PROXY
COMMONWEALTH CASH RESERVE FUND, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
ON NOVEMBER 21, 1995 PROXY SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Commonwealth Cash Reserve Fund, Inc.
(the "Fund") does hereby appoint Jeffrey A. Laine and Arthur E. Anderson II
or either of them, attorneys and proxies of the undersigned, with full power
of substitution to attend the Special Meeting of Shareholders of the Fund to
be held on November 21, 1995, at the offices of McGuire Woods Battle &
Boothe, L.L.P., One James Center, Richmond, Virginia 23219 at 11:00 a.m.
Eastern Daylight Time and at all adjournments thereof, and to vote the shares
held in the name of the undersigned on the record date for such meeting on
the matters listed below.
Management recommends a vote FOR the proposal listed below. The shares
represented hereby will be voted as indicated below or FOR the proposal
indicated below if no choice is indicated.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
PROPOSAL 1: To approve a new Advisory Agreement between Public
Financial Management, Inc. ("PFM") and the Fund.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEARS
HEREON. When signing as custodian, attorney,
trustee, etc., please sign your full title to
as each. A corporation should sign by an
authorized officer.
Dated: _________________________ , 1995
Signature
Signature
(if two signatures are required)
YOUR VOTE IS IMPORTANT. PLEASE MARK,
DATE AND SIGN THIS PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE.
Account #
Shares as of October 31, 1995
_____________
COMMONWEALTH CASH RESERVE FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 21, 1995
To the Shareholders of
Commonwealth Cash Reserve Fund, Inc.
A Special Meeting (the "Meeting") of Shareholders of Commonwealth Cash
Reserve Fund, Inc. (the "Fund"). will be held at 11:00 a.m. on November 21,
1995, at the offices of McGuire Woods Battle & Boothe, L.L.P., One James
Center, Richmond, Virginia 23219, for the following purposes:
1. To approve a new Advisory Agreement between Public Financial
Management, Inc. ("PFM") and the Fund.
2. To transact such other business as may properly come before the
meeting or any adjournment of the Meeting.
Shareholders of record at the close of business on October 31, 1995,
will be entitled to receive notice of and to vote at the meeting.
By Order of the Board of Directors
JEFFREY A. LAINE
President
Richmond, Virginia
November 8, 1995
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING PLEASE SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY. YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED FORM OF PROXY,
DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED
FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION,
WE ASK YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
COMMONWEALTH CASH RESERVE FUND, INC.
P.O. Box 1192
Richmond, Virginia 23209-1192
(800) 338-3383
SPECIAL MEETING OF SHAREHOLDERS
to be held on November 21, 1995
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Commonwealth Cash Reserve Fund, Inc.
(the "Fund") for use at the Special Meeting of Shareholders of the Fund, and
any adjournments thereof, to be held on November 21, 1995, at 11:00 a.m. at
the offices of McGuire Woods Battle & Boothe, L.L.P., One James Center,
Richmond, Virginia 23219, for the purposes set forth in the accompanying
Notice of Special Meeting of Shareholders.
This Proxy Statement will be mailed to shareholders of record on or
about November 8, 1995.
Shares represented by executed and unrevoked proxies will be voted in
accordance with the specifications made thereon. Unless instructions to the
contrary are marked thereon, a proxy will be voted FOR each of the proposals
listed in the accompanying Notice of Special Meeting of Shareholders. A
shareholder who executes and returns the enclosed form of proxy nevertheless
may revoke it by giving another proxy or by letter or telegram directed to
the Fund which must show the shareholder's name and account number. To be
effective, such revocation must be received prior to the meeting. Any
shareholder who attends the meeting in person may vote by ballot at the
meeting, thereby canceling any proxy previously given.
Proxy solicitations will be made primarily by mail, but such
solicitations may also be made by telephone, telegraph or personal interviews
conducted by officers or employees of the Fund or its investment adviser.
The costs of proxy solicitation and expenses incurred in connection with the
preparation of this Proxy Statement and its enclosures will be paid by the
Fund. The Fund, upon request, will reimburse nominees and other fiduciaries
for their reasonable expenses in forwarding solicitation materials to their
principals.
