement.
TRANSFER AGENCY
Section 3. The Fund shall furnish to Fund/Plan as Transfer Agent a
sufficient supply of blank Share Certificates and from time to time will renew
such supply upon the request of Fund/Plan. Such blank Share Certificates shall
be signed manually or by facsimile signatures of officers of the Fund authorized
by law or by the by-laws of the Fund to sign Share Certificates and, if
required, shall bear the corporate seal or a facsimile thereof.
- 3 -
<PAGE> 4
Section 4. Fund/Plan as Transfer Agent shall make original issues of
Shares in accordance with Section 26 and 27 below and with the Fund's Prospectus
and Statement of Additional Information upon the written request of the Fund and
upon being furnished with (i) a certified copy of a resolution or resolutions of
the Board of Directors of the Fund authorizing such issue; (ii) an opinion of
counsel as to the validity of such additional Shares; and (iii) necessary funds
for the payment of any original issue tax applicable to such additional Shares.
Section 5. Transfers of Shares shall be registered and new Share
Certificates issued by Fund/Plan upon surrender of outstanding Share
Certificates (i) in form deemed by Fund/Plan to be properly endorsed for
transfer, (ii) with all necessary endorsers' signatures guaranteed by a member
firm of a national securities exchange or a commercial bank, accompanied by
(iii) such assurances as Fund/Plan shall deem necessary or appropriate to
evidence the genuineness and effectiveness of each necessary endorsement, and
(iv) satisfactory evidence of compliance with all applicable laws relating to
the payment or collection of taxes.
Section 6. When mail is used for delivery of Share Certificates,
Fund/Plan shall forward Share Certificates in "non-negotiable" form by
first-class mail, and Share Certificates in "negotiable" form by registered
mail, all mail deliveries to be
- 4 -
<PAGE> 5
covered while in transit to the addressee by insurance arranged for by
Fund/Plan.
Section 7. In registering transfers, Fund/Plan as Transfer Agent may
rely upon the Uniform Commercial Code or any other statutes which, in the
opinion of counsel, protect Fund/Plan and the Fund is not requiring complete
documentation, in registering transfers without inquiry into adverse claims, in
delaying registration for purposes of such inquiry, or in refusing registration
where, in its judgment, an adverse claim requires such refusal.
Section 8. Upon receiving indemnity satisfactory to Fund/Plan,
Fund/Plan as Transfer Agent may issue new Share Certificates in place of Share
Certificates represented to have been lost, destroyed, or stolen, and may issue
new Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates.
Section 9. In case any officer of the Fund who shall have signed
manually or whose facsimile signature shall have been affixed to blank Share
Certificates shall die, resign, or be removed from office prior to the issuance
of such Share Certificates, Fund/Plan as Transfer Agent may issue or register
such Share Certificates as the Share Certificates of the Fund notwithstanding
such death, resignation, or removal; and the Fund shall file promptly with
Fund/Plan such approval, adoption, or ratification as may be required by law.
- 5 -
<PAGE> 6
Section 10. Fund/Plan will maintain stock registry records in the usual
form in which it will note the issuance, transfer, and redemption of Shares and
the issuance and transfer of Share Certificates, and is also authorized to
maintain an account entitled Unissued Certificate Account in which it will
record the Shares and fractions issued and outstanding from time to time for
which issuance of Share Certificates is deferred. Except with respect to Share
transactions processed through the Transfer Agent, the Fund is responsible for
providing Fund/Plan with reports of Fund Share purchases, redemptions, and total
Shares outstanding on the next business day after each net asset valuation.
Fund/Plan is authorized to keep records, which will be part of the stock
transfer records, in which it will note the names and registered addresses of
Shareholders, and the number of Shares and fractions from time to time owned by
them for which no Share Certificates are outstanding. Each Shareholder will be
assigned a single account number. Whenever a Shareholder redeems Shares
represented by Share Certificates, Fund/Plan as Transfer Agent, upon receipt of
the Share Certificates registered in the name of the Shareholder (or if not so
registered, in proper form for transfer), shall cancel such Share Certificates,
debit the Shareholder's individual stock account and credit the Shares to the
Unissued Share Certificate Account.