Voting Securities and Principal Holders
Shareholders of record at the close of business on October 31, 1995
will be entitled to be present and to vote at the meeting. Each share of
common stock is entitled to one vote, and fractional shares of common stock
are entitled to proportionate shares of one vote. Shareholders do not have
cumulative voting rights. On October 31, 1995, there were 133,963,338 shares
of the Fund's common stock outstanding held by 11 shareholders of record.
The presence, in person or by proxy, of shares representing at least a
majority of the outstanding shares of the Fund as of October 31, 1995 is
required to take action on the proposal outlined in this Proxy Statement for
a quorum. If such quorum is not present, the persons named as proxies may
propose one or more adjournments of the meeting to permit further
solicitations of proxies. Any such adjournment will require the affirmative
vote of a majority of those shares present at the meeting, in person or by
proxy. When voting on a proposed adjournment, the persons named as proxies
will vote for the proposed adjournment all shares that they are entitled to
vote.
PROPOSAL 1: Approval or Disapproval of an Investment Advisory Agreement for
the Fund
Introduction.
Since March 15, 1994, Public Financial Management, Inc. ("PFM" or "Adviser")
has served as the Fund's investment adviser pursuant to an agreement ("Current
Advisory Agreement") between the Fund and PFM. Among other things, and as
required under the Investment Company Act of 1940 ("1940 Act"), the Current
Advisory Agreement provides that it will automatically terminate in the event
of its "assignment" as defined in the 1940 Act. By agreement dated September
25, 1995, the managing directors of Public Financial Management, Inc. ("PFM"),
a wholly-owned subsidiary of Marine Midland Bank and the Fund's investment
adviser, have agreed to purchase all of the outstanding common stock of PFM
from Marine Midland Bank. This stock purchase transaction ("Transaction"),
when consummated, would give rise to an "assignment" of the Current Advisory
Agreement within the meaning of the 1940 Act. In order for PFM to continue to
serve as the Fund's investment adviser, both the Fund's Board of Directors and
its shareholders must approve a new investment advisory agreement between the
Fund and PFM.
At a meeting of the Board of Directors of the Fund held on October 26, 1995,
the Fund's Board of Directors, including those members of the Board who are
not "interested persons" of the Fund as defined in the Act ("Independent
Directors"), considered and approved a new investment advisory agreement
("Proposed Advisory Agreement") between PFM and the Fund. The Proposed
Advisory Agreement is substantially identical to the Current Advisory
Agreement. In particular, the Proposed Advisory Agreement does not reflect
any increase in the advisory fee payable to PFM for its investment advisory or
other services. A copy of the Proposed Advisory Agreement appears as Exhibit
A to this Proxy Statement. At the meeting, shareholders of the Fund will be
asked to approve the Proposed Advisory Agreement.
THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 1.
Description of Proposed Advisory Agreement. As noted above, the Proposed
Advisory Agreement is substantively identical to the Current Advisory
Agreement. Under the Proposed Advisory Agreement, subject to supervision by
the Board, PFM is responsible for providing a continuous investment program
for the Fund, including research and management with respect to all securities
and investments and cash equivalents in the Fund's portfolio. PFM is also
responsible for calculating the Fund's net asset value. The Proposed Advisory
Agreement also states that the Adviser shall pay all expenses incurred by it
in providing these services to the Fund, other than the cost of securities
(including brokerage commissions, if any) purchased by the Fund. For its
services under the Proposed Advisory Agreement, PFM is entitled to receive for
its services a fee, which is identical to the fee to which PFM is entitled
under the Current Advisory Agreement, computed daily and payable monthly, at
an annual rate of .12 of 1% of the first $200 million of average daily net
assets, .10 of the average daily net assets over $200 million but under $400
million, .09 of 1% of the average daily net assets over $400 million but under
$600 million, and .08 of 1% of the average daily net assets over $600 million.
All expenses not expressly assumed by PFM under the Proposed Advisory
Agreement (or by PFM or other service providers under separate agreements) are
paid by the Fund, including legal and audit expenses, fees and expenses of the
Fund's custodian, expenses associated with proxy statements and reports to
shareholders, out-of-pocket costs of the Fund's Transfer Agent, bookkeeping
and accounting agent, share issuance and redemption costs, expenses related to
the registration of the Fund and its shares under federal and state securities
laws, interest, taxes and other nonrecurring expenses, including litigation.
In addition, the Proposed Advisory Agreement provides that PFM will pay all
compensation of any director, officer and employee of the Fund who is an
affiliated person of PFM. The Fund bears the cost of the preparation,
printing and distribution of its prospectuses pursuant to a plan of
distribution ("Rule 12b-1 Plan") adopted by the Fund and last approved by
shareholders at their annual meeting held on July 6, 1994 and by the Fund's
Board on June 8, 1995.
The Proposed Advisory Agreement provides that, in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Advisor is not liable for any error of judgment,
mistake of law or loss in connection with the Advisor's performance of the
Advisory Agreement and permits the Advisor to act as an investment advisor for
any other organization, firm, corporation or person.
Consideration by the Board of Trustees. At its meeting held on October 26,
1995, the Board considered the Proposed Advisory Agreement.
During the course of the Board's deliberations, the Board of Directors
reviewed the services provided by PFM in the past, the nature, quality and
scope of the advisory services provided to the Fund, including the Fund's
investment performance and expense ratio, as well as services provided under
the separate administration and transfer agency agreements. The Board also
considered information relating to advisory fees paid by, and expense ratios
of, other funds of comparable size and with comparable investment objectives
to the Fund.
The Board also considered PFM's representation that there are no plans to make
any material changes in the Fund's investment objective or policies, the
manner in which PFM will manage the Fund, the investment personnel who
currently make investment decisions with respect to the Fund's portfolio or
the stockholder services of other business activities of the Fund. If, after
the Transaction, any such changes are proposed that might materially affect
PFM's services to the Fund, the Fund's Board will consider the effect of those
changes and take such action as it deems advisable under the circumstances.
Additionally, the Board requested, and PFM provided to the Board, information
relating to PFM's financial position following the Transaction, including pro
forma financial statements, information relating to PFM's private investment
advisory accounts and insurance coverage to be obtained by PFM on or before
consummation of the Transaction. The Board also considered PFM's
representation that the Transaction will not result in any change in PFM's
financial condition that is reasonably likely to impair PFM's ability to
fulfill its obligations under the Proposed Advisory Agreement.
Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of the Fund on the Record Date is necessary to approve
Proposal 1. As defined by the 1940 Act, a "majority of the outstanding voting
securities" of the Fund means the lesser of (1) 67% of the shares of the Fund
present at a meeting of shareholders if the owners of more than 50% of the
shares of the Fund then outstanding are present in person or by proxy; or (2)
more than 50% of the outstanding voting securities of the Fund. If the
Proposed Advisory Agreement is approved by the Fund's shareholders, the
Proposed Advisory Agreement will become effective on the date following the
consummation of the Transaction and will remain in effect, unless sooner
terminated in accordance with its terms, for two years. Thereafter, such
agreement will continue in effect from year to year so long as it is approved
annually by vote of the Fund's Board of Directors in accordance with the
provisions of the 1940 Act. If, however, the Proposed Advisory Agreement is
not approved by the shareholders, and the Transaction is consummated, the
Advisory Agreement currently in effect will terminate and the Board of
Directors will make such arrangements for the provision of investment advisory
to the Fund as it believes appropriate and in the best interest of
shareholders.
Information Regarding Public Financial Management, Inc. PFM is registered as
an investment adviser under the Investment Advisers Act of 1940. Its offices
are located at 2101 North Front Street, Suite 200, Harrisburg, Pennsylvania,
17110. PFM is currently a wholly-owned subsidiary of Marine Midland Bank.
Following consummation of the Transaction, however, all of the outstanding
common stock of PFM will be held by PFM Acquisition Corp., a holding company
all of the shares of which are held by those individuals who will serve as
managing directors of PFM. The name, business address and principal
occupation of each of those individuals who will serve as PFM's principal
executive officer and managing directors following the Transaction, are as
follows:
Name and Address
Principal Occupation or Employment
F. John White
Two Logan Square, Suite 1600
18th & Arch Streets
Philadelphia, PA 19103
Chief Executive Officer
Public Financial Management, Inc.