Section 11. Fund/Plan will issue Share Certificates for Shares of the
Fund only upon receipt of a written request from a
- 6 -
<PAGE> 7
Shareholder. In all other cases, the Fund authorizes the Fund/Plan to dispense
with the issuance and countersignature of Share Certificates whenever Shares are
purchased. In such case, Fund/Plan as Transfer Agent shall merely note on its
stock registry records the issuance of the Shares and fractions (if any), shall
credit the Unissued Certificate Account with the Shares and fractions issued and
shall credit the proper number of Shares and fractions to the respective
Shareholders. Likewise, whenever Fund/Plan has occasion to surrender for
redemption Shares and fractions owned by Shareholders, it shall be unnecessary
to issue Share Certificates for redemption purposes. The Fund authorizes
Fund/Plan in such cases to process the transactions by appropriate entries in
its stock transfer records, and debiting of the Unissued Certificate Account and
the record of issued Shares outstanding.
Section 12. Fund/Plan as Transfer Agent will, in addition to the duties
and functions above mentioned, perform the usual duties and functions of a stock
Transfer Agent for a corporation. It will countersign for issuance or reissuance
Share Certificates representing original issue or reissue treasury Shares as
provided herein, and will transfer Share Certificates registered in the name of
Shareholders from one Shareholder to another in the usual manner. Fund/Plan may
rely conclusively and act without further investigation upon any list,
instruction, certificate, authorization, Share Certificate, or
- 7 -
<PAGE> 8
other instrument or paper believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned, or executed by duly
authorized person or persons, or upon the instructions of any officer of the
Fund, or upon the advice of counsel for the Fund or for Fund/Plan. Fund/Plan may
record any transfer of Share Certificates which is believed by it in good faith
to have been duly authorized or may refuse to record any transfer of Share
Certificates if, in good faith, Fund/Plan as Transfer Agent deems such refusal
necessary in order to avoid any liability either to the Fund or to Fund/Plan.
The Fund agrees to indemnify and hold Fund/Plan harmless from and against any
and all losses, costs, claims, and liability which it may suffer or incur by
reason of so relying or acting or refusing to act.
Section 13. In case of any request or demand for the inspection of the
share records of the Fund, Fund/Plan as Transfer Agent shall endeavor to notify
the Fund and to secure instructions as to permitting or refusing such
inspection. However, Fund/Plan may exhibit such records to any person in any
case where it is advised by its counsel that it may be held liable for failure
to do so.
ACCOUNTING SERVICES
Section 14. The Fund shall promptly turn over to Fund/Plan such of the
Accounts and Records previously maintained by or for it as are necessary for
Fund/Plan to perform its functions under this Agreement. The Fund authorizes
Fund/Plan to rely on such
- 8 -
<PAGE> 9
Accounts and Records turned over to it and hereby indemnifies and holds
Fund/Plan, its successors and assigns, harmless of and from any and all
expenses, damages, claims, suits, liabilities, actions, demands, and losses
whatsoever arising out of or in connection with any error, omission, inaccuracy,
or other deficiency of such Accounts and Records or in the failure of the Fund
to provide any portion of such or to provide any information needed by Fund/Plan
to knowledgeably perform its functions.
The Fund agrees promptly to advise Fund/Plan in writing of any
inaccuracies, omissions, discrepancies, or other deficiencies in the Accounts
and Records. Fund/Plan shall make reasonable efforts to isolate and correct any
inaccuracies, omissions, discrepancies, or other deficiencies in the Accounts
and Records delivered to Fund/Plan, to the extent such matters are disclosed to
Fund/Plan or are discovered by it and are relevant to its performance of its
functions under this Agreement. The Fund shall provide Fund/Plan with such
assistance as it may reasonably request in connection with its efforts to
correct such matters. The Fund agrees to pay Fund/Plan on a current and ongoing
basis for its reasonable time and costs expended on the correction of such
matters, said payment to be in addition to the fees and charges agreed to for
the normal services rendered under this Agreement.
- 9 -
<PAGE> 10
Fund/Plan expressly makes no warranty or representation that any error,
omission, or deficiency can be satisfactorily corrected. The Fund further agrees
that if Fund/Plan is subject to any claim, suit, or other expenses due, in
Fund/Plan's sole reasonable judgment, to any inaccuracy, omission, discrepancy,
or other deficiency of the Accounts and Records delivered to Fund/Plan
hereunder, or due to any failure to provide any records or material required
hereunder, the Fund shall pay Fund/Plan on a monthly basis for all costs in
connection therewith and indemnify and hold Fund/Plan harmless from and against
all costs in connection therewith, including all attorneys' fees and costs;
provided, however, that if such error, omission, inaccuracy, or other deficiency
is caused directly or indirectly by gross negligence or reckless disregard by
Fund/Plan of its duties and responsibilities hereunder, the Fund shall have no
obligation to indemnify and hold harmless Fund/Plan, its successors, or assigns.