Martin Paul Margolis
2101 North Front Street
Building 3, Suite 200
Harrisburg, PA 17110
Managing Director
Public Financial Management, Inc.
Michael R. Varano
2101 North Front Street
Building 3, Suite 200
Harrisburg, PA 17110
Managing Director
Public Financial Management, Inc.
Glen M. Williard
2101 North Front Street
Building 3, Suite 200
Harrisburg, PA 17110
Managing Director
Public Financial Management, Inc.
Peter Kessenich
600 Peachtree Street, NE
Suite 3850
Atlanta, GA 30308
Managing Director
Public Financial Management, Inc.
Bill Newman
114 W. 7th Street
Suite 1500
Austin, TX 78701
Managing Director
Public Financial Management, Inc.
Stephanie Gibson
99 Summer Street
Suite 1020
Boston, MA 02110
Managing Director
Public Financial Management, Inc.
Lavon Wisher
5900 Enterprise Parkway
Ft. Myers, FL 33905
Managing Director
Public Financial Management, Inc.
Marlin Mosby
530 Oak Court Drive
Suite 145
Memphis, TN 38117
Managing Director
Public Financial Management, Inc.
Keith Curry
660 Newport Center Drive
Suite 750
Newport Beach, CA 92660
Managing Director
Public Financial Management, Inc.
Barbara Bisgaier
Two Logan Square, Suite 1600
18th & Arch Streets
Philadelphia, PA 19103
Managing Director
Public Financial Management, Inc.
John Miller
Two Logan Square, Suite 1600
18th & Arch Streets
Philadelphia, PA 19103
Managing Director
Public Financial Management, Inc.
Napoleon Nelson
Two Logan Square, Suite 1600
18th & Arch Streets
Philadelphia, PA 19103
Managing Director
Public Financial Management, Inc.
Nancy Winkler
Two Logan Square, Suite 1600
18th & Arch Streets
Philadelphia, PA 19103
Managing Director
Public Financial Management, Inc.
Nancy Jones
505 Montgomery Street
Suite 800
San Francisco, CA 94111
Managing Director
Public Financial Management, Inc.
Ted Ricci
505 Montgomery Street
Suite 800
San Francisco, CA 94111
Managing Director
Public Financial Management, Inc.
Administration and Transfer Agency Agreement
PFM also serves as the Fund's Administrator and Transfer Agent pursuant
to separate Agreements last approved for continuance following the Transaction
by the Fund's Board at its meeting held on October 26, 1995. These Agreements
were also submitted to and approved by shareholders at their meeting held on
July 6, 1994.
Administration Agreement. Under the Administration Agreement, the
Administrator, subject to the supervision and control of the Board of
Directors, provides all administrative services to the Fund other than those
relating to its investment portfolio and to the maintenance of its financial
records. The Administrator, at its own expense, also provides office space
and facilities, equipment and personnel to the Fund for the performance of the
Administrator's functions and pays all compensation of the Fund's directors,
officers and employees who are affiliated persons of the Administrator. As
part of its duties under the Administration Agreement, the Administrator (1)
maintains the Fund's books and records (other than financial books and
record); oversees its insurance relationships; prepares all required tax
returns, proxy statements, reports to shareholders and directors, and reports
to and other filings with the Securities and Exchange Commission and other
governmental agencies; (2) prepares on the Fund's behalf, such applications
and reports as may be necessary to register or maintain the Fund's
registration and/or registration of its share under the securities or blue sky
laws of the Commonwealth of Virginia and other states where shares may be
sold; (3) responds to all inquiries or other communications of shareholders
and broker-dealers, if any; and (4) oversees all relationships between the
Fund and its Custodian and accountants, including negotiation of agreements in
relation there and the supervision of the performance of such agreements and
oversees all administrative matters which are necessary or desirable in
connection with the issuance or redemption of shares of the Fund. The
Administration Agreement permits the Administrator to act as investment
advisor, administrator and/or transfer agent for any other organization, firm,
corporation or person.
As compensation for its services as Administrator under the
Administration Agreement, PFM is entitled to a fee, payable monthly, which is
computed on the net asset value of the Fund at the close of business each
business day at the annual rate of .05 or 1% of average daily net assets. For
the fiscal year ended March 31, 1995, PFM waived all of the fees to which it
was entitled under the Administration Agreement.
Under the Administration Agreement all expenses not expressly assumed by
PFM under the Administration Agreement or by PFM or other service providers
under separate contracts, are paid in full by the Fund.
The Administration Agreement continues in effect from year to year if
approved annually by the directors, including a majority of the Independent
Directors. The Administration Agreement may be terminated at any time without
penalty by the Administrator upon sixty (60) days' written notice to the Fund.
It may be terminated by the Fund at any time without penalty upon sixty (60)
days' written notice to the Administrator, providing that such termination by
the Fund shall be directed or approved by the vote of a majority of its
directors, including a majority of the Independent Directors.
Transfer Agency Agreement. Under the Transfer Agency Agreement, PFM
serves as the Fund's Transfer Agent, dividend disbursing agent and registrar.
No fees are payable by the Fund under the Transfer Agency Agreement without
the express agreement of the Fund. However, PFM is entitled to reimbursement
for its out of pocket expenses incurred under the Transfer Agency Agreement.
Under the Transfer Agency Agreement, PFM is entitled to rely upon and
shall incur no liability to the Fund in acting upon, oral or written
instructions actually received by PFM under the Agreement. PFM is entitled to
rely upon oral instructions from the Fund to the extent such instructions
reasonably appear to have been received from an authorized person of the Fund.
The authorized persons of the Fund are designated by the Board of Directors,
and include officers and employees of PFM acting in its capacity as investment
advisor and administrator. In the absence of contrary written instructions
from the fund, PFM is authorized to take most of the day to day actions
required for the operations of its duties as Transfer Agent, including
issuance, transfer and redemption of shares, and opening, maintaining,
servicing and closing of shareholder accounts.
The Transfer Agency Agreement provides that in exercising its duties
under the Agreement, PFM shall be obligated to exercise care and diligence and
to act in good faith and use it best efforts to ensure the accuracy and
completeness of the services rendered. PFM shall be responsible for its own
negligent failure to perform its duties under the Transfer Agency Agreement.
However, to the extent that duties, obligations and responsibilities are not
expressly set forth in the Transfer Agency Agreement, PFM is not liable for
any actions or omissions except in the case of willful misfeasance, bad faith
or gross negligence or reckless disregard of PFM's duties. PFM is protected
from liability to the Fund in the case of any action or inaction which it
takes in reliance on any directions, advice or oral or written instructions
received pursuant to the terms of the Transfer Agency Agreement, which action
or inaction it believes to be consistent with the directions, advice or
instructions. PFM is not excused from any liability in the case of any action
or omission which constitutes willful misfeasance, bad faith, gross negligence
or reckless disregard by PFM of its duties. In addition, the Fund agrees to
indemnify PFM against all liabilities and expenses incurred by PFM arising
directly or indirectly from any action or thing which PFM takes or does at the
request or direction of or in reliance on the advice of the Fund, except that
PFM will not be indemnified against any liability to the Fund or any
shareholders arising out of PFM's willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or PFM's negligent failure to
perform duties expressly provided for in the Transfer Agency Agreement or
otherwise agreed to by PFM in writing. The Transfer Agency Agreement
continues in effect unless terminated by either the Fund (upon 60 days written
notice) or by PFM ( upon 90 days written notice). Either party may terminate
the Transfer Agency Agreement upon the required notice without penalty.