Section 15. To the extent it and the Custodian possess the necessary
information by reason of the performance of their custodial, transfer agency and
dividend disbursing services under this Agreement and the Custodian Agreement
relating to the Fund and to the extent it receives other necessary information
by Written or Oral Instructions, Fund/Plan shall maintain and keep current the
following Accounts and Records relating to the business of the Fund in such form
as may be mutually agreed to between the Fund and Fund/Plan:
- 10 -
<PAGE> 11
(a) Cash Receipt Journal
(b) Cash Disbursements Journal
(c) Dividends Paid Record
(d) Purchase and Sales Journals - Portfolio
Securities
(e) Subscription and Redemption Journals
(f) Security Ledgers
(g) Broker Ledger
(h) General Ledger
(i) Daily Expense Accruals
(j) Daily Interest Accruals
(k) Securities and Monies borrowed or loaned and
collateral therefor
(l) Daily Trail Balance
(m) Investment Income Journal
Unless necessary information to perform the above functions (which is
not otherwise in the possession of the Transfer Agent or Custodian) is furnished
by Written or Oral Instructions to Fund/Plan daily prior to (i) the close of
business on the next day on which money market instruments are generally traded
(a "Business Day") and (ii) the calculation of the Funds' net asset value, as
provided below, Fund/Plan shall incur no liability, and the Fund shall indemnify
and hold harmless Fund/Plan from and against any liability arising from any
failure to provide complete information or from any
- 11 -
<PAGE> 12
discrepancy between the information received by Fund/Plan and used in such
calculations and any subsequent information received by Fund/Plan.
Section 16. Fund/Plan shall make the proper accounting entries in
accordance with the information available to it in accordance with Section 15
hereof, and shall notify the Custodian of all cash and Securities. The Fund
shall direct that the broker-dealer or other person through whom a transaction
occurred send a confirmation to the Fund/Plan. Fund/Plan shall verify this
confirmation against the Written Instructions when received from the Fund and
forward the confirmation to the Custodian. Fund/Plan shall promptly notify the
Fund of any discrepancy between the confirmation and the Fund's Written
Instructions, but shall incur no responsibility or liability for such
discrepancy. The Fund shall cause any necessary corrections to be made and shall
advise Fund/Plan accordingly.
Section 17. On each Business Day, Fund/Plan shall calculate the net
asset value of the Fund in accordance with the Fund's prospectus and Statement
of Additional Information, and shall communicate this information to the Fund's
Administrator.
Fund/Plan shall calculate the daily dividend ratio of the Fund in
accordance with the Fund's prospectus and Statement of Additional Information
and resolutions of the Fund's Board of Directors and shall communicate this
information to the
- 12 -
<PAGE> 13
Administrator. Fund/Plan shall also prepare and maintain, at such intervals not
more frequent than daily specified by the Fund, an evaluation of Securities for
which market quotations are available through Quotron Financial Information
Services or other mechanical pricing services used by Fund/Plan; all other
Securities shall be evaluated in accordance with the Fund's Written
Instructions, and Fund/Plan shall have no responsibility or liability for the
accuracy of the prices quoted by Quotron or by the information supplied by the
Fund or upon the Written Instructions.
The Fund assumes all responsibility for computation of "amortized
cost", valuation of restricted securities, and all valuations not ascertainable
solely by mechanical procedures.
Section 18. For all purposes under this Agreement, Fund/Plan is
authorized to act upon receipt of the first of any Written or Oral Instruction
it receives from the Fund or its agents on behalf of the Fund. In cases where
the first Instruction is an Oral Instruction that is not in the form of a
document or written record, a confirmatory Written Instruction or Oral
Instruction in the form of a document or written record shall be delivered, and
in cases where Fund/Plan receives an Instruction from the fund, whether Written
or Oral, to enter a portfolio transaction on the records, the Fund shall cause
the broker-dealer to send a written confirmation to Fund/Plan.