GENERAL INFORMATION
Public Financial Management, Inc., the address of which is Governor's Plaza
North, 2101 North Front Street, Building 3, Suite 200, Harrisburg Pennsylvania
17110, has served as the Fund's investment advisor, administrator and transfer
agent since March 15, 1994. As of the date of this Proxy Statement, PFM is a
wholly-owned subsidiary of Marine Midland Bank, which is in turn a wholly-
owned, indirect subsidiary of Hongkong and Shaghai Banking Corporation, Ltd.
Following the Transaction, however, all of the outstanding common stock of PFM
will be owned indirectly by its senior management, all of whom will serve as
Managing Directors of PFM following the Transaction. Commonwealth Financial
Group, Inc. ("Distributor"), the address of which is 38 Cohasset Lane, Cherry
Hill, New Jersey 08003, serves as the Fund's distributor. As previously
noted, Jeffrey A. Laine, who serves as a director of the Fund as well as its
President and Treasurer, is the President of the Distributor.
Executive Officers of the Fund. The individuals whose names, ages, business
addresses and principal occupations are set forth below, currently serve as
officers of the Fund. None of these individuals own, beneficially or of
record, any shares of the fund as of October 31, 1995.
Name, Address and Position
with the Fund
Principal Occupation During Past Five Years and Age
Jeffrey A. Laine, Director
President and Treasurer
38 Cohasset Lane
Cherry Hill, New Jersey 08003
President, Commonwealth Financial Group, Inc., 1994; President Laine
Financial Group, Inc., 1992-present; Senior Vice President and Chief
Financial Officer of J.C. Thompson & Associates, Inc., 1989-1994; Senior Vice
President of Commonwealth Financial Group, Inc., 1993-1994; Executive Vice
President and Chief Financial Officer of Institutional Capital Management
Corporation, 1987-1990; Treasurer, Van Lieu Securities, 1989-1991; Senior
Vice President, Treasurer and Chief Financial Officer of Mariner Funds
Services, 1987-1992; Vice President and Treasurer of Mariner Funds Trust,
1987-1992. Age 38.
Arthur E. Anderson II
Secretary
Partner, McGuire Woods Battle & Boothe, L.L.P., Richmond, Virginia. Age 36
Mr. Anderson has been Secretary of the Fund since October 1994 and Mr.
Anderson's law firm has been counsel to the Fund since June 13, 1994 and co-
counsel since June 8, 1995. During the fiscal year ended March 31, 1995, Mr.
Anderson's firm received an aggregate of $18,108.69 in payment for legal
service. Aside from the fees paid to his firm, Mr. Anderson did not receive
any remuneration for serving as the Fund's Secretary. Mr. Laine is President
of the Fund's Distributor and has acted in that capacity since March 15,
1995. During the fiscal year ended March 31, 1995, Mr. Laine's firm received
as aggregate of $20,891 pursuant to the Fund's Rule 12b-1 Plan. Aside from
the fees paid to his firm, Mr. Laine did not receive any remuneration for
serving as the Fund's President.
Information regarding 5% Holders of Fund Shares. Set forth below is
certain information as to all persons known to the Fund to own of record or
beneficially 5% or more the Fund's shares on October 31, 1995. The Fund is
not aware of any person, other than those named above, who beneficially owned
5% or more of the Fund's outstanding shares of common stock on October 31,
1995.
Name and Address # of Shares % of Shares
City of Norfolk
City Hall Building
Norfolk, VA 23501 33,042,640 24.7%
Arlington County
2100 Clarendon Boulevard
Arlington, VA 22201 21,548,654 16.1%
City of Virginia Beach
P.O. Box 6157
Virginia Beach, VA 23456-0157 16,547,737 12.4%
Prince William County
1 County Complex Court
Prince William, VA 22192 16,098,082 12.0%
City of Newport News
2400 Washington Avenue
Newport News, VA 23607 13,145,249 9.8%
City of Lynchburg
P.O. Box 60
Lynchburg, VA 24505 9,466,259 7.1%
City of Roanoke
P.O. Box 1451
Roanoke, VA 24007-1451 7,838,341 5.9%
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the meeting.
Under Virginia law, the Fund is not required to hold annual meetings,
and does not intend to do so unless there are matters required to be acted
upon by shareholders. In the event the Fund holds an annual meeting, it will
inform shareholders thereof and the date by which proposals of shareholders
must be received for inclusion in the Proxy Statement and Form of Proxy for
the annual meeting. A shareholder proposal intended to be presented at any
meeting of shareholders of the Fund hereinafter called must be received by
the Fund a reasonable time before the Board of Director's solicitation
relating thereto is made in order to be included in the Fund's Proxy
Statement and Form of Proxy relating to that meeting and presented at the
meeting. The mere submission of a proposal by a shareholder does not
guaranty that this proposal will be included in the Proxy Statement because
certain rules under the federal securities laws must be complied with before
inclusion of the proposal is required.
IT IS lMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE
AND RETURN THE PROXY FORM AS SOON AS POSSIBLE IN THE ENCLOSED STAMPED
ENVELOPE.
ADVISORY AGREEMENT
AGREEMENT, made as of _____________ between COMMONWEALTH CASH RESERVE
FUND, INC. (herein called the "Company"), and PUBLIC FINANCIAL MANAGEMENT,
INC. (the "Adviser").
WHEREAS, the Company is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Company desires to appoint the Adviser as investment
adviser to its investment portfolio (the "Fund");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Delivery of Documents. The Company has furnished the Adviser with
copies properly certified or authenticated of each of the following:
(a) The Company's Articles of Incorporation, as filed with the
Clerk of the State Corporation Commission of the Commonwealth of
Virginia on December 8, 1986 and all amendments thereto (such Articles
of Incorporation, as presently in effect and as it shall from time to
time be amended, is herein called the "Articles of Incorporation");
(b) The Company's Bylaws, and amendments thereto (such Bylaws,
as presently in effect and as it shall from time to time be amended, is
herein called the "Bylaws");
(c) Resolution of the Company's Board of Directors authorizing
the appointment of the Adviser and approving this Agreement;
(d) The Company's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission
("SEC") on December 11, 1986 and all amendments thereto;
(e) The Company's Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") (File No.33-10754) and
under the 1940 Act as filed with the SEC on December 11, 1987, and all
amendments thereto; and
(f) The Company's most recent Prospectus and Statement of
Additional Information (such Prospectus, and Statement of Additional
Information as presently in effect and all amendments and supplements
thereto are herein called the "Prospectus").
The Company will furnish the Adviser from time to time with copies of
all amendments of or supplements to the foregoing.
2. Services. The Company hereby appoints the Adviser to act as
investment adviser to the Fund for the period and on the terms set forth in
this Agreement. Intending to be legally bound, the Adviser accepts such
appointment and agrees to furnish the services required herein to the Fund
with compensation as hereinafter provided.
Subject to the supervision of the Company's Board of Directors the
Adviser will provide with respect to the Fund a continuous investment program,
including investment research and management with respect to all securities
and investments and cash equivalents in such Fund. The Adviser will compute
the Net Asset Value and daily net income of the Fund at the times and in the
manner set forth in the Prospectus and resolutions of the Company's Board of
Directors applicable to the Fund. The Adviser will determine from time to
time what securities and other investments will be purchased, retained or sold
by the Fund. The Adviser 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 Company's Board of Directors
applicable to the Fund.
3. Covenants by Adviser. The Adviser agrees with respect to the
services provided to the Fund that it:
(a) will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission;
(b) will use the same skill and care in providing such services
as it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(c) will not make loans to any person to purchase or carry Fund
shares, or make loans to the Fund;
(d) will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any broker or
dealer. In placing orders with brokers and dealers, the Adviser will
attempt to obtain the best net price and the most favorable execution of
its orders. Consistent with this obligation, when the execution and
price offered by two or more brokers or dealers are comparable, the
Adviser may, in its discretion, purchase and sell portfolio securities
from and to brokers and dealers who provide the Company with research
advice and other services. In no instance will portfolio securities be
purchased from or sold to the Adviser, any sub-advisor, the
Administrator, the Distributor, or an affiliated person of the Fund, the
Adviser, any sub-adviser, or the Distributor;
(e) will maintain all books and records with respect to the
securities transactions for the Fund to the extent agreed upon between
the Company and the Advisor, keep the Company's books of account with
respect to the Fund and furnish the Company's Board of Directors with
such periodic and special reports as the Board may reasonably request
with respect to the Fund;
(f) will treat confidentially and as proprietary information of
the Company all records and other information relative to the Company
and prior, present or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior notification
to and approval in writing by the Company, which approval shall not be
unreasonably withheld and may not be withheld and will be deemed granted
where the Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company).