- 13 -
<PAGE> 14
Fund/Plan shall be entitled to rely on the first Instruction received and, for
any act or omission undertaken in compliance therewith, shall be free of
liability and fully indemnified and held harmless by the Fund; provided,
however, that in the event a Written or Oral Instruction received by Fund/Plan
is countermanded by a timely later Written or Oral Instruction received by
Fund/Plan prior to acting upon such countermanded Instruction, Fund/Plan shall
act upon such later Written or Oral Instruction. The sole obligation of
Fund/Plan with respect to any follow-up or confirmatory Written Instruction,
Oral Instruction in documentary or written form, or broker-dealer written
confirmation shall be to make reasonable efforts to detect any discrepancy
between the original Instruction and such confirmation and to report such
discrepancy to the Fund. The Fund shall be responsible, at the Fund's expense,
for taking any action, including any reprocessing, necessary to correct any
discrepancy or error and, to the extent such action requires Fund/Plan to act,
the Fund shall give Fund/Plan specific Written Instruction as to the action
required.
Section 19. At the end of each month, the Fund shall cause the
Custodian to forward to Fund/Plan a monthly statement of cash and portfolio
transactions, which will be reconciled with Fund/Plan's Accounts and Records
maintained for the Fund. Fund/Plan will report any discrepancies to the
Custodian, and report an unreconciled items to the Fund.
- 14 -
<PAGE> 15
Section 20. Fund/Plan shall promptly supply daily and periodic reports
of the Fund as requested by the Fund and agreed upon by Fund/Plan.
Section 21. The Fund shall and shall require each of its agents to
provide Fund/Plan as of the close of each business day, or on such other
schedule as the Fund determines is necessary, with Written or Oral Instructions
(to be delivered to Fund/Plan by 10:00 a.m. the next following Business Day)
containing all data and information necessary for Fund/Plan to maintain the
Fund's Accounts and Records, and Fund/Plan may conclusively assume that the
information it receives by Written or Oral Instructions is complete and
accurate. Except with respect to Share transactions processed through the
Transfer Agent, the Fund is responsible to provide or cause to be provided to
Fund/Plan reports of Share purchases, redemptions, and total shares outstanding
on the next business day after each net asset valuation.
Section 22. The Accounts and Records, in the agreed upon formal,
maintained by Fund/Plan shall be the property of the Fund, and shall be made
available to the Fund promptly upon request and shall be maintained for the
periods prescribed in Rule 31(a)-2 of the Investment Company Act of 1940, as
amended. Fund/Plan shall assist the Fund's independent auditors or, upon
approval of the Fund or upon demand, any regulatory body, in any
- 15 -
<PAGE> 16
requested review of the Fund's Accounts and Records but shall be reimbursed for
all expenses and employee time invested in any such review of the Fund's
Accounts and Records outside of routine and normal periodic reviews. Upon
receipt from the Fund of any necessary information not in its possession,
Fund/Plan shall supply the necessary data for the Fund's or its accountant's
completion of any necessary tax returns, questionnaires, periodic reports to
shareholders and such other reports and information requests as the Fund and
Fund/Plan shall agree upon from time to time.
Section 23. Fund/Plan and the Fund may from time to time adopt such
procedures as they agree upon in writing, and Fund/Plan may conclusively assume
that any procedure approved by the Fund or directed by the Fund, does not
conflict with or violate any requirements of the Fund's Prospectus, Statement of
Additional Information, Deed of Fund, or any rule or regulation of any
regulatory body or governmental agency. The Fund shall be responsible for
notifying Fund/Plan of any changes in regulations or rules which might
necessitate changes in Fund/Plan's procedures, and for working out with
Fund/Plan such changes.
Section 24. Fund/Plan, in performing under the terms and conditions of
this Agreement, shall incur no liability for its status hereunder or for any
actions taken or omitted in good faith reliance upon any authorized Written or
Oral Instruction,
- 16 -
<PAGE> 17
any certified copy of any resolution of the Board of Directors of the Fund, or
any other document reasonably believed by Fund/Plan to be genuine and to have
been executed or signed by the proper person or persons, and the Fund hereby
agrees to indemnify and hold Fund/Plan harmless from any and all loss,
liability, and expense, including any legal expenses, arising out of Fund/Plan's
performance, or status, or any act or omission of Fund/Plan, under this
Agreement.
Section 25. All financial data provided to, processed by, and reported
by Fund/Plan under this Agreement shall be stated in United States dollars or
currency. Fund/Plan shall have no obligation to convert to, equate, or deal in
foreign currencies or values, and expressly assumes no liability for any
currency conversion or equation computations relating to the affairs of the
Fund.
ISSUANCE OF SHARES
Section 26. Prior to the daily determination of net asset value and in
accordance with the Fund's Prospectus and Statement of Additional Information,
Fund/Plan shall process all purchase orders received since the last
determination of the net asset value of the Fund. (For purposes of this
Agreement, the date of a purchase order is received shall be determined in
accordance with the Fund's Prospectus as in effect from time to time.)
- 17 -
<PAGE> 18
Fund/Plan shall calculate daily the amount available for investment in
Shares of the Fund at the net asset value determined by the Fund as of the time
stated in the Fund's Prospectus and Statement of Additional Information, the
number of Shares and fractional Shares of the Fund to be purchased, and the net
asset value to be deposited with the Custodian. Fund/Plan, as Agent for the
Shareholders, shall place a purchase order daily with the Fund for the proper
number of Shares and fractional Shares of the Fund to be purchased and confirm
such number to the Fund in writing.
Section 27. Having made the calculations provided for in Section 25,
Fund/Plan shall thereupon pay over the net asset value of shares purchased to
the Custodian. The net asset value shall then be deposited in the account
maintained under the Custodian Agreements. The proper number of Shares and
fractional Shares of the Fund shall then be issued daily and credited by
Fund/Plan to the Unissued Certificate Account. The Shares and fractional Shares
of the Fund purchased for each Shareholder will be credited by Fund/Plan to his
separate account. Fund/Plan shall mail to each Shareholder a confirmation of
each purchase, with copies to the Fund if requested. Such confirmation will show
the prior Share balance, the new Share balance, the Shares for which Share
Certificates are outstanding (if any), the amount invested, and the price paid
for the newly purchased Shares.
- 18 -
<PAGE> 19
REDEMPTIONS
Section 28. Prior to the daily determination of net asset value and in
accordance with the Fund's Prospectus and Statement of Additional Information,
Fund/Plan shall process all requests from Shareholders to redeem Shares of the
Fund and determine the number of Shares of the Fund required to be redeemed to
make monthly payments, automatic payments, or the like. Thereupon, Fund/Plan
shall advise the Fund of the total number of Shares of the Fund available for
redemption and the number of Shares and fractional Shares of the fund requested
to be redeemed. The Fund shall then quote to Fund/Plan the applicable net asset
value, whereupon Fund/Plan shall furnish the Fund with an appropriate
confirmation of the redemption and process the redemption by filing with the
Custodian an appropriate statement and making the proper distribution and
application of the redemption proceeds in accordance with the Fund's Prospectus
and Statement of Additional Information. The stock registry books recording
outstanding Shares, the Unissued Certificate Account, and the individual account
of the Shareholder shall be properly debited.
Section 29. The proceeds of redemption shall be remitted by Fund/Plan
in accordance with the Fund's Prospectus and Statement of Additional
Information, and in accordance with the particular shareholder's Account
Registration Form filed with the Transfer Agent. If Share Certificates have been
issued for Shares being redeemed, then such Share Certificates and a stock
- 19 -
<PAGE> 20
power with a signature guarantee of a commercial Fund/Plan, or of a member firm
of a national securities exchange, shall accompany the redemption request. If
Share Certificates have not been issued to the redeeming Shareholder, the
signature of the Shareholder on the redemption request must be similarly
guaranteed. The Fund may authorize Fund/Plan to waive the signature guarantee in
certain cases by Written Instructions and hereby authorizes Fund/Plan to waive
the signature guarantee with respect to all redemptions by telephone and check
described in the Fund's Prospectus and Statement of Additional Information.
For the purposes of redemption of Shares which have been purchased
within 15 days of a redemption request, the Fund shall provide Fund/Plan, from
time to time, with Written Instructions concerning the time within which such
requests may be honored.
DIVIDENDS
Section 30. Upon the declaration of each dividend and each capital
gains distribution by the Board of Directors of the Fund, the Fund shall notify
Fund/Plan of the date of such declaration, the amount payable per Share, the
record date of such declaration, the amount payable per Share, the record date
for determining the Shareholders entitled to payment, the payment, and the
reinvestment date price.
Section 31. On or before each payment date the Fund will transfer or
cause the Custodian to transfer to Fund/Plan, in its capacity as Dividend
Disbursing Agent, the total amount of the
- 20 -
<PAGE> 21
dividend or distribution currently payable. On the designated payment date,
Fund/Plan will automatically reinvest all dividends in additional Shares of the
Fund except in cases where Shareholders have elected to receive Shares in cash,
in which case Fund/Plan will mail distribution checks to the Shareholders for
the proper amounts payable to them.
GENERAL PROVISIONS
Section 32. Fund/Plan shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of
Shares, the disbursement of dividends, and dividend reinvestment, in which will
be noted the transactions effected for each Shareholder and the number of Shares
and fractional Shares owned by each for which no Share Certificates are
outstanding. Fund/Plan agrees to make available upon request and to preserve for
the periods prescribed in Rule 31a-2 any records relating to services provided
under this Agreement which are required to be maintained by Rule 31a-1.
Section 33. In addition to the services as Transfer Agent, Dividend
Disbursing, and Accounting Services Agent, as set forth above, Fund/Plan will
perform other services for the Fund as agreed from time to time, including but
not limited to preparation of and mailing Federal Tax Information Forms, mailing
semi-annual reports of the Fund, preparation of one annual list of Shareholders,
and mailing notices of Shareholders' meetings, proxies, and proxy statements.
- 21 -
<PAGE> 22
Section 34. Nothing contained in this Agreement is intended to or shall
require Fund/Plan, in any capacity hereunder, to perform any functions or duties
on any holiday, day of special observance, or any other day on which Fund/Plan
or the New York Stock Exchange is closed. Functions or duties normally scheduled
to be performed on such days shall be performed on, and as of, the next
succeeding business day on which both the New York Stock Exchange and Fund/Plan
are open. Notwithstanding the foregoing, Fund/Plan shall compute the net asset
value of the Fund on each day required pursuant to Rule 22c-1 promulgated under
the Investment Company Act of 1940.
Section 35. The Fund agrees to pay Fund/Plan compensation for its
services and to reimburse it for expenses, as set forth in Schedule A attached
hereto, or as shall be set forth in amendments to such Schedule approved by the
Fund and Fund/Plan.
Section 36. In acting in any capacity set forth in this Agreement,
Fund/Plan shall not be personally liable for any taxes, assessments, or
governmental charges which may be levied or assessed on any basis whatsoever in
connection with its duties hereunder, excepting only for taxes assessed against
it in its corporate capacity arising out of its compensation hereunder.
Section 37. The Fund shall indemnify Fund/Plan and save it harmless and
against any and all actions, suits, and claims, whether groundless or otherwise,
arising directly or indirectly
- 22 -
<PAGE> 23
out of or in connection with its performance under this Agreement as Transfer
Agent and Dividend Disbursing Agent, and from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses, and liabilities
incurred by Fund/Plan in connection with any such action, suit, or claim.
Fund/Plan shall not be under any obligation to prosecute or to defend any
action, suit, or claim arising out of or in connection with its performance
under this Agreement as Transfer Agent and Dividend Disbursing Agent which, in
the opinion of its counsel, may involve it in expense or liability, and the Fund
shall, so often as reasonably requested, furnish Fund/Plan with satisfactory
indemnity against such expense or liability, and upon request of Fund/Plan the
Fund shall assume the entire defense of any action, suit, or claim subject to
the foregoing indemnity; provided, however, that Fund/Plan shall give the Fund
notice of and reasonable opportunity to defend any such action, suit, or claim,
in the name of the Fund or Fund/Plan or both.
Without limiting the foregoing:
(a) Fund/Plan may rely upon the advice of the Fund or of
counsel, who may be counsel for the Fund or counsel for Fund/Plan, and upon
statements of accountants, brokers, and other persons reasonably believed by it
in good faith to be expert in the matters upon which they are consulted, and,
for any actions taken in good faith upon such statements, Fund/Plan shall not be
liable to anyone.
- 23 -
<PAGE> 24
(b) Fund/Plan may act upon any Oral Instruction which it
receives and which it believes in good faith was transmitted by the person or
persons authorized by the Board of Directors of the Fund to give such Oral
Instruction. Fund/Plan shall have no duty or obligation to make any inquiry or
effort of certification of such Oral Instruction.
(c) Fund/Plan shall not be liable for any action taken in
good faith reliance upon any Written Instruction or certified copy of any
resolution of the Board of Directors of the Fund, and Fund/Plan may rely upon
the genuineness of any such document or copy thereof believed in good faith by
Fund/Plan to have been validly executed.
(d) Fund/Plan may rely and shall be protected in acting upon
any signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper or document believed by it to be genuine and to have been signed or
presented by a purchaser, by the Fund, or by other proper party or parties.
Section 38. Upon receipt of Written Instructions from the Fund and as
provided herein, Fund/Plan is authorized to make payment upon redemption of
Shares without a signature guarantee. The Fund hereby agrees to indemnify and
hold Fund/Plan and its successors and assigns harmless from and
- 24 -
<PAGE> 25
against any and all expenses, damages, claims, suits, liabilities, actions,
demand, and losses whatsoever arising out of or in connection with a payment by
Fund/Plan upon redemption of Shares without a signature guarantee and, upon the
request of Fund/Plan, the Fund shall assume the entire defense of any action,
suit, or claim subject to the foregoing indemnity. Fund/Plan shall notify the
Fund of any such action, suit, or claim within 30 days after receipt by
Fund/Plan of notice thereof.
Section 39. The Fund shall promptly cause to be turned over to
Fund/Plan (i) an accurate list of Shareholders of the Fund showing the proper
registered address and number of Shares owned and whether such Shares are
represented by outstanding Share Certificates or by non-certificated share
accounts and (ii) all shareholder records, files, and other materials necessary
or appropriate for proper performance of the functions assumed by the Fund/Plan
under this Agreement (hereinafter called "Materials"), and hereby agrees to
indemnify and hold Fund/Plan, its successors, and assigns, harmless from and
against any and all expenses, damages, claims, suits, liabilities, actions,
demands, and losses whatsoever arising out of or in connection with any error,
omission, inaccuracy, or other deficiency of such Materials, or out of the
failure of the Fund to provide any portion of such or to provide any information
need by Fund/Plan knowledgeably to perform its functions.
- 25 -
<PAGE> 26
Section 40. The Fund shall file with Fund/Plan a certified copy of each
resolution of its Board of Directors authorizing the execution of Written
Instructions or the transmittal of Oral Instructions, as provided in Section 1
of the Custodian Agreement.
Section 41. This Agreement may be amended from time to time by a
supplemental agreement executed by the Fund and Fund/Plan.
Section 42. Either the Fund or Fund/Plan may give 60 days' written
notice to the other of the termination of this Agreement, such termination to
take effect at the time specified in the notice.
Section 43. Any notice or other communication required by or permitted
to be given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Fund:
Navigator Money Market Fund, Inc.
232 Lakeside Drive
Horsham, PA 19044
Attention: Fairfield Group, Inc.
- 26 -
<PAGE> 27
If to Fund/Plan:
Fund/Plan Services, Inc.
P.O. Box 874
Conshohocken, PA 19428
Attention: E. F. Heffernan, Jr.
Section 44: The Fund represents and warrants to Fund/Plan that the
execution and delivery of this Transfer Agency Agreement by the undersigned
officers of the Fund has been duly and validly authorized by resolution of the
Board of Directors of the Fund.
Section 45. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 46. This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without the
written consent of Fund/Plan or by Fund/Plan without the written consent of the
Fund, authorized or approved by a resolution of its Board of Directors.
Section 47. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
Section 48. Notwithstanding anything herein to the contrary, nothing
herein shall protect the Transfer Agent for the
- 27 -
<PAGE> 28
consequences of its negligence in the performance of the responsibilities
assumed by it hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and their corporate seals hereunto duly
affixed and attested, as of the day and year first above written.
NAVIGATOR MONEY MARKET FUND, INC.
(SEAL) By/s/ Frank J. Bruzda
---------------------------------------------
Attest /s/ R.B. Siedel
-----------------------------------------
FUND/PLAN SERVICES, INC.
(SEAL) By/s/ E.F. Heffernan, Jr.
---------------------------------------------
Attest /s/ J.K. Curtis
-----------------------------------------
- 28 -
<PAGE> 1
Exhibit 10
[MORGAN, LEWIS & BOCKIUS LETTERHEAD]
July 1, 1985
Navigator Money Market Fund
232 Lakeside Drive
Horsham, Pennsylvania 19044
Gentlemen:
We are furnishing this opinion with respect to the proposed offer and
sale from time to time of an indefinite number of shares of beneficial interest
(the "Shares") of Navigator Money Market Fund (the "Fund"), being registered
under the Securities Act of 1933 by Registration Statement on Form N-1A No.
2-97840 of the Fund.
We have acted as counsel for the Fund since its organization pursuant
to that certain Agreement and Declaration of Trust dated May 16, 1985 (the
"Declaration of Trust"), and are familiar with the action taken by its trustees
to authorize the issuance of the Shares. We have examined its records of
shareholder and trustee actions, its By-Laws and the Declaration of Trust. We
have examined a certificate of the Treasurer of the Fund dated today stating
that there are issued and outstanding 100,000 shares of beneficial interest,
and that the Fund has received the appropriate consideration for such
outstanding shares. We have also examined such other documents as we deem
necessary for the purpose of this opinion.
We supervised the action taken by the Fund to effect registration with
the Securities and Exchange Commission as an investment management company by
the filing of a Notification of Registration on Form N-8A under the Investment
Company Act of 1940. We have examined copies of a Registration Statement, as
amended, under said Act and under the Securities Act of 1933 on Form N-1A, in
the forms filed or to be filed with the Securities and Exchange Commission.
We assume that appropriate action will be taken to register or qualify
the sale of the Shares under any applicable state and federal laws regulating
sales and offerings of
<PAGE> 2
[MORGAN, LEWIS & BOCKIUS LETTERHEAD]
Navigator Money Market Fund
July 1, 1985
Page 2
securities and that upon sales of the Shares the Fund will receive the net
asset value thereof.
Based upon the foregoing, we are of the opinion that:
1. The Fund is a trust legally organized and validly existing pursuant
to the Declaration of Trust and is authorized to issue an unlimited number of
shares, of which 100,000 shares are presently issued and outstanding.
2. Upon the issue of any of the Shares for cash at net asset value and
receipt by the Fund of the authorized consideration therefor, the Shares so
issued will be validly issued, fully paid and nonassessable by the Fund.
The Fund is an entity of the type commonly known as a "business trust".
Under Pennsylvania law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or 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.
The Declaration of Trust provides for indemnification out of the Fund property
for all loss and expense of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund itself would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the
registration of the Shares for offering and sale pursuant to the Securities Act
of 1933. We consent to the filing of this opinion with and as a part of said
Registration Statement on Form N-1A and amendments thereto, and to our being
named as legal counsel under the caption "Legal Counsel" in the Prospectus
included in said Registration Statement.
Very truly yours,
/s/ Morgan, Lewis & Bockius
<PAGE> 1
Exhibit (11)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" and "Independent
Auditors" in the Statement of Additional Information and to the incorporation by
reference in this Post-Effective Amendment No. 14 to the Registration Statement
(Form N-1A No. 2-97840) of the Navigator Money Market Fund, Inc. and
Post-Effective Amendment No. 12 to the Registration Statement (Form N-1A No.
33-3082) of the Navigator Tax-Free Money Market Fund, Inc. of our report dated
April 11, 1997, included in the 1997 Annual Report to Shareholders of the
Navigator Money Market Fund, Inc. and Navigator Tax-Free Money Market Fund, Inc.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
June 26, 1997
<PAGE> 1
Exhibit (16)
Seven Day Average Yield
<TABLE>
<CAPTION>
Date Daily Dividend
---- --------------
<S> <C>
February 22 .000142918
February 23 .000142918
February 24 .000143436
February 25 .000143375
February 26 .000144776
February 27 .000143720
February 28 .000144526
----------
Total .001005669
Divided by 7 .000143667
Multiplied by 365 .052438455 (5.24%)
</TABLE>
Compounded Effective Yield:
[(1 + .001005669)(365/7)] - 1 = .053809933 (5.38%)
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000769270
<NAME> NAVIGATOR MONEY MARKET FUND, INC.
<SERIES>
<NUMBER> 1
<NAME> PRIME OBLIGATIONS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 180,912
<INVESTMENTS-AT-VALUE> 180,912
<RECEIVABLES> 302
<ASSETS-OTHER> 11
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 181,225
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,007
<TOTAL-LIABILITIES> 1,007
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 180,221
<SHARES-COMMON-STOCK> 180,221
<SHARES-COMMON-PRIOR> 167,735
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 180,218
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,488
<OTHER-INCOME> 0
<EXPENSES-NET> 292
<NET-INVESTMENT-INCOME> 9,196
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,196
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,196
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 707,670
<NUMBER-OF-SHARES-REDEEMED> (695,726)
<SHARES-REINVESTED> 542
<NET-CHANGE-IN-ASSETS> 12,486
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 351
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 716
<AVERAGE-NET-ASSETS> 176,049
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .052
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.052)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