4. Services Not Exclusive. The services furnished by the Adviser
hereunder are deemed not to be exclusive, and the Adviser shall be free to
furnish similar services to others so long as its services under this
Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any of such records upon the Company's
request. The Adviser further agrees to maintain the records required by the
following sections of Rule 31 under the Investment Company Act of 1940:
31a-l(a);
31a-l(b)(1), (2), (3), (5), through (12);
31a-2(a)(1) except as it refers to 31a-l(b)(4);
31a-2(a)(2);
31a-2(e);
31a-3.
6. Expenses. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions,
if any) purchased for the Fund.
For the services provided and the expenses assumed with respect to
the Fund pursuant to this Agreement, the Company will pay the Adviser from the
assets belonging to the Fund and the Adviser will accept as full compensation
therefor a fee, computed daily and paid monthly, at an annual rate of .12 of
1% of the first $200 million of average daily net assets of the Fund, .10 of
1% of the average daily net assets over $200 million but under $400 million,
.09 of 1% of the average daily net assets over $400 million but under $600
million, and .08 of 1% of the average daily net assets over $600 million.
If in any fiscal year the aggregate expenses of the Fund (as
defined under the securities regulations of any state having jurisdiction over
the Company) exceed the expense limitations of any such state, the Adviser
will waive fees to the extent required to attain compliance. The obligation
of the Adviser to waive fees to the Company hereunder is limited in any fiscal
year to the amount of its fee hereunder for such fiscal year, provided,
however, that notwithstanding the foregoing, the Adviser shall waive or
reimburse the Company for 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 Company so require.
Such expense waiver or reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
7. Limitation of Liability. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company 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 loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
Any person, even though also an officer, partner, employee, or agent of the
Adviser, who may be or become an officer, Director, employee or agent of the
Company, shall be deemed, when rendering service to the Company or acting on
any business of the Company (other than services or business in connection
with Adviser's duties as investment adviser hereunder), to be rendering such
services to or acting solely, for the Company and not as an officer, partner,
employee or agent or one under the control or direction of the Adviser even
though paid by it.
8. Duration and Termination. This Agreement will become effective as
of the date first written above, and shall continue in effect for a period of
two years. Thereafter if not terminated, this Agreement shall continue in
effect with respect to the Fund for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Company's Board of Directors who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval; (b) and by a majority of
the Company's Board 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 Company (by
vote of the Company's Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund), or by the Adviser 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.)
9. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, except by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. No material amendment of this
Agreement shall be effective with respect to the Fund until approved by vote
of a majority of the outstanding voting securities of the Fund.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit 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 Virginia law.
11. Names. The names "Commonwealth Cash Reserve Fund, Inc." and
"Directors of Commonwealth Cash Reserve Fund, Inc." refer respectively to the
Company created and the Directors as Directors but not individually or
personally, acting from time to time under the Articles of Incorporation dated
December 2, 1986, which is hereby referred to and a copy of which is on file
at the office of the Clerk of the State Corporation Commission of the
Commonwealth of Virginia and the principal office of the Company. The
obligations of "Commonwealth Cash Reserve Fund, Inc." entered into in the name
or on behalf thereof by any of the Directors, representatives or agents are
made not individually, but in such capacities, and are not binding upon any of
the Directors, Shareholders, or representatives of the Directors personally,
but bind only the Company's Property, and all persons dealing with any class
of shares of the Company must look solely to the Company's Property belonging
to such class for the enforcement of any claims against the Company.
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.
COMMONWEALTH CASH RESERVE FUND, INC.
BY:
PUBLIC FINANCIAL MANAGEMENT, INC.
BY:
