<PAGE> 1
As filed with the Securities and Exchange Commission November 15, 1996
1933 Act Registration No. 33-21489
1940 Act File No. 811-5545
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 38 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 40 [X]
THE SESSIONS GROUP
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(800) 752-1823
CHARLES H. HIRE, ESQ.
Baker & Hostetler
65 East State Street, Suite 2100
Columbus, Ohio 43215
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: Immediately, upon effectiveness.
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. On August 28, 1996, the Registrant filed its Rule 24f-2
Notice with respect to the fiscal year ended June 30, 1996.
<PAGE> 2
CROSS REFERENCE SHEET
THE KEYPREMIER AGGRESSIVE GROWTH FUND
One Funds
of
The Sessions Group
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
<S> <C> <C>
1. Cover page.................. Cover Page
2. Synopsis.................... Fee Table
3. Condensed Financial
Information............... Performance Information
4. General Description of
Registrant................ Investment Objective and Policies;
Investment Restrictions; General Information
- Description of the Group and Its Shares; Cover Page
5. Management of the Fund...... Management of the Group; General Information
- Custodian; General Information - Transfer
Agency and Fund Accounting Services
5A. Management Discussion
of Fund Performance....... Inapplicable
6. Capital Stock and Other
Securities................ How to Purchase and Redeem Shares; Dividends and
Taxes; General Information - Description of
the Group and Its Shares; General Information -
Miscellaneous
7. Purchase of Securities
Being Offered............. Valuation of Shares; How to Purchase and Redeem Shares;
Management of the Group
8. Redemption or Repurchase.... How to Purchase and Redeem Shares
9. Pending Legal Proceedings... Inapplicable
</TABLE>
<PAGE> 3
THE KEYPREMIER AGGRESSIVE GROWTH FUND
3435 Stelzer Road For current yield, purchase, and
Columbus, Ohio 43219 redemption information, call
(800) 766-3960.
The Sessions Group (the "Group") is an open-end management investment
company. The Group includes The KeyPremier Aggressive Growth Fund (the "Fund")
which is a diversified portfolio of the Group. The Trustees of the Group have
divided the Fund's beneficial ownership into an unlimited number of
transferable units called shares (the "Shares").
Martindale Andres & Company, Inc., West Conshohocken, Pennsylvania
(the "Adviser"), which is a wholly owned subsidiary of Keystone Financial, Inc.
("Keystone"), acts as the investment adviser to the Fund.
THE SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, THE ADVISER, KEYSTONE OR ANY OF THEIR AFFILIATES.
SUCH SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY, AND AN INVESTMENT IN THE FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
Additional information about the Fund and the Group, contained in a
Statement of Additional Information, has been filed with the Securities and
Exchange Commission and is available upon request without charge by writing to
the Group at its address or by calling the Group at the telephone number shown
above. The Statement of Additional Information bears the same date as this
Prospectus and is incorporated by reference in its entirety into this
Prospectus.
This Prospectus sets forth concisely the information about the Fund
and the Group that a prospective investor ought to know before investing.
Investors should read this Prospectus and retain it for future reference.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") OR
ANY STATE SECURITIES COMMISSION NOR HAS THE 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 January __, 1997.
<PAGE> 4
The Fund's net asset value per share will fluctuate as the value of
its portfolio changes in response to changing market prices and/or other
factors.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services
("BISYS"), Columbus, Ohio, acts as the Fund's administrator and distributor.
BISYS Fund Services, Inc., Columbus, Ohio, the corporate general partner of
BISYS, acts as the Fund's transfer agent (the "Transfer Agent") and performs
certain fund accounting services for the Fund.
<PAGE> 5
PROSPECTUS SUMMARY
SHARES OFFERED: Units of beneficial interest ("Shares") of the Fund,
one separate investment fund of The Sessions Group, an Ohio business trust (the
"Group").
OFFERING PRICE: The public offering price of the Fund is equal to the
net asset value per share plus a sales charge of 4.50% of the public offering
price, reduced on investments of $100,000 or more (See "HOW TO PURCHASE AND
REDEEM SHARES -- Sales Charges"). Under certain circumstances, the sales
charge may be eliminated (See "HOW TO PURCHASE AND REDEEM SHARES -- Sales
Charge Waivers").
MINIMUM PURCHASE: $1,000 minimum initial investment with $25 minimum
subsequent investments. Such minimum initial investment is reduced for
investors using the Auto Invest Plan described herein and for employees of the
Adviser and its affiliates.
TYPE OF COMPANY: The Fund is a diversified series of an open-end,
management investment company.
INVESTMENT OBJECTIVE: Growth of capital.
INVESTMENT POLICIES: Under normal market conditions, the Fund will
invest substantially all, but in no event less than 65%, of its total assets in
common stocks and securities convertible into common stocks of companies with
market capitalizations ranging between $100 million and $5 billion.
RISK FACTORS AND SPECIAL CONSIDERATIONS: An investment in the Fund is
subject to certain risks, including market risk, as set forth in detail under
"INVESTMENT OBJECTIVES AND POLICIES -- Risk Factors and Investment Techniques."
As with other mutual funds, there can be no assurance that the Fund will
achieve its investment objective. The Fund, to the extent set forth under
"INVESTMENT OBJECTIVE AND POLICIES," may engage in the following practices: the
use of repurchase agreements and reverse repurchase agreements, entering into
options and futures transactions, the purchase of securities on a when-issued
or delayed-delivery basis and the purchase of foreign securities, directly and
through American Depository Receipts, and derivatives.
INVESTMENT ADVISER: Martindale Andres & Company, Inc. (the
"Adviser").
DIVIDENDS: Dividends from net income are declared and generally paid
quarterly. Net realized capital gains are distributed at least annually.
DISTRIBUTOR: BISYS Fund Services Limited Partnership d/b/a BISYS Fund
Services ("BISYS").
<PAGE> 6
FEE TABLE
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases (as a percentage of
offering price) 4.50%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees(1) 1.00%
12b-1 Fees None
Other Expenses(2) .31
-----
Estimated Total Fund Operating Expenses 1.31
-----
</TABLE>
EXAMPLE
You 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
------ -------
<S> <C>
$58 $85
</TABLE>
The purpose of the above table is to assist a potential purchaser of
Shares of the Fund in understanding the various costs and expenses that an
investor in the Fund will bear directly or indirectly. Such expenses do not
include any fees charged by the Adviser or any of its affiliates to its
customer accounts which may have invested in Shares of the Fund. See
"MANAGEMENT OF THE GROUP" and "GENERAL INFORMATION" for a more complete
discussion of the annual operating expenses of the Fund. THE FOREGOING EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
- --------------------------
1 However, the Adviser has agreed with the Group to waive all of its
investment advisory fees for the Fund through March 31, 1997.
2 "Other Expenses" are estimated for the current fiscal year.
PERFORMANCE INFORMATION
From time to time performance information for the Fund showing the
Fund's average annual total return and aggregate total return may be presented
in advertisements, sales literature and shareholder reports. SUCH PERFORMANCE
FIGURES ARE BASED ON HISTORICAL RESULTS AND ARE NOT INTENDED TO INDICATE FUTURE
PERFORMANCE. Average annual total return will be calculated for the period
since commencement of operations for the Fund (or its
-2-
<PAGE> 7
respective collective investment and common trust funds) and will reflect the
imposition of the maximum sales charge, if any. Average annual total return is
measured by comparing the value of an investment in the Fund at the beginning
of the relevant period to the redeemable value of the investment at the end of
the period (assuming immediate reinvestment of any dividends or capital gains
distributions), which figure is then annualized. Aggregate total return is
calculated similarly to average annual total return except that the return
figure is aggregated over the relevant period instead of annualized. The Fund
may also present its average annual total return and aggregate total return
excluding the effect of a sales charge.
The Fund has been initially funded by the transfer of all of the
assets of a corresponding collective investment fund and common trust fund
managed by the Adviser (the "CIF"). Because the management of the Fund is
substantially the same as the CIF, the quoted performance of the Fund will
include the performance of the CIF for the periods prior to the effectiveness
of the Group's registration statement as it relates to the Fund. Such
performance will be restated to reflect the estimated current fees of the Fund.
The CIF was not registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), and therefore was not subject to certain investment
restrictions that are imposed by the 1940 Act. If the CIF had been so
registered, its performance might have been adversely affected.
Investors may also judge the performance of the Fund by comparing or
referencing it to the performance of other mutual funds with comparable
investment objectives and policies through various mutual fund or market
indices and to data prepared by various services, which indices or data may be
published by such services or by other services or publications. In addition
to performance information, general information about the Fund that appears in
such publications may be included in advertisements, sales literature and
reports to Shareholders.
Total return is generally a function of market conditions, types of
investments held, and operating expenses. Consequently, current total return
will fluctuate and is not necessarily representative of future results. Any
fees charged by Keystone or by any of its affiliates, including the Adviser, to
its customer accounts which may have invested in Shares of the Fund will not be
included in performance calculations; such fees, if charged, will reduce the
actual performance from that quoted. In addition, if the Adviser or BISYS
voluntarily reduces all or part of its fees for the Fund, as discussed below,
the total return for the Fund will be higher than it would otherwise be in the
absence of such voluntary fee reductions.
-3-
<PAGE> 8
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The investment objective for the Fund is growth of capital. The
investment objective of the Fund is a non-fundamental policy, meaning that such
objective may be changed by the Group's Trustees without the vote of the
Shareholders of the Fund. There can be no assurance that the investment
objective of the Fund will be achieved. Any income earned by the Fund will be
incidental to its overall objective of growth of capital.
Under normal market conditions, the Fund will invest substantially
all, but in no event less than 65%, of its total assets in common stocks and
securities convertible into common stocks of companies with market
capitalizations ranging between $100 million and $5 billion. Under normal
market conditions, the Fund intends to operate with a fully invested
philosophy, i.e., the Fund will generally invest 90% of its assets in common
stocks and securities convertible into common stocks.
The Fund attempts to invest in high quality small to mid
capitalization companies that the Adviser believes have demonstrated one or
more of the following characteristics: (1) strong management team with an
ownership stake in the business; (2) solid revenue and earnings history; (3)
unique position in the company's targeted market; (4) innovative products and
solid new product distribution channels; and (5) solid balance sheet. In
addition, the Adviser attempts to invest in companies that are selling at
earnings multiples which the Adviser believes to be less than their expected
long-term growth rate.
The Adviser employs a "bottom-up" approach in its security selection
process. A "bottom-up" approach emphasizes company specific factors rather
than industry factors when making its buy/sell decisions. As a result of this
approach, the Adviser does not utilize a sector neutral strategy. The Adviser
does not seek to have the Fund have representation in all economic sectors;
therefore, the Fund's sector weightings may be overweighted and/or
underweighted relative to its appropriate peers and/or benchmarks.
For purposes of the foregoing, securities convertible into common
stocks include convertible bonds, convertible preferred stock, options and
rights. The securities purchased by the Fund are generally traded on
established U.S. markets and exchanges, although as discussed below, the Fund
may invest in restricted or privately placed securities. Under normal market
conditions, the Fund may also invest up to 35% of its total assets in warrants,
foreign securities through sponsored American Depositary Receipts ("ADRs"),
securities of other investment companies and equity REITs (real estate
investment trusts), cash
-4-
<PAGE> 9
and Short-Term Obligations and may engage in other investment techniques
described below. "Short-Term Obligations" consist of obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
U.S. Treasury securities stripped of the unmatured interest coupons and such
stripped interest coupons), with maturities of 12 months or less, certificates
of deposit, bankers' acceptances and demand and time deposits of selected
banks, securities of money market mutual funds, and commercial paper rated in
one of the two highest rating categories by appropriate nationally recognized
statistical rating organizations ("NRSROs," e.g., Standard & Poor's Corporation
and Moody's Investors Service) and repurchase agreements collateralized by such
obligations. These obligations are described further in the Statement of
Additional Information. The Fund may also invest up to 100% of its total
assets in Short-Term Obligations and cash when deemed appropriate for temporary
defensive purposes as determined by the Adviser to be warranted due to current
or anticipated market conditions. However, to the extent that the Fund is so
invested, it may not achieve its investment objectives.
RISK FACTORS AND INVESTMENT TECHNIQUES
Like any investment program, an investment in the Fund entails certain
risks. Equity securities such as those in which the Fund may invest are more
volatile and carry more risk than some other forms of investment, including
investments in equity securities of large capitalization issuers or in high
grade fixed income securities. Therefore, the Fund is subject to stock market
risk, i.e., the possibility that stock prices in general will decline over
short or even extended periods of time. The Fund is intended for investors who
have a long-term investment time horizon and who can accept the higher risks
involved in seeking potentially higher capital appreciation through investments
in growth oriented companies. A growth oriented company typically invests most
of its net income in its enterprise and does not pay out much, if any, in
dividends. Accordingly, the Fund does not anticipate any significant
distributions to Shareholders from net investment income, and potential
investors should be in a financial position to forego current income from their
investment in the Fund. In addition, smaller capitalized companies generally
have limited product lines, markets and financial resources and are dependent
upon a limited management group. The securities of less seasoned companies may
have limited marketability and may be subject to more abrupt or erratic market
movements over time than securities of more seasoned companies or the market
as a whole.
Depending upon the performance of the Fund's investments, the net
asset value per share of the Fund may decrease instead of increase.
The Fund may invest in put and call options and futures as more fully
discussed below. Such instruments are considered to be "derivatives." A
derivative is generally defined as an instrument
-5-
<PAGE> 10
whose value is based upon, or derived from, some underlying index, reference
rate (e.g., interest rates), security, commodity or other asset. The Fund will
not invest more than 20% of its total assets in any such derivatives at any
one time.
Repurchase Agreements. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund
would acquire securities, in exchange for cash, from banks and/or registered
broker-dealers which the Adviser deems creditworthy under guidelines approved
by the Group's Board of Trustees. The seller agrees to repurchase such
securities at a mutually agreed 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 portfolio securities. Securities subject to repurchase agreements
must be of the same type and quality as those in which the Fund may invest
directly. Repurchase agreements are considered to be loans by the Fund under
the 1940 Act. For further information about repurchase agreements and the
related risks, see "INVESTMENT OBJECTIVE AND POLICIES - Additional Information
on Portfolio Instruments - Repurchase Agreements" in the Statement of
Additional Information.
Reverse Repurchase Agreements. The Fund may borrow funds by entering
into reverse repurchase agreements in accordance with the investment
restrictions described below. 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. At the time the Fund enters into a reverse repurchase agreement, it
will place in a segregated custodial account assets such as U.S. Government
securities or other liquid high-grade debt securities consistent with the
Fund's investment restrictions having a value equal to the repurchase price
(including accrued interest), and will continually monitor the account to
ensure that such equivalent value is maintained at all times. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by the Fund may decline below the price at which the Fund is obligated to
repurchase the securities. Reverse repurchase agreements are considered to be
borrowings by the Fund under the 1940 Act and therefore a form of leverage.
The Fund may experience a negative impact on its net asset value if interest
rates rise during the term of a reverse repurchase agreement. The Fund
generally will invest the proceeds of such borrowings only when such borrowings
will enhance the Fund's liquidity or when the Fund reasonably expects that the
interest income to be earned from the investment of the proceeds is greater
than the interest expense of the transaction. For further information about
reverse repurchase agreements, see "INVESTMENT OBJECTIVE AND POLICIES -
Additional Information on Portfolio Instruments - Reverse Repurchase
Agreements" in the Statement of Additional Information.
-6-
<PAGE> 11
Except as otherwise disclosed to the Shareholders of the Fund, the
Group will not execute portfolio transactions through, acquire portfolio
securities issued by, make savings deposits in, or enter into repurchase or
reverse repurchase agreements with the Adviser, BISYS, or their affiliates, and
will not give preference to the Adviser's correspondents with respect to such
transactions, securities, savings deposits, repurchase agreements, and reverse
repurchase agreements.
Foreign Investments. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying foreign
securities and are denominated in U.S. dollars. Investments in foreign
securities, including ADRs, may subject the Fund to investment risks that
differ in some respects from those related to investments in securities of U.S.
domestic issuers. Such risks include future adverse political and economic
developments, the possible imposition of withholding taxes on interest or other
investment income, possible seizure, nationalization, or expropriation of
foreign deposits or investments, the possible establishment of exchange
controls or taxation at the source, less stringent disclosure requirements,
less liquid or developed securities markets or the adoption of other foreign
governmental restrictions which might adversely affect the payment of
principal, interest or dividends on such securities or the purchase or sale
thereof.
Restricted Securities. Securities in which the Fund may invest
include securities issued by corporations without registration under the
Securities Act of 1933, as amended (the "1933 Act"), such as securities issued
in reliance on the so-called "private placement" exemption from registration
which is afforded by Section 4(2) of the 1933 Act ("Section 4(2) securities").
Section 4(2) securities are restricted as to disposition under the Federal
securities laws, and generally are sold to institutional investors such as the
Fund who agree that they are purchasing the securities for investment and not
with a view to public distribution. Any resale must also generally be made in
an exempt transaction. Section 4(2) securities are normally resold, if at all,
to other institutional investors through or with the assistance of the issuer
or investment dealers who facilitate the resale of such Section 4(2)
securities, thus providing some liquidity.
Pursuant to procedures adopted by the Board of Trustees of the Group,
the Adviser may determine Section 4(2) securities to be liquid if such
securities are eligible for resale under Rule 144A under the 1933 Act and are
readily saleable. Rule 144A permits the Fund to purchase securities which have
been privately placed and resell such securities to certain qualified
institutional buyers without restriction. For purposes of determining whether
a Rule 144A security is readily saleable, and therefore liquid, the Adviser
must consider, among other things, the frequency of trades and quotes for the
security, the number of dealers willing to purchase or sell the security and
the number of potential purchasers, dealer undertakings to make a market in the
security, and the nature of the security and marketplace trades of such
security. However, investing in Rule 144A securities, even if such
-7-
<PAGE> 12
securities are initially determined to be liquid, could have the effect of
increasing the level of the Fund's illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.
Securities Lending. In order to generate additional income, the Fund
may, from time to time, lend its portfolio securities to broker-dealers, banks,
or institutional borrowers of securities. The Fund must receive 100%
collateral in the form of cash or U.S. Government securities. This collateral
will be valued daily by the Adviser. Should the market value of the loaned
securities increase, the borrower must furnish additional collateral to the
Fund. During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest received on such securities. Loans are subject
to termination by the Fund or the borrower at any time. While the Fund does
not have the right to vote securities on loan, the Fund intends to terminate
the loan and regain the right to vote if that is considered important with
respect to the investment. In the event the borrower would default in its
obligations, the Fund bears the risk of delay in recovery of the portfolio
securities and the loss of rights in the collateral. The Fund will enter into
loan agreements only with broker-dealers, banks, or other institutions that the
Adviser has determined are creditworthy under guidelines established by the
Group's Board of Trustees. The Fund will not lend more than 33% of the total
value of its portfolio securities at any one time. The Fund will not lend more
than 33% of the total value of its portfolio securities at any one time.
Writing Covered Call and Put Options. The Fund may write covered call
and covered put options on securities, or futures contracts regarding
securities, in which the Fund may invest, in an effort to realize additional
income. A put option gives the purchaser the right to sell the underlying
security at the stated exercise price at any time prior to the expiration date
of the option, regardless of the market price of the security. A call option
gives the purchaser of the option the right to buy, and a writer has the
obligation to sell, the underlying security at the stated exercise price at any
time prior to the expiration of the option, regardless of the market price of
the security. The premium paid to the writer is consideration for undertaking
the obligations under the option contract. Such options will be listed on
national securities or futures exchanges. The Fund may write covered call
options as a means of seeking to enhance its income through the receipt of
premiums in instances in which the Adviser determines that the underlying
securities or futures contracts are not likely to increase in value above the
exercise price. The Fund also may seek to earn additional income through the
receipt of premiums by writing put options. By writing a call option, the Fund
limits its opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option; by writing a put
option, the Fund assumes the risk that it may be required to purchase the
underlying security at a price in excess of its then current market value.
-8-
<PAGE> 13
The Fund, as part of its option transactions, also may write index put
and call options. Through the writing of index options the Fund can achieve
many of the same objectives as through the use of options on individual
securities. Options on securities indices are similar to options on a security
except that, rather than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
option.
When the Fund writes an option, an amount equal to the net premium
(the premium less the commission) received by the Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The
current value of the traded option is the last sale price or, in the absence of
a sale, the mean between bid and asked price. If an option expires on the
stipulated expiration date or if the Fund enters into a closing purchase
transaction, it will realize a gain (or a loss if the cost of a closing
purchase transaction exceeds the net premium received when the option is sold)
and the deferred credit related to such option will be eliminated. If an
option is exercised, the Fund may deliver the underlying security in the open
market. In either event, the proceeds of the sale will be increased by the net
premium originally received and the Fund will realize a gain or loss. The Fund
will limit its writing of options such that at no time will more than 20% of
the Fund's total assets be subject to such option transactions.
Purchasing Options. In addition, the Fund may purchase put and call
options written by third parties covering indices and those types of financial
instruments or securities in which the Fund may invest to attempt to provide
protection against adverse price effects from anticipated changes in prevailing
prices for such instruments. The purchase of a put option is intended to
protect the value of the Fund's holdings in a falling market while the purchase
of a call option is intended to protect the value of the Fund's positions in a
rising market. Put and call options purchased by the Fund will be valued at
the last sale price, or in the absence of such a price, at the mean between bid
and asked price. Such options will be listed on national securities or futures
exchanges.
In purchasing a call option, the Fund would be in a position to
realize a gain if, during the option period, the price of the underlying
security, index or futures contract increased by an amount in excess of the
premium paid for the call option. It would realize a loss if the price of the
underlying security, index or futures contract declined or remained the same or
did not increase during the period by more than the amount of the premium. By
purchasing a put option, the Fund would be in a position to realize a gain if,
during the option period, the price of the security,
-9-
<PAGE> 14
index or futures contract declined by an amount in excess of the premium paid.
It would realize a loss if the price of the security, index or futures contract
increased or remained the same or did not decrease during that period by more
than the amount of the premium. If a put or call option purchased by the Fund
were permitted to expire without being sold or exercised, its premium would
represent a realized loss to the Fund.
Futures Contracts. The Fund may purchase or sell contracts for the
future delivery of the specific financial instruments or securities in which
the Fund may invest, and indices based upon the types of securities in which
the Fund may invest (collectively, "Futures Contracts"). The Fund may use this
investment technique as a substitute for a comparable market position in the
underlying securities or to hedge against anticipated future changes in market
interest rates, which otherwise might adversely affect either the value of the
Fund's securities or the prices of securities which the Fund intends to
purchase at a later date.
To the extent the Fund is engaging in a futures transaction as a
hedging device, because of the risk of an imperfect correlation between
securities in the Fund's portfolio that are the subject of a hedging
transaction and the futures contract used as a hedging device, it is possible
that the hedge will not be fully effective if, for example, losses on the
portfolio securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities. For futures
contracts based on indices, the risk of imperfect correlation increases as the
composition of the Fund's portfolio varies from the composition of the index.
In an effort to compensate for the imperfect correlation of movements in the
price of the securities being hedged and movements in the price of futures
contracts, the Fund may buy or sell futures contracts in a greater or lesser
dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the future contract has been less or greater than that
of the securities. Such "over hedging" or "under hedging" may adversely affect
the Fund's net investment results if the market does not move as anticipated
when the hedge is established.
Successful use of futures by the Fund also is subject to the Adviser's
ability to predict correctly movements in the direction of the market or
interest rates. For example, if the Fund has hedged against the possibility of
a decline in the market adversely affecting the value of securities held in its
portfolio and prices increase instead, the Fund will lose part or all of the
benefit of the increased value of securities which it has hedged because it
will have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.
-10-
<PAGE> 15
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put)
at a specified exercise price at any time during the option exercise period.
The writer of the option is required upon exercise to assume an offsetting
futures position (a short position if the option is a call and a long position
if the option is a put). Upon exercise of the option, the assumption of
offsetting futures positions by the writer and holder of the option will be
accompanied by delivery of the accumulated cash balance in the writer's futures
margin account which represents the amount by which the market price of the
futures contract, at exercise, exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option on the futures contract.
Call options sold by the Fund with respect to futures contracts will
be covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which are
expected to move relatively consistently with the instruments underlying, the
futures contract. Put options sold by the Fund with respect to futures
contracts will be covered when, among other things, cash or liquid securities
are placed in a segregated account to fulfill the obligation undertaken.
The Fund may utilize various index futures to protect against changes
in the market value of the securities in its portfolio or which it intends to
acquire. Securities index futures contracts are based on an index of various
types of securities, e.g., stocks. The index assigns relative values to the
securities included in an index, and fluctuates with changes in the market
value of such securities. The contract is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash based upon the
difference between the value of the index at the close of the last trading day
of the contract and the price at which the index contract was originally
written. The acquisition or sale of an index futures contract enables the Fund
to protect its assets from fluctuations in rates or prices of certain
securities without actually buying or selling such securities.
In general, the value of futures contracts sold by the Fund to offset
declines in its portfolio securities will not exceed the total market value of
the portfolio securities to be hedged, and futures contracts purchased by the
Fund will be covered by a segregated account consisting of cash or liquid
securities in an amount equal to the total market value of such futures
contracts, less the initial margin deposited therefor.
When buying futures contracts and when writing put options, the Fund
will be required to segregate in a separate account cash and/or U.S. Government
securities in an amount sufficient to meet
-11-
<PAGE> 16
its obligations. When writing call options, the Fund will be required to own
the financial instrument or futures contract underlying the option or segregate
cash and/or U.S. Government securities in an amount sufficient to meet its
obligations under written calls.
When-Issued or Delayed-Delivery Securities. The Fund may purchase
securities on a when-issued or delayed-delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and delivery
scheduled for a future time. The Fund will engage in when-issued and
delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with and in furtherance of its investment objectives and
policies, not for investment leverage, although such transactions represent a
form of leveraging. When-issued or delayed-delivery securities are securities
purchased for delivery beyond the normal settlement date at a stated price and
thereby involve a risk that the price obtained in the transaction will be less
advantageous than those available in the market when delivery takes place. The
Fund will generally not pay for such securities or start earning dividends, if
any, on them until they are received on the settlement date. When the Fund
agrees to purchase such securities, however, its custodian will set aside cash
or liquid securities equal to the amount of the commitment in a separate
account. Securities purchased on a when-issued or delayed-delivery basis are
recorded as an asset and are subject to changes in value based upon market
factors. In when-issued and delayed-delivery transactions, the Fund relies on
the seller to complete the transaction; the seller's failure to do so may cause
the Fund to miss a price considered to be advantageous.
Investment Company Securities. The Fund may also invest in the
securities of other investment companies in accordance with the limitations of
the 1940 Act and any exemptions therefrom. The Fund intends to invest in other
investment companies which, in the opinion of the Adviser will assist such Fund
in achieving its investment objective and in money market mutual funds for
purposes of short-term cash management. The Fund will incur additional
expenses due to the duplication of fees and expenses as a result of investing
in mutual funds. Additional restrictions on the Fund's investments in the
securities of other mutual funds are contained in the Statement of Additional
Information.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions that may be
changed only by a vote of a majority of the outstanding Shares of the Fund (as
defined under "GENERAL INFORMATION -- Miscellaneous" herein). The Fund will
not:
1. Purchase securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
if, immediately after such purchase,
-12-
<PAGE> 17
more than 5% of the Fund's total assets would be invested in such issuer or the
Fund would hold more than 10% of the outstanding voting securities of the
issuer, except that 25% or less of the Fund's total assets may be invested
without regard to such limitations. There is no limit to the percentage of
assets that may be invested in U.S. Treasury bills, notes, or other obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
2. Purchase any securities which would cause more than 25% of the
Fund's total assets at the time of purchase to be invested in 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, its agencies or instrumentalities,
and repurchase agreements secured by obligations of the U.S. Government, its
agencies or instrumentalities; (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)
technology companies will be divided according to their services. For example,
medical devices, biotechnology, semi-conductor, software and communications
will each be considered a separate industry.
3. Borrow money or issue senior securities except that the Fund
may enter into reverse repurchase agreements and may otherwise borrow money or
issue senior securities as and to the extent permitted by the 1940 Act or any
rule, order or interpretation thereunder.
4. Make loans, except that the Fund may purchase or hold debt
instruments and lend portfolio securities in accordance with its investment
objective and policies, make time deposits with financial institutions and
enter into repurchase agreements.
The following additional investment restriction may be changed without
the vote of a majority of the outstanding Shares of the Fund: the Fund may not
purchase or otherwise acquire any security if, as a result, more than 15% of
its net assets would be invested in securities that are illiquid. For purposes
of this investment restriction, illiquid securities include securities which
are not readily marketable and repurchase agreements with maturities in excess
of seven days.
VALUATION OF SHARES
The net asset value of the Fund is determined and its Shares are
priced as of the close of regular trading on the New York Stock Exchange (the
"Exchange") (generally 4:00 p.m. Eastern time) on each Business Day of the
Fund. The time at which the Shares of the Fund are priced is hereinafter
referred to as the "Valuation Time." A "Business Day" of the Fund is a day on
which the Exchange is open
-13-
<PAGE> 18
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 of the Fund is
received) during which there is sufficient trading in portfolio instruments
such that the Fund's net asset value per share might be materially affected.
The Exchange will not be open in observance of the following holidays: New
Year's Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. Net asset value per share for purposes of
pricing purchases and redemptions is calculated by dividing the value of all
securities and other assets belonging to the Fund, less the liabilities charged
to the Fund, by the number of the Fund's outstanding Shares.
The net asset value per share for the Fund will fluctuate as the value
of the investment portfolio of the Fund changes. The Trustees of the Group
have set the initial price of the Fund's Shares at $10 per share.
The portfolio securities for which market quotations are readily
available are valued based upon their current available prices in the principal
market in which such securities normally are traded. Unlisted securities for
which market quotations are readily available are valued at such market values.
Other securities, including restricted securities and other securities for
which market quotations are not readily available, and other assets are valued
at fair value by the Adviser under procedures established by, and under the
supervision of the Group's Board of Trustees. Securities may be valued by an
independent pricing service approved by the Group's Board of Trustees.
Investments in debt securities with remaining maturities of 60 days or less may
be valued based upon the amortized cost method.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in the Fund are sold on a continuous basis by the Group's
distributor, BISYS (the "Distributor"). The principal office of the
Distributor is 3435 Stelzer Road, Columbus, Ohio 43219. If you wish to
purchase Shares, telephone the Group at (800) 766-3960.
PURCHASES OF SHARES
Shares may be purchased through procedures established by the
Distributor in connection with the requirements of qualified accounts
maintained by or on behalf of certain persons ("Customers") by the Adviser, its
affiliates or its correspondent entities (collectively, "Entities").
Shares of the Fund sold to the Entities acting in a fiduciary,
advisory, custodial, agency, or other similar capacity on behalf of
-14-
<PAGE> 19
Customers will normally be held of record by the Entities. With respect to
Shares of the Fund so sold, it is the responsibility of the particular Entity
to transmit purchase or redemption orders to the Distributor and to deliver
federal funds for purchase on a timely basis. Beneficial ownership of Shares
will be recorded by the Entities and reflected in the account statements
provided by the Entities to Customers.
Investors may also purchase Shares of the Fund by completing and
signing an Account Registration Form and mailing it, together with a check (or
other negotiable bank draft or money order) in at least the minimum initial
purchase amount, payable to the applicable Fund, to The KeyPremier Funds, P.O.
Box 182707, Columbus, Ohio 43218-2707. Subsequent purchases of Shares of the
Fund may be made at any time by mailing a check (or other negotiable bank draft
or money order) payable to the Group, to the above address.
If an Account Registration Form has been previously received by the
Group, investors may also purchase Shares by wiring funds to the Fund's
custodian. Prior to wiring any such funds and in order to ensure that wire
orders are invested promptly, investors must call the Group at (800) 766-3960
to obtain instructions regarding the bank account number into which the funds
should be wired and other pertinent information.
Shares of the Fund are purchased at the net asset value per share (see
"VALUATION OF SHARES") next determined after receipt by the Distributor, its
agents or broker-dealers with whom it has an agreement of an order in good form
to purchase Shares plus any applicable sales charge as described below.
Purchases of Shares of the Fund will be effected only on a Business Day (as
defined in "VALUATION OF SHARES") of the Fund.
For an order for the purchase of Shares of the Fund that is placed
through a broker-dealer, the applicable public offering price will be the net
asset value as so determined (plus any applicable sales charge), but only if
the broker-dealer receives the order and transmits it to the Distributor prior
to the Valuation Time for that day. The broker-dealer is responsible for
transmitting such orders by the Valuation Time. If the broker-dealer fails to
do so, the investor's right to that day's closing price must be settled between
the investor and the broker-dealer. If the broker-dealer receives the order
after the Valuation Time for that day, the price will be based on the net asset
value determined as of the Valuation Time for the next Business Day.
-15-
<PAGE> 20
MINIMUM INVESTMENT
Except as otherwise discussed below under "Auto Invest Plan," the
minimum investment is $1,000 for the initial purchase of Shares of the Fund by
an investor and $25 for subsequent purchases of Shares of the Fund. The
initial minimum investment amount is reduced to $250 for employees of the
Adviser, Keystone or any of their affiliates.
Depending upon the terms of a particular Customer's account, the
Entities or their affiliates may charge a Customer account fees for automatic
investment and other cash management services provided in connection with an
investment in the Fund. Information concerning these services and any charges
will be provided by the Entities. This Prospectus should be read in
conjunction with any such information received from the Entities or their
affiliates.
The Fund reserves the right to reject any order for the purchase of
its Shares in whole or in part, including purchases made with foreign checks
and third party checks not originally made payable to the order of the
investor.
Every Shareholder will receive a confirmation of each new transaction
in his or her account, which will also show the total number of Shares owned by
the Shareholder and the number of Shares being held in safekeeping by the
Transfer Agent for the account of the Shareholder. Reports of purchases and
redemptions of Shares by Entities on behalf of their Customers will be sent by
the Entities to their Customers. Shareholders may rely on these statements in
lieu of certificates. Certificates representing Shares will not be issued.
AUTO INVEST PLAN
The KeyPremier Funds Auto Invest Plan enables Shareholders to make
regular monthly or quarterly purchases of Shares of the Fund through automatic
deduction from their bank accounts, provided that the Shareholder's bank is a
member of the Federal Reserve and the Automated Clearing House (ACH) system.
With Shareholder authorization the Transfer Agent will deduct the amount
specified (subject to the applicable minimums) from the Shareholder's bank
account which will automatically be invested in Shares of the Fund at the
public offering price next determined after receipt of payment by the Transfer
Agent. The required minimum initial investment when opening an account using
the Auto Invest Plan is $250; the minimum amount for subsequent investments is
$25. To participate in the Auto Invest Plan, Shareholders should complete the
appropriate section of the Account Registration Form or a supplemental sign-up
form which can be acquired by calling the Group at (800) 766-3960. For a
Shareholder to change the Auto Invest instructions, the request must be made in
writing to the Group at: 3435 Stelzer Road, Columbus, Ohio 43219.
-16-
<PAGE> 21
The Group may eliminate or change the Auto Invest Plan at any time or
from time to time without notice thereof.
SALES CHARGES
The public offering price of Shares of the Fund equals net asset value
plus a sales charge in accordance with the table below. BISYS receives this
sales charge as Distributor and reallows a portion of it as dealer discounts
and brokerage commissions. However, the Distributor, in its sole discretion
may pay certain dealers all or part of the portion of the sales charge it
receives. The broker or dealer who receives a reallowance in excess of 90% of
the sales charge may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933.
<TABLE>
<CAPTION>
Dealer Discounts
Amount of and Brokerage
Transaction at Sales Charge as % Sales Charge as % Commissions as %
Public Offering of Net Amount of Public of Public
Price Invested Offering Price Offering Price
- ------------------- ----------------- ----------------- ----------------
<S> <C> <C> <C>
Less than $100,000 4.71% 4.50% 4.05%
$100,000 but less 3.63 3.50 3.15
than $250,000
$250,000 but less 2.56 2.50 2.25
than $500,000
$500,000 but less 1.52 1.50 1.35
than $1,000,000
$1,000,000 or more 0 0 0
</TABLE>
From time to time dealers who receive dealer discounts and brokerage
commissions from the Distributor may reallow all or a portion of such dealer
discounts and brokerage commissions to other dealers or brokers. The
Distributor, at its expense, will also provide additional compensation to
dealers in connection with sales of Shares of the Fund. Such compensation will
include financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding the Fund, and/or other dealer-sponsored special events. In
some instances, this compensation will be made available only to certain dealers
whose representatives have sold a significant amount of such Shares.
Compensation will include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Compensation will also
include the following types of non-cash compensation offered through sales
contests: (1) vacation trips, including the provision of travel arrangements
and lodging at luxury resorts at an exotic location, (2) tickets for
entertainment events (such as concerts, cruises and
-17-
<PAGE> 22
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of the Fund' Shares to qualify for this
compensation to the extent such may be prohibited by the laws of any state or
any self-regulatory agency, such as the National Association of Securities
Dealers, Inc. None of the aforementioned compensation is paid for by the Fund
or its Shareholders.
SALES CHARGE WAIVERS
The Distributor will waive sales charges for the purchase of Shares of
the Fund by or on behalf of (1) purchasers for whom Keystone, the Adviser, one
of their affiliates or another financial institution acts in a fiduciary,
advisory, agency, custodial (other than individual retirement accounts), or
similar capacity, (2) officers, trustees, directors, advisory board members,
employees and retired employees (including spouses, children and parents of the
foregoing) of Keystone, the Adviser, the Group, BISYS and any affiliated
company thereof, (3) investors who purchase Shares with the proceeds from a
distribution from the Adviser, Keystone or an affiliate trust or agency
account, and (4) brokers, dealers and agents who have a sales agreement with
the Distributor, and their employees (and their spouses and children under 21).
The Distributor may change or eliminate the foregoing waivers at any time or
from time to time without notice thereof. The Distributor may also
periodically waive all or a portion of the sales charge for all investors with
respect to the Fund.
In addition, the Distributor may waive sales charges for the purchase
of the Fund's Shares with the proceeds from the recent redemption of shares of
a non-money market fund that imposes a sales charge. The purchase must be made
within 60 days of the redemption, and the Distributor must be notified in
writing by the investor, or by his financial institution, at the time the
purchase is made. A copy of the investor's account statement showing such
redemption must accompany such notice.
CONCURRENT PURCHASES
For purposes of qualifying for a lower sales charge, investors have
the privilege of combining concurrent purchases of the Fund and one or more of
the other funds of the Group sold with a sales charge and advised by the
Adviser ("KeyPremier Load Funds"). For example, if a Shareholder concurrently
purchases Shares in the Fund at the total public offering price of $50,000 and
Shares in another KeyPremier Load Fund at the total public offering price of
$50,000, the sales charge would be that applicable to a $100,000 purchase as
shown in the table above. This privilege, however, may be modified or
eliminated at any time or from time to time by the Group without notice
thereof.
-18-
<PAGE> 23
LETTER OF INTENT
An investor may obtain a reduced sales charge by means of a written
Letter of Intent which expresses the intention of such investor to purchase
Shares of the Fund at a designated total public offering price within a
designated 13-month period. Each purchase of Shares under a Letter of Intent
will be made at the net asset value plus the sales charge applicable at the
time of such purchase to a single transaction of the total dollar amount
indicated in the Letter of Intent. A Letter of Intent may include purchases of
Shares made not more than 90 days prior to the date such investor signs a
Letter of Intent; however, the 13-month period during which the Letter of
Intent is in effect will begin on the date of the earliest purchase to be
included. This program may be modified or eliminated at any time or from time
to time by the Group without notice. For further information about letters of
intent, interested investors should contact the Group at (800) 766-3960.
A Letter of Intent is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Letter of Intent is 5% of such amount. Shares purchased with the first 5% of
such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
Shares actually purchased if the full amount indicated is not purchased, and
such escrowed Shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed Shares, whether paid in cash or
reinvested in additional Shares, are not subject to escrow. The escrowed
Shares will not be available for disposal by the investor until all purchases
pursuant to the Letter of Intent have been made or the higher sales charge has
been paid. When the full amount indicated has been purchased, the escrow will
be released. An adjustment will be made to reflect any reduced sales charge
applicable to Shares purchased during the 90-day period prior to the date the
Letter of Intent was entered into at the conclusion of the 13-month period and
in the form of additional Shares credited to the Shareholder's account at the
then current public offering price applicable to a single purchase of the total
amount of the total purchases. Additionally, if the total purchases within the
13-month period exceed the amount specified, a similar adjustment will be made
to reflect further reduced sales charges applicable to such purchases, if any.
RIGHT OF ACCUMULATION
Pursuant to the right of accumulation, investors are permitted to
purchase Shares of the Fund at the public offering price applicable to the
total of (a) the total public offering price of the Shares then being purchased
plus (b) an amount equal to the then current net asset value of the purchaser's
combined holdings of the Shares of all KeyPremier Load Funds. The "purchaser's
-19-
<PAGE> 24
combined holdings" described in the preceding sentence shall include the
combined holdings of the purchaser, the purchaser's spouse and children under
the age of 21 and the purchaser's retirement plan accounts. To receive the
applicable public offering price pursuant to the right of accumulation,
Shareholders must, at the time of purchase, give the Transfer Agent sufficient
information to permit confirmation of qualification. This right of
accumulation, however, may be modified or eliminated at any time or from time
to time by the Group without notice.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for Shares of The KeyPremier Prime
Money Market Fund or any other KeyPremier Load Fund at respective net asset
values if the amount to be exchanged meets the applicable minimum investment
requirements and the exchange is made in states where it is legally authorized.
When shares of The KeyPremier Prime Money Market Fund are exchanged for Shares
of the Fund or other KeyPremier Load Fund, the applicable sales load will be
assessed, unless such shares to be exchanged were acquired through a previous
exchange for shares on which a sales charge was paid. Under such
circumstances, the Shareholder must notify the Group that a sales charge was
originally paid and provide the Group with sufficient information to permit
confirmation of the Shareholder's right not to pay a sales charge.
An exchange is considered a sale of Shares for federal income tax
purposes. However, a Shareholder may not include any sales charge on Shares of
the Fund as a part of the cost of those Shares for purposes of calculating the
gain or loss realized on an exchange of those Shares within 90 days of their
purchase.
The Group may at any time modify or terminate the foregoing exchange
privileges. The Group, however, will give Shareholders 60 days' advance
written notice of any such modification.
A Shareholder wishing to exchange his or her Shares may do so by
contacting the Group at (800) 766-3960 or by providing written instructions to
the Group. Any Shareholder who wishes to make an exchange should obtain and
review the current prospectus of the fund in which he or she wishes to invest
before making the exchange. For a discussion of risks associated with
unauthorized telephone exchanges, see "Redemption by Telephone" below.
REDEMPTION OF SHARES
Shares may ordinarily be redeemed by mail or by telephone. However,
all or part of a Customer's Shares may be redeemed in accordance with
instructions and limitations pertaining to his or her account at an Entity.
For example, if a Customer has agreed with an Entity to maintain a minimum
balance in his or her account with the Entity, and the balance in that account
falls below that
-20-
<PAGE> 25
minimum, the Customer may be obliged to redeem, or the Entity may redeem on
behalf of the Customer, all or part of the Customer's Shares of the Fund to the
extent necessary to maintain the required minimum balance.
Redemption by Mail
A written request for redemption must be received by the Group, at the
address shown on the front page of this Prospectus, in order to honor the
request. The Transfer Agent will require a signature guarantee by an eligible
guarantor institution. The signature guarantee requirement will be waived if
the following conditions apply: (1) the redemption check is payable to the
Shareholder(s) of record, and (2) the redemption check is mailed to the
Shareholder(s) at the address of record or mailed or wired to a commercial bank
account previously designated on the Account Registration Form. There is no
charge for having redemption proceeds mailed to a designated bank account. To
change the address to which a redemption check is to be mailed, a written
request therefor must be received by the Transfer Agent. In connection with
such request, the Transfer Agent will require a signature guarantee by an
eligible guarantor institution. For purposes of this policy, the term
"eligible guarantor institution" shall include banks, brokers, dealers, credit
unions, securities exchanges and associations, clearing agencies and savings
associations as those terms are defined in the Securities Exchange Act of 1934.
The Transfer Agent reserves the right to reject any signature guarantee if (1)
it has reason to believe that the signature is not genuine, (2) it has reason
to believe that the transaction would otherwise be improper, or (3) the
guarantor institution is a broker or dealer that is neither a member of a
clearing corporation nor maintains net capital of at least $100,000.
Redemption by Telephone
If a Shareholder has so designated on the Account Registration Form, a
Shareholder may request a redemption of his or her Shares by telephoning the
Transfer Agent and having the payment of redemption requests sent
electronically directly to a domestic commercial bank account previously
designated by the Shareholder on the Account Registration Form. A Shareholder
may also have such payment mailed directly to the Shareholder at the
Shareholder's address as recorded by the Transfer Agent. However, this option
may be suspended for a period of 30 days following a telephonic address change.
Under most circumstances, such payments will be transmitted on the next
Business Day following receipt of a valid request for redemption. Such wire
redemption requests may be made by the Shareholder by telephone to the Group.
The Group may reduce the amount of a wire redemption payment by the
then-current wire redemption charge of the Fund's custodian. There is
currently no charge for having payment of redemption requests mailed or sent
-21-
<PAGE> 26
electronically to a designated bank account. For telephone redemptions, call
the Group at (800) 766-3960.
Neither the Group, the Fund nor their service providers will be liable
for any loss, damages, expense or cost arising out of any telephone redemption
effected in accordance with the Group's telephone redemption procedures, acting
upon instructions reasonably believed to be genuine. The Group will employ
procedures designed to provide reasonable assurance that instructions by
telephone are genuine; if these procedures are not followed, the Group, the
Fund or their service providers may be liable for any losses due to
unauthorized or fraudulent instructions. These procedures include recording
all phone conversations, sending confirmations to Shareholders within 72 hours
of the telephone transaction, verification of account name and account number
or tax identification number, and sending redemption proceeds only to the
address of record or to a previously authorized bank account. If, due to
temporary adverse conditions, Shareholders are unable to effect telephone
transactions, Shareholders may also mail the redemption request to the Group at
the address shown on the front page of this Prospectus.
AUTO WITHDRAWAL PLAN
The Auto Withdrawal Plan enables Shareholders of the Fund, with an
account balance in the Fund of $5,000 or more, to make regular monthly or
quarterly redemptions of Shares. With Shareholder authorization, the Transfer
Agent will automatically redeem Shares at the net asset value on the dates of
the withdrawal and have a check in the amount specified mailed to the
Shareholder. The required minimum withdrawal is $50 monthly. To participate
in the Auto Withdrawal Plan, Shareholders should call (800) 766-3960 for more
information. Purchases of additional Shares, including use of the Auto Invest
Plan described above, concurrent with withdrawals may be disadvantageous to
certain Shareholders because of tax liabilities and sales charges. For a
Shareholder to change the Auto Withdrawal instructions, the request must be
made in writing to the Group.
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. Payment to Shareholders for Shares redeemed will be made within seven
days after receipt by the Distributor of the request for redemption. However,
to the greatest extent possible, each Fund will attempt to honor requests from
Shareholders for next day payments upon redemption of Shares if the request for
redemption is received by the Distributor before the Valuation Time on a
Business Day or, if the request for redemption is received after the Valuation
Time, to honor requests
-22-
<PAGE> 27
for payment on the second Business Day. The Fund will attempt to so honor
redemption requests unless it would be disadvantageous to the Fund or the
Shareholders of the Fund to sell or liquidate portfolio securities in an amount
sufficient to satisfy requests for payments in that manner.
At various times, the Group may be requested to redeem Shares for
which it has not yet received good payment. In such circumstances, the Group
may delay the forwarding of proceeds for up to 15 days or more until payment
has been collected for the purchase of such Shares. The Group intends to pay
cash for all Shares redeemed, but under abnormal conditions which make payment
in cash unwise, the Group 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.
Due to the relatively high cost of handling small investments, the
Group reserves the right to redeem, at net asset value, the Shares of the Fund
of any Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder (but not as a result of a decrease in the market price of such
Shares, the deduction of any sales charge or the establishment of an account
with less than $1,000 using the Auto Invest Plan), the account of such
Shareholder has a value of less than $1,000 ($250 if the Shareholder is an
employee of the Adviser or one of its affiliates). Accordingly, an investor
purchasing Shares of the Fund in only the minimum investment amount may be
subject to such involuntary redemption if he or she thereafter redeems some of
his or her Shares. Before the Group exercises its right to redeem such Shares
and to send the proceeds to the Shareholder, the Shareholder will be given
notice that the value of the Shares in his or her account is less than the
minimum amount and will be allowed at least 60 days to make an additional
investment in an amount which will increase the value of the account to at
least $1,000 ($250 if the Shareholder is an employee of the Adviser or one of
its affiliates).
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION" in the Statement
of Additional Information for examples of when the Group may suspend the right
of redemption.
DIVIDENDS AND TAXES
DIVIDENDS
A dividend for the Fund is declared quarterly at the close of business
on the day of declaration consisting of an amount of accumulated undistributed
net income of the Fund as determined necessary or appropriate by the
appropriate officers of the Group. Such dividend is generally paid quarterly.
Shareholders will automatically receive all income dividends and capital gains
distributions in additional full and fractional Shares of the Fund
-23-
<PAGE> 28
at the net asset value as of the date of payment, unless the Shareholder elects
to receive dividends or distributions in cash. Such election, or any
revocation thereof, must be made in writing to the Transfer Agent at 3435
Stelzer Road, Columbus, Ohio 43219, and will become effective with respect to
dividends and distributions having record dates after its receipt by the
Transfer Agent.
Distributable net realized capital gains, if any, for the Fund are
distributed at least annually. Dividends are paid in cash not later than seven
Business Days after a Shareholder's complete redemption of his or her Shares in
the Fund.
If a Shareholder elects to receive distributions in cash, and checks
(1) are returned and marked as "undeliverable" or (2) remain uncashed for six
months, the Shareholder's cash election will be changed automatically and
future dividend and capital gains distributions will be reinvested in the Fund
at the per share net asset value determined as of the date of payment of the
distribution. In addition, any undeliverable checks or checks that remain
uncashed for six months will be canceled and will be reinvested in the Fund at
the per share net asset value determined as of the date of cancellation.
FEDERAL TAXES
The Fund is treated as a separate entity for federal income tax
purposes and intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986 (the "Code") for so long as such qualification is
in the best interest of the Fund's Shareholders. Qualification as a regulated
investment company under the Code requires, among other things, that the
regulated investment company distribute to its shareholders at least 90% of its
investment company taxable income. The Fund contemplates declaring as
dividends all or substantially all of its investment company taxable income
(before deduction of dividends paid).
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of having a
non-calendar taxable year) an amount equal to 98% of their ordinary income for
the calendar year plus 98% of their capital gain net income for the one-year
period ending on October 31 of such calendar year. If distributions during a
calendar year were less than the required amount, the Fund would be subject to
a nondeductible 4% excise tax on the deficiency.
It is expected that the Fund will distribute annually to its
Shareholders all or substantially all of the Fund's net ordinary income and net
realized capital gains and that such distributed net ordinary income and
distributed net realized capital gains will be taxable income to Shareholders
for federal income tax purposes, even if paid in additional Shares of the Fund
and not in cash. The
-24-
<PAGE> 29
dividends received deduction for corporations will apply to the aggregate of
such ordinary income distributions in the same proportion as the aggregate
dividends eligible for the dividends deduction, if any, received by the Fund
bear to its gross income.
Distribution by the Fund of the excess of net long-term capital gain,
if any, over net short-term capital loss is taxable to Shareholders as
long-term capital gain in the year in which it is received, regardless of how
long the Shareholder has held the Shares. Such distributions are not eligible
for the dividends received deduction.
If the net asset value of a Share is reduced below the Shareholder's
cost of that Share by the distribution of income or gain realized on the sale
of securities, the distribution, from a practical stand point, is a return of
invested principal, although taxable as described above.
Prior to purchasing Shares, the impact of dividends or capital gains
distributions which are expected to be declared or have been declared, but have
not been paid, should be carefully considered. Any such dividends or capital
gains distributions paid shortly after a purchase of Shares prior to the record
date will have the effect of reducing the per share net asset value of the
Shares by the amount of the dividends or distributions. All or a portion of
such dividends or distributions, although in effect a return of capital, is
subject to tax.
Additional information regarding federal taxes is contained in the
Statement of Additional Information under the heading "ADDITIONAL INFORMATION
- -- Additional General Tax Information." However, the information contained in
this Prospectus and the additional material in the Statement of Additional
Information are only brief summaries of some of the important tax
considerations generally affecting the Fund and its Shareholders. Accordingly,
potential investors are urged to consult their own tax advisers concerning the
application of federal, state and local taxes as such laws and regulations
affect their own tax situation.
Shareholders will be advised at least annually as to the federal
income tax consequences of distributions made to them during the year.
MANAGEMENT OF THE GROUP
TRUSTEES OF THE GROUP
Overall responsibility for management of the Group rests with its
Board of Trustees. Unless so required by the Group's Declaration of Trust or
By-Laws or by Ohio law, at any given time all of the Trustees may not have been
elected by the shareholders of the Group. The Group will be managed by the
Trustees in
-25-
<PAGE> 30
accordance with the laws of Ohio governing business trusts. The Trustees, in
turn, elect the officers of the Group to supervise its day-to-day operations.
The Trustees of the Group receive fees and are reimbursed for their
expenses in connection with each meeting of the Board of Trustees they attend.
However, no officer or employee of BISYS Fund Services Inc., the sole general
partner of BISYS, or BISYS receives any compensation from the Group for acting
as a Trustee of the Group. The officers of the Group receive no compensation
directly from the Group for performing the duties of their offices. BISYS
receives fees from the Fund for acting as Administrator, may receive fees under
the Administrative Services Plan discussed below and may retain all or a
portion of any sales load imposed upon purchases of Shares. BISYS Fund
Services, Inc. receives fees from the Fund for acting as Transfer Agent and for
providing certain fund accounting services.
INVESTMENT ADVISER
Martindale Andres & Company, Inc., Four Falls Corporate Center, Suite
200, West Conshohocken, Pennsylvania 19428, is the investment adviser of the
Fund and has served as such since the Fund's inception. The Adviser is a
wholly owned subsidiary of Keystone Financial, Inc., 1 Keystone Plaza,
Harrisburg, Pennsylvania 17101 ("Keystone"). The Adviser was organized in 1989
and was acquired by Keystone in December 1995. Except with respect to the
KeyPremier Load Funds and The KeyPremier Prime Money Market Fund, the Adviser
has not previously served as the investment adviser to a registered open-end
management investment company. However, the Adviser has managed since its
founding the investment portfolio of high net worth individuals, endowments,
pension and common trust funds. The Adviser currently has over $1.6 billion
under management.
Subject to the general supervision of the Board of Trustees of the
Group and in accordance with the investment objective and restrictions of the
Fund, the Adviser manages the Fund, makes decisions with respect to and places
orders for all purchases and sales of its portfolio securities, and maintains
the Fund's records relating to such purchases and sales.
William C. Martindale, Jr. is responsible for the day-to-day
management of the Fund's portfolio, has managed the CIF since July 1, 1994, and
has over 25 years of equity investment experience. Mr. Martindale co-founded
the Adviser in 1989 and serves as its Chief Investment Officer. Prior to 1989,
Mr. Martindale served in various investment-related capacities with Dean Witter
Reynolds.
For the services provided and expenses assumed pursuant to its
Investment Advisory Agreement with the Group, the Adviser receives a fee from
the Fund, computed daily and paid monthly, at the annual
-26-
<PAGE> 31
rate of one percent (1.00%) of such Fund's average daily net assets.
The Adviser may periodically voluntarily reduce all or a portion of
its advisory fee with respect to the Fund to increase the net income of the
Fund available for distribution as dividends. The Adviser may not seek
reimbursement of such voluntarily reduced fees after the end of the fiscal year
in which the fees were reduced. The reduction of such fee will cause the total
return of the Fund to be higher than it would otherwise be in the absence of
such a reduction.
ADMINISTRATOR AND DISTRIBUTOR
BISYS is the administrator for the Fund and also acts as the Fund's
principal underwriter and distributor (the "Administrator" or the
"Distributor," as the context indicates). BISYS and its affiliated companies,
including BISYS Fund Services, Inc., are wholly owned by The BISYS Group, Inc.,
a publicly-held company which is a provider of information processing, loan
servicing and 401(k) administration and recordkeeping services to and through
banking and other financial organizations.
The Administrator generally assists in all aspects of the Fund's
administration and operation. For expenses assumed and services provided as
administrator pursuant to its management and administration agreement with the
Group, the Administrator receives a fee from the Fund, computed daily and paid
periodically, calculated at an annual rate of eleven and one-half
one-hundredths of one percent (.115%) of the Fund's average daily net assets.
The Administrator may periodically voluntarily reduce all or a portion of its
administration fee with respect to the Fund to increase the net income of the
Fund available for distribution as dividends. The Administrator may not seek
reimbursement of such reduced fees after the end of the fiscal year in which
the fees were reduced. The voluntary reduction of such fee will cause the
total return of the Fund to be higher than it would otherwise be in the absence
of such a fee reduction.
The Distributor acts as agent for the Fund in the distribution of its
Shares and, in such capacity, solicits orders for the sale of Shares,
advertises, and pays the costs of advertising, office space and its personnel
involved in such activities. The Distributor receives no compensation under
its Distribution Agreement with the Group, but may retain all or a portion of
any sales charge imposed upon the purchase of Shares. See "HOW TO PURCHASE AND
REDEEM SHARES -- Sales Charges."
-27-
<PAGE> 32
EXPENSES
The Adviser and the Administrator each bear all expenses in connection
with the performance of their services as investment adviser and administrator,
respectively, other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund. The Fund will bear the following
expenses relating to its operations: organizational expenses, taxes, interest,
any brokerage fees and commissions, fees and expenses of the Trustees of the
Group, Commission fees, state securities qualification fees, costs of preparing
and printing prospectuses for regulatory purposes and for distribution to the
Fund's current shareholders, outside auditing and legal expenses, advisory
fees, fees and out-of-pocket expenses of the custodian, fund accountant and
Transfer Agent, costs for independent pricing services, certain insurance
premiums, costs of maintenance of the Group's existence, costs of shareholders'
reports and meetings, expenses incurred under the Administrative Services Plan
described below and any extraordinary expenses incurred in the Fund's
operation.
ADMINISTRATIVE SERVICES PLAN
The Group has adopted an Administrative Services Plan (the "Services
Plan") pursuant to which the Fund is authorized to pay compensation to banks
and other financial institutions (each a "Service Organization"), which may
include the Adviser, Entities, and BISYS, which agree to provide certain
ministerial, record keeping and/or administrative support services for their
customers or account holders (collectively, "customers") who are the beneficial
or record owner of Shares of the Fund. In consideration for such services, a
Service Organization receives a fee from the Fund, computed daily and paid
monthly, at an annual rate of up to .25% of the average daily net asset value
of Shares of the Fund owned beneficially or of record by such Service
Organization's customers for whom the Service Organization provides such
services.
The servicing agreements adopted under the Services Plan (the
"Servicing Agreements") require the Service Organizations receiving such
compensation to perform certain ministerial, record keeping and/or
administrative support services with respect to the beneficial or record owners
of Shares of the Fund, such as processing dividend and distribution payments
from the Fund on behalf of customers, providing periodic statements to
customers showing their positions in the Shares of the Fund, providing
sub-accounting with respect to Shares beneficially owned by such customers and
providing customers with a service that invests the assets of their accounts in
Shares of the Fund pursuant to specific or pre-authorized instructions.
As authorized by the Services Plan, the Group has entered into a
Servicing Agreement with Keystone Brokerage, Inc.("Keystone Brokerage"), an
affiliate of the Adviser, pursuant to which
-28-
<PAGE> 33
Keystone Brokerage has agreed to provide certain administrative support
services in connection with Shares of the Fund owned of record or beneficially
by its customers. Such administrative support services may include, but are
not limited to, (i) processing dividend and distribution payments from the Fund
on behalf of customers; (ii) providing periodic statements to its customers
showing their positions in the Shares; (iii) arranging for bank wires; (iv)
responding to routine customer inquiries relating to services performed by
Keystone Brokerage; (v) providing sub-accounting with respect to the Shares
beneficially owned by Keystone Brokerage's customers or the information
necessary for sub- accounting; (vi) if required by law, forwarding shareholder
communications from the Fund (such as proxies, shareholder reports, annual and
semi-annual financial statements and dividend, distribution and tax notices) to
its customers; (vii) aggregating and processing purchase, exchange, and
redemption requests from customers and placing net purchase, exchange, and
redemption orders for customers; and (viii) providing customers with a service
that invests the assets of their account in the Shares pursuant to specific or
pre-authorized instructions. In consideration of such services, the Group, on
behalf of the Fund, has agreed to pay Keystone Brokerage a monthly fee,
computed at the annual rate of twenty-five one-hundredths of one percent (.25%)
of the average aggregate net asset value of Shares of that Fund held during the
period by customers for whom Keystone Brokerage has provided services under the
Servicing Agreement.
BANKING LAWS
The Adviser believes that it possesses the legal authority to perform
the investment advisory services for the Fund contemplated by its investment
advisory agreement with the Group, as described in this Prospectus, without
violation of applicable banking laws and regulations, and has so represented in
its investment advisory agreement with the Group. Future changes in Federal or
state statutes and regulations relating to permissible activities of banks or
bank holding companies and their subsidiaries and affiliates as well as further
judicial or administrative decisions or interpretations of present and future
statutes and regulations could change the manner in which the Adviser could
continue to perform such services for the Fund. See "MANAGEMENT OF THE GROUP -
Glass-Steagall Act" in the Statement of Additional Information for further
discussion of applicable law and regulations.
GENERAL INFORMATION
DESCRIPTION OF THE GROUP AND ITS SHARES
The Group was organized as an Ohio business trust on April 25, 1988.
The Group consists of seventeen funds, each having its own class of shares.
Each share represents an equal proportionate interest in a fund with other
shares of the same fund, and is
-29-
<PAGE> 34
entitled to such dividends and distributions out of the income earned on the
assets belonging to the fund as are declared at the discretion of the Trustees
(see "Miscellaneous" below). The other funds of the Group are The KeyPremier
Prime Money Market Fund, The KeyPremier Pennsylvania Municipal Bond Fund, The
KeyPremier Established Growth Fund, The KeyPremier Intermediate Term Income
Fund, 1st Source Monogram U.S. Treasury Obligations Money Market Fund, 1st
Source Monogram Diversified Equity Fund, 1st Source Monogram Income Equity
Fund, 1st Source Monogram Special Equity Fund, 1st Source Monogram Income Fund,
1st Source Monogram Intermediate Tax-Free Bond Fund, Riverside Capital Money
Market Fund, Riverside Capital Value Fund, Riverside Capital Fixed Income Fund,
Riverside Capital Growth Fund, Riverside Capital Tennessee Municipal
Obligations Fund and Riverside Capital Low Duration Government Securities Fund.
Shareholders are entitled to one vote for each dollar of value
invested and a proportionate fractional vote for any fraction of a dollar
invested, and will vote in the aggregate and not by fund except as otherwise
expressly required by law. For example, Shareholders of the Fund will vote in
the aggregate with other shareholders of the Group with respect to the election
of Trustees. However, Shareholders of the Fund will vote as a fund, and not in
the aggregate with other shareholders of the Group, for purposes of approval or
amendment of the Fund's investment advisory agreement.
Overall responsibility for the management of the Fund is vested in the
Board of Trustees of the Group. See "MANAGEMENT OF THE GROUP - Trustees of the
Group." Individual Trustees are elected by the shareholders of the Group,
although Trustees may, under certain circumstances, fill vacancies, including
vacancies created by expanding the size of the Board. Trustees be removed by
the Board of Trustees or shareholders in accordance with the provisions of the
Declaration of Trust and By-Laws of the Group and Ohio law. See "ADDITIONAL
INFORMATION - Miscellaneous" in the Statement of Additional Information for
further information.
An annual or special meeting of shareholders to conduct necessary
business is not required by the Declaration of Trust, the 1940 Act or other
authority except, under certain circumstances, to elect Trustees, amend the
Declaration of Trust, the investment advisory agreement or the Fund's
fundamental policies and to satisfy certain other requirements. To the extent
that such a meeting is not required, the Group does not intend to have an
annual or special meeting of shareholders.
The Group has represented to the Commission that the Trustees will
call a special meeting of shareholders for purposes of considering the removal
of one or more Trustees upon written request therefor from shareholders holding
not less than 10% of the outstanding votes of the Group. At such a meeting, a
quorum of shareholders (constituting a majority of votes attributable to all
-30-
<PAGE> 35
outstanding shares of the Group), by majority vote, has the power to remove one
or more Trustees.
Immediately prior to the public offering of the Fund's Shares, BISYS
Fund Services Ohio, Inc. was the sole shareholder of the Fund. It is expected
that immediately after the public offering of the Fund's Shares, BISYS Fund
Services Ohio, Inc.'s holding of Shares of the Fund will be reduced below 5%.
CUSTODIAN
The Bank of New York serves as the custodian for the Fund.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS Fund Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43219,
serves as the Fund's transfer agent pursuant to a Transfer Agency Agreement
with the Group and receives a fee for such services. BISYS Fund Services, Inc.
also provides certain accounting services for the Fund pursuant to the Fund
Accounting Agreement and receives a fee from the Fund for such services equal
to the greater of (a) a fee computed at an annual rate of 0.03% of the Fund's
average daily net assets or (b) the annual fee of $30,000. See "MANAGEMENT OF
THE GROUP - Transfer Agency and Fund Accounting Services" in the Statement of
Additional Information for further information.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual
reports audited by independent public accountants.
As used in this Prospectus and in the Statement of Additional
Information, "assets belonging to the fund" means the consideration received by
a fund 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 amounts derived from any reinvestment of such
proceeds, and any general assets of the Group not readily identified as
belonging to a particular fund that are allocated to such fund by the Group's
Board of Trustees. The Board of Trustees may allocate such general assets in
any manner it deems fair and equitable. Determinations by the Board of
Trustees of the Group as to the timing of the allocation of general liabilities
and expenses and as to the timing and allocable portion of any general assets
with respect to the Fund are conclusive.
As used in this Prospectus and in the Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Fund means
the affirmative vote, at a meeting of Shareholders duly called, of the lesser
of (a) 67% or more of the votes of
-31-
<PAGE> 36
Shareholders of the Fund present at a meeting at which the holders of more than
50% of the votes attributable to Shareholders of record of such Fund are
represented in person or by proxy, or (b) the holders of more than 50% of the
outstanding votes of Shareholders of the Fund.
Inquiries regarding the Fund may be directed in writing to the Group
at 3435 Stelzer Road, Columbus, Ohio 43219, or by calling toll free (800)
766-3960.
-32-
<PAGE> 37
INVESTMENT ADVISER
Martindale Andres & Company, Inc.
Four Falls Corporate Center, Suite 200
West Conshohocken, Pennsylvania 19428
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
LEGAL COUNSEL
Baker & Hostetler
65 East State Street
Columbus, Ohio 43215
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
-33-
<PAGE> 38
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FEE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DIVIDENDS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
MANAGEMENT OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS 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 THE FUND
OR ITS DISTRIBUTOR, BISYS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY BISYS IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE> 39
The
KeyPremier
Aggressive Growth
Fund
[LOGO]
Martindale, Andres & Company,
Inc.
Investment Adviser
---------------------------------
Prospectus dated January __, 1997
---------------------------------
-35-
<PAGE> 40
THE KEYPREMIER AGGRESSIVE GROWTH FUND
One Investment Portfolio of
THE SESSIONS GROUP
Statement of Additional Information
January __, 1997
This Statement of Additional Information is not a prospectus, but should be
read in conjunction with the prospectus (the "Prospectus") of The KeyPremier
Aggressive Growth Fund (the "Fund"), dated as of the date hereof. The Fund is
one of seventeen funds of The Sessions Group, an Ohio business trust (the
"Group"). This Statement of Additional Information is incorporated in its
entirety into the Prospectus. Copies of the Prospectus may be obtained by
writing the Group at 3435 Stelzer Road, Columbus, Ohio 43219, or by telephoning
toll free (800) 766-3960.
<PAGE> 41
TABLE OF CONTENTS
Page
THE SESSIONS GROUP . . . . . . . . . . . . . . . . . . . . . . . . B-1
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . B-1
Additional Information on Portfolio Instruments . . . . . B-1
Investment Restrictions . . . . . . . . . . . . . . . . . B-8
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . B-10
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . B-10
MANAGEMENT OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . B-10
Trustees and Officers . . . . . . . . . . . . . . . . . . B-10
Investment Adviser . . . . . . . . . . . . . . . . . . . . B-13
Portfolio Transactions . . . . . . . . . . . . . . . . . . B-15
Glass-Steagall Act . . . . . . . . . . . . . . . . . . . . B-17
Administrator . . . . . . . . . . . . . . . . . . . . . . B-18
Distributor . . . . . . . . . . . . . . . . . . . . . . . B-19
Administrative Services Plan . . . . . . . . . . . . . . . B-20
Custodian . . . . . . . . . . . . . . . . . . . . . . . . B-21
Transfer Agency and Fund Accounting Services . . . . . . . B-21
Auditors . . . . . . . . . . . . . . . . . . . . . . . . . B-23
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . B-23
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . B-23
Description of Shares . . . . . . . . . . . . . . . . . . B-23
Vote of a Majority of the Outstanding Shares . . . . . . . B-24
Additional General Tax Information . . . . . . . . . . . . B-24
Calculation of Total Return . . . . . . . . . . . . . . . B-28
Performance Comparisons . . . . . . . . . . . . . . . . . B-29
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . B-30
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
- i -
<PAGE> 42
STATEMENT OF ADDITIONAL INFORMATION
THE SESSIONS GROUP
The Sessions Group (the "Group") is an open-end management investment
company which currently offers seventeen separate investment portfolios. This
Statement of Additional Information deals with one of those portfolios, the
Fund, which is considered to be a diversified portfolio.
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus. Capitalized
terms not defined herein are defined in the Prospectus. No investment in
Shares of the Fund should be made without first reading the Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
Additional Information on Portfolio Instruments
The following policies supplement the investment objective and
policies of the Fund as set forth in the Prospectus.
Bank Obligations. The Fund may invest in bank obligations such as
bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange
typically 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 on maturity.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks having, at the time of investment, capital, surplus,
and undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements).
Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of
deposit and demand and time deposits will be those of domestic and foreign
banks and savings and loan associations, if (a) at the time of investment the
depository institution has capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of its most recently published financial
statements), or (b) the principal amount of the instrument is insured in full
by the Federal Deposit Insurance Corporation.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Issues of commercial paper normally have
maturities of less than nine months and fixed rates of return.
<PAGE> 43
The Fund will purchase commercial paper consisting of issues rated at
the time of purchase by one or more appropriate nationally recognized
statistical rating organizations ("NRSRO") (e.g., Standard & Poor's Corporation
and Moody's Investors Service, Inc.) in one of the two highest rating
categories for short-term debt obligations. The Fund may also invest in
commercial paper that is not rated but that is determined by the Adviser to be
of comparable quality to instruments that are so rated by an NRSRO that is
neither controlling, controlled by, or under common control with the issuer of,
or any issuer, guarantor, or provider of credit support for, the instruments.
For a description of the rating symbols of the NRSROs, see the Appendix.
Foreign Investment. Investments in securities issued by foreign
issuers, including ADRs, may subject the Fund to investment risks that differ
in some respects from those related to investment in obligations of U.S.
domestic issuers. Such risks include future adverse political and economic
developments, possible seizure, nationalization, or expropriation of foreign
investments, less stringent disclosure requirements, the possible establishment
of exchange controls or taxation at the source, or the adoption of other
foreign governmental restrictions. The Fund will acquire such securities only
when the Adviser believes the risks associated with such investments are
minimal.
U.S. Government Obligations. The Fund may invest in obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Obligations of certain agencies and instrumentalities of
the U.S. Government are supported by the full faith and credit of the U.S.
Treasury; others are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; and still others are supported
only by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to U.S. Government-sponsored
agencies or instrumentalities if it is not obligated to do so by law.
The Fund may also invest in the following types of U.S. Treasury
securities: direct obligations issued by the U.S. Treasury including bills,
notes and bonds which differ from each other only in interest rates, maturities
and times of issuance; U.S. Treasury securities that have been stripped of
their unmatured interest coupons (which typically provide for interest payments
semi-annually); interest coupons that have been stripped from such U.S.
Treasury securities; receipts and certificates for such stripped debt
obligations and stripped coupons (collectively, "Stripped Treasury
Securities"); and in repurchase agreements collateralized by such securities.
Stripped Treasury Securities will include (1) coupons that have been stripped
from U.S. Treasury bonds, which may be held through the Federal Reserve Bank's
book-
B-2
<PAGE> 44
entry system called "Separate Trading of Registered Interest and Principal of
Securities" ("STRIPS") or through a program entitled "Coupon Under Book-Entry
Safekeeping" ("CUBES").
Treasury bills have maturities of one year or less; Treasury notes
have maturities of one to ten years and Treasury bonds generally have
maturities of greater than ten years. Stripped Treasury Securities are sold at
a deep discount because the buyer of those securities receives only the right
to receive a future fixed payment (representing principal or interest) on the
security and does not receive any rights to periodic interest payments on the
security.
Real Estate Investment Trust. The Fund may invest in equity REITs.
REITs pool investors funds for investment primarily in commercial real estate
properties. Investment in REITs may subject the Fund to certain risks. REITs
may be affected by changes in the value of the underlying property owned by the
trust. REITs are dependent upon specialized management skill, may not be
diversified and are subject to the risk of financing projects. REITs are also
subject to heavy cash flow dependency, defaults by borrowers, self liquidation
and the possibility of failing to qualify for the beneficial tax treatment
available to REITs under the Internal Revenue Code and to maintain its
exemption from the 1940 Act. As a shareholder in a REIT, the Fund would bear,
along with other shareholders, its pro rata portion of the REIT's operating
expenses. These expenses would be in addition to the advisory and other
expenses the Fund bears directly in connection with its own operations.
Restricted Securities. Securities in which the Fund may invest
include securities issued by corporations without registration under the
Securities Act of 1933, as amended (the "1933 Act"), such as securities issued
in reliance on the so-called "private placement" exemption from registration
which is afforded by Section 4(2) of the 1933 Act ("Section 4(2) securities").
Section 4(2) securities are restricted as to disposition under the Federal
securities laws, and generally are sold to institutional investors such as the
Fund who agree that they are purchasing the securities for investment and not
with a view to public distribution. Any resale must also generally be made in
an exempt transaction. Section 4(2) securities are normally resold to other
institutional investors through or with the assistance of the issuer or
investment dealers who make a market in such Section 4(2) securities, thus
providing liquidity. Any such restricted securities will be considered to be
illiquid for purposes of the Fund's limitations on investments in illiquid
securities unless, pursuant to procedures adopted by the Board of Trustees of
the Group, the Adviser has determined such securities to be liquid because such
securities are eligible for resale under Rule 144A under the 1933 Act and are
readily saleable. The Fund will limit its investment in Section 4(2)
securities to not more than 5% of its net assets.
When-Issued Securities. As discussed in the Prospectus, the Fund may
purchase 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 securities on a "when-issued" basis, the Fund's custodian will set
aside cash or liquid portfolio securities equal to the amount of the commitment
in a separate account. Normally, the Fund's custodian will set aside portfolio
securities to satisfy the purchase commitment, and in such a case, the Fund may
be required subsequently to place additional assets in the separate account in
order to assure 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
B-3
<PAGE> 45
aside cash. In addition, because the Fund will set aside cash or liquid
portfolio securities to satisfy its purchase commitments in the manner
described above, the Fund's liquidity and the ability of the Adviser to manage
it might be affected in the event its commitments to purchase "when-issued"
securities ever exceeded 25% of its total assets. Under normal market
conditions, however, the Fund's commitment to purchase "when-issued" or
"delayed-delivery" securities will not exceed 25% of its total assets.
When the Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in
the Fund's incurring a loss or missing the opportunity to obtain a price
considered to be advantageous. The Fund will engage in "when-issued" delivery
transactions only for the purpose of acquiring portfolio securities consistent
with the Fund's investment objective and policies and not for investment
leverage.
Repurchase Agreements. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund
would acquire securities from banks and registered broker-dealers which the
Adviser deems creditworthy under guidelines approved by the Group's Board of
Trustees, subject to the seller's agreement to repurchase such securities at a
mutually agreed-upon date and price. The repurchase price would generally
equal 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 portfolio securities. The seller under a repurchase agreement will
be required to maintain continually the value of collateral held pursuant to
the agreement at not less than the repurchase price (including accrued
interest). This requirement will be continually monitored by the Adviser. If
the seller were to default on its repurchase obligation or become insolvent,
the Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price under the
agreement, or to the extent that the disposition of such securities by the Fund
were delayed pending court action. Additionally, there is no controlling legal
precedent confirming that the Fund would be entitled, as against a claim by
such seller or its receiver or trustee in bankruptcy, to retain the underlying
securities. Securities subject to repurchase agreements will be held by the
Fund's custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system.
Reverse Repurchase Agreements. As discussed in the Prospectus, the
Fund may borrow funds by entering into reverse repurchase agreements in
accordance with its investment restrictions. Pursuant to such agreements, the
Fund would sell portfolio securities to financial institutions such as banks
and broker-dealers, and agree to repurchase the securities at a
B-4
<PAGE> 46
mutually agreed-upon date and price. At the time the Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
assets such as U.S. Government securities or other liquid, high grade debt
securities consistent with the Fund's investment restrictions having a value
equal to the repurchase price (including accrued interest), and will
subsequently continually monitor the account to ensure that such equivalent
value is maintained at all times. Reverse repurchase agreements involve the
risk that the market value of the securities sold by the Fund may decline below
the price at which the Fund is obligated to repurchase the securities. Reverse
repurchase agreements are considered to be borrowings by the Fund under the
1940 Act and therefore a form of leveraging.
Hedging Transactions. Hedging transactions, including the use of
options and futures, in which the Fund is authorized to engage as described in
the Prospectus, have risks associated with them including possible default by
the other party to the transaction, illiquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such hedging transactions could result in losses greater than if they
had not been used.
Use of put and call options may result in losses to the Fund, force
the sale or purchase of portfolio securities at inopportune times or for prices
higher than (in the case of put options) or lower than (in the case of call
options) current market values, limit the amount of appreciation the Fund can
realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of options and futures transactions entails certain
other risks. In particular, the variable degree of correlation between price
movements of futures contracts and price movements in the related portfolio
position of the Fund create the possibility that losses on the hedging
instrument may be greater than gains in the value of the Fund's position. In
addition, futures and options markets may not be liquid in all circumstances.
As a result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use
of futures and options transactions for hedging should tend to minimize the
risk of loss due to a decline in the value of the hedged position, at the same
time they tend to limit any potential gain which might result from an increase
in value of such position. Finally, the daily variation margin requirements
for futures contracts would create a greater ongoing potential financial risk
than would purchases of options, where the exposure is limited to the cost of
the initial premium. Losses resulting from the use of hedging transactions
would reduce net asset value, and possible income, and such losses can be
greater than if the hedging transactions had not been utilized.
B-5
<PAGE> 47
General Characteristics of Options. Put options and call options
typically have similar structural characteristics and operational mechanics
regardless of the underlying instrument on which they are purchased or sold.
Thus, the following general discussion relates to each of the particular types
of options discussed in greater detail below. In addition, many hedging
transactions involving options require segregation of the Fund's assets in
special accounts, as described further below.
With certain exceptions, exchange-listed options generally settle by
physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options are cash settled
for the net amount, if any, by which the option is "in-the- money" (i.e., where
the value of the underlying instrument exceeds, in the case of a call option,
or is less than, in the case of a put option, the exercise price of the option)
at the time the option is exercised. Frequently, rather than taking or making
delivery of the underlying instrument through the process of exercising the
option, listed options are closed by entering into offsetting purchase or sale
transactions that do not result in ownership of the new option. The Fund's
ability to close out its position as a purchaser or seller of a put or call
option is dependent in part, upon the liquidity of the option market. In
addition, the hours of trading for listed options may not coincide with the
hours during which the underlying financial instruments are traded. To the
extent that the options markets close before the markets for the underlying
financial instruments, significant price and rate movements can take place in
the underlying markets that cannot be reflected in the option markets.
Exchange-listed options generally have standardized terms and
performance mechanics unlike over-the-counter traded options. The Fund
currently expects to purchase and sell only exchange traded options.
Exchange-traded options generally are guaranteed by the clearing agency which
is the issuer or counterparty to such options. This guarantee usually is
supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with options purchased on an exchange.
All options written by the Fund must be "covered" (i.e., the Fund must
own the securities or futures contract subject to a call option or must meet
the asset segregation requirements) as long as the call is outstanding. Even
though the Fund will receive the option premium to help protect it against
loss, a call option written by the Fund exposes the Fund during the term of the
option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or instrument and may require the Fund to hold
a security or instrument which it might
B-6
<PAGE> 48
otherwise have sold. With respect to put options written by the Fund, the Fund
will place high quality liquid debt securities in a segregated account to cover
its obligations under such put option and will monitor the value of the assets
in such account and its obligations under the put option daily.
Futures Contracts. As discussed in the Prospectus, the Fund may enter
into futures contracts. This investment technique is designed primarily to act
as a substitute for a position in the underlying security and to hedge against
anticipated future changes in market conditions which otherwise might adversely
affect the value of securities which the Fund holds or intends to purchase.
For example, when market values of portfolio securities are expected to fall,
the Fund can seek through the sale of futures contracts to offset a decline in
the value of its portfolio securities. When market values are expected to
rise, the Fund, through the purchase of such contracts, can attempt to secure
better prices for the Fund than might later be available in the market when it
effects anticipated purchases.
The acquisition of put and call options on futures contracts will,
respectively, give the Fund the right (but not the obligation), for a specified
price, to sell or to purchase the underlying futures contract, upon exercise of
the option, at any time during the option period.
Futures transactions involve brokerage costs and require the Fund to
segregate liquid assets, such as cash, U.S. Government securities or other
liquid high grade debt obligations, to cover its performance under such
contracts. The Fund may lose the expected benefit of futures transactions if
securities prices or foreign exchange rates move in an unanticipated manner.
Such unanticipated changes may also result in poorer overall performance than
if the Fund had not entered into any futures transactions. In addition, the
value of the Fund's futures positions may not prove to be perfectly or even
highly correlated with the value of its portfolio securities, limiting the
Fund's ability to hedge effectively against market risk and giving rise to
additional risks. There is no assurance of liquidity in the secondary market
for purposes of closing out futures positions.
Regulatory Restrictions. To the extent required to comply with
Securities and Exchange Commission Release No. IC-10666, when purchasing a
futures contract or writing a put option, the Fund will maintain in a
segregated account cash or liquid high-grade securities equal to the value of
such contracts.
To the extent required to comply with Commodity Futures Trading
Commission Regulation 4.5 and thereby avoid being classified as a "commodity
pool operator," the Fund will not enter into a futures contract or purchase an
option thereon if
B-7
<PAGE> 49
immediately thereafter the initial margin deposits for futures contracts held
by the Fund plus premiums paid by it for open options on futures would exceed
5% of the liquidation value of the Fund's total assets after taking into
account unrealized profits and unrealized losses on any contracts entered into.
The Fund will not engage in transactions in futures contracts or options
thereon for speculation, but only to attempt to hedge against changes in market
conditions affecting the values of securities which the Fund holds or intends
to purchase. When futures contracts or options thereon are purchased to
protect against a price increase on securities intended to be purchased later,
it is anticipated that at least 25% of such intended purchases will be
completed.
Securities of Other Investment Companies. The Fund may invest in
securities issued by other investment companies. The Fund currently intends to
limit its investments so that, as determined immediately after a securities
purchase is made: (a) not more than 5% of the value of its total assets will
be invested in the securities of any one investment company; (b) not more than
10% of the value of its total assets will be invested in the aggregate in
securities of investment companies as a group; and (c) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Fund. As a shareholder of another investment company, the Fund would bear,
along with other shareholders, its pro rata portion of that company's expenses,
including advisory fees. These expenses would be in addition to the advisory
and other expenses that the Fund bears directly in connection with its own
operations. Investment companies in which the Fund may invest may also impose
a sales or distribution charge in connection with the purchase or redemption of
their shares and other types of commissions or charges. Such charges will be
payable by the Fund and, therefore, will be borne directly by shareholders of
the Fund.
Investment Restrictions
The Fund's investment objective is a non-fundamental policy and may be
changed without a vote of the shareholders of the Fund. In addition to the
fundamental investment policies listed in the Prospectus, the following
investment restrictions may be changed only by a vote of the majority of the
outstanding Shares of the Fund (as defined under "ADDITIONAL INFORMATION - Vote
of a Majority of the Outstanding Shares").
In addition to the investment restrictions set forth in the
Prospectus, the Fund may not:
1. Purchase securities on margin, except for use of short-term
credit necessary for clearance of purchases of portfolio securities and except
as may be necessary to make margin payments in connection with derivative
securities transactions;
B-8
<PAGE> 50
2. Underwrite the securities issued by other persons, except to
the extent that the Fund may be deemed to be an underwriter under certain
securities laws in the disposition of "restricted securities;"
3. Purchase or sell real estate (although investments in
marketable securities of companies engaged in such activities and securities
secured by real estate or interests therein are not prohibited by this
restriction); and
4. Purchase or sell commodities or commodities contracts, except
to the extent disclosed in the current Prospectus of the Fund.
The following additional investment restrictions may be changed
without the vote of a majority of the outstanding Shares of the Fund. The Fund
may not:
1. Purchase securities of other investment companies, except (a)
in connection with a merger, consolidation, acquisition or reorganization, and
(b) to the extent permitted by the 1940 Act, or pursuant to any exemptions
therefrom;
2. Engage in any short sales;
3. Purchase or retain the securities of an issuer if the officers
or trustees of the Group, or the officers or directors of the Adviser, who each
owns beneficially more than .5% of the outstanding securities of such issuer,
together own beneficially more than 5% of such securities; and
4. Mortgage or hypothecate the Fund's assets in excess of
one-third of the Fund's total assets.
If any percentage restriction or requirement described above is
satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in asset value will not constitute a
violation of such restriction or requirement. However, should a change in net
asset value or other external events cause the Fund's investments in illiquid
securities, repurchase agreements with maturities in excess of seven days and
other instruments in the Fund which are not readily marketable to exceed the
limit set forth in the Fund's Prospectus for its investment in illiquid
securities, the Fund will act to cause the aggregate amount of such securities
to come within such limit as soon as reasonably practicable. In such an event,
however, the Fund would not be required to liquidate any portfolio securities
where the Fund would suffer a loss on the sale of such securities.
B-9
<PAGE> 51
Portfolio Turnover
The portfolio turnover rate for the Fund is calculated by dividing the
lesser of the Fund's purchases or sales of portfolio securities for the year by
the monthly average value of the portfolio securities. The Commission requires
that the calculation exclude all securities whose remaining maturities at the
time of acquisition were one year or less.
The portfolio turnover rate for the Fund for its first fiscal period
ending June 30, 1997, is estimated to be less than 50%. The portfolio turnover
rate for the Fund may vary greatly from year to year as well as within a
particular year, and may also be affected by cash requirements for redemptions
of Shares. High portfolio turnover rates will generally result in higher
transaction costs, including brokerage commissions, to the Fund and may result
in additional tax consequences to the Fund's Shareholders. Portfolio turnover
will not be a limiting factor in making investment decisions.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund are sold on a continuous basis by BISYS, and BISYS
has agreed to use appropriate efforts to solicit all purchase orders. In
addition to purchasing Shares directly from BISYS, Shares may be purchased
through procedures established by BISYS in connection with the requirements of
accounts at the Adviser or the Adviser's affiliated entities (collectively,
"Entities"). Customers purchasing Shares of the Fund may include officers,
directors, or employees of the Adviser or the Entities.
The Group may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the Exchange is
restricted by applicable rules and regulations of the Commission, (b) the
Exchange is closed for other than customary weekend and holiday closings, (c)
the Commission has by order permitted such suspension, or (d) an emergency
exists as a result of which (i) disposal by the Group of securities owned by it
is not reasonably practical, or (ii) it is not reasonably practical for the
Group to determine the fair value of its net assets.
MANAGEMENT OF THE GROUP
Trustees and Officers
Overall responsibility for management of the Group rests with its
Board of Trustees. The Trustees elect the officers of the Group to supervise
actively its day-to-day operations.
B-10
<PAGE> 52
The names of the Trustees and officers of the Group, their addresses,
and principal occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Position(s) Held With Principal Occupation
Name, Age and Address the Group During Past 5 Years
- --------------------- ----------- --------------------
<S> <C> <C>
Walter B. Grimm* Chairman, From June, 1992 to present, employee of
3435 Stelzer Road President and Trustee BISYS Fund Services Limited Partnership
Columbus, Ohio 43219 (formerly The Winsbury Company); from
Age: 51 July, 1981 to June, 1992, President of
Leigh Investments Consulting
(investment firm).
Nancy E. Converse* Trustee and Assistant Since July, 1990, employee of BISYS
3435 Stelzer Road Secretary Fund Services Limited Partnership
Columbus, Ohio 43219 (formerly The Winsbury Company) or
Age: 47 BISYS Fund Services Ohio, Inc.
(formerly The Winsbury Service
Corporation).
Maurice G. Stark Trustee Consultant; from 1979 to December,
7662 Cloister Drive 1994, Vice President-Finance and Chief
Columbus, Ohio 43235 Financial Officer, Battelle Memorial
Age: 61 Institute (scientific research and
development service corporation).
James H. Woodward, Ph.D. Trustee Since July 1991, Chancellor of The
The University of North University of North Carolina at
Carolina at Charlotte Charlotte.
Charlotte, NC 28223
Age: 56
Chalmers P. Wylie Trustee From April, 1993 to present, of Counsel
754 Stonewood Court with Emens, Kegler, Brown, Hill &
Columbus, Ohio 43235 Ritter (law firm); from January, 1993
Age: 75 to present, Adjunct Professor at The
Ohio State University; from January,
1967 to January, 1993, Member of the
United States House of Representatives
for the 15th District.
J. David Huber Vice President Since January, 1996, President of BISYS
3435 Stelzer Road Fund Services Limited Partnership; from
Columbus, Ohio 43219 June, 1987 to December, 1995, employee
Age: 50 of BISYS Fund Services Limited
Partnership (formerly The Winsbury
Company); from September, 1988 to
present, Vice President of BISYS Fund
Services Ohio, Inc. (formerly
</TABLE>
B-11
<PAGE> 53
<TABLE>
<S> <C> <C>
The Winsbury Service
Corporation).
William J. Tomko Vice President From April, 1987 to present, employee
3435 Stelzer Road of BISYS Fund Services Limited
Columbus, Ohio 43219 Partnership (formerly The Winsbury
Age: 37 Company).
Stephen G. Mintos Treasurer From January, 1987 to present, employee
3435 Stelzer Road of BISYS Fund Services Limited
Columbus, Ohio 43219 Partnership (formerly The Winsbury
Age: 42 Company).
George Stevens Secretary From September, 1996 to present, employee
3435 Stelzer Road of BISYS Fund Services Limited
Columbus, Ohio 43219 Partnership; from September, 1995 to
Age: 46 August, 1996, consultant on bank
investment products and activities; from
June, 1980 to September, 1995, employee
of AmSouth Bank.
Alaina V. Metz Assistant From June, 1995 to present, employee of
3435 Stelzer Road Secretary BISYS Fund Services Limited
Columbus, Ohio 43219 Partnership; prior to June, 1995,
Age: 29 supervisor at Alliance Capital
Management, L.P. (investment management
firm).
- -------------------
</TABLE>
*Mr. Grimm and Ms. Converse are each considered to be an "interested
person" of the Group as defined in the 1940 Act.
As of the date of this Statement of Additional Information, the
Group's officers and trustees, as a group, own less than 1% of the Fund's
Shares.
No officer or employee of BISYS or BISYS Fund Services, Inc. receives
any compensation from the Group for acting as trustee of the Group. The
officers of the Group receive no compensation directly from the Group for
performing the duties of their offices. BISYS receives fees from the Fund for
acting as Administrator and may receive fees pursuant to the Administrative
Services Plan described below. BISYS Fund Services, Inc. receives fees from
the Fund for acting as transfer agent and for providing certain fund accounting
services. Messrs. Grimm, Huber, Mintos, Tomko and Young, Ms. Converse and Ms.
Metz are employees of BISYS.
The following table sets forth information regarding all compensation
paid by the Group to its Trustees for their services as trustees during the
fiscal year ended June 30, 1996. The Group has no pension or retirement plans.
B-12
<PAGE> 54
COMPENSATION TABLE
<TABLE>
<CAPTION>
Aggregate Total Compensation
Name and Position Compensation From the Group
With the Group From the Group and the Fund Complex*
- ----------------- ---------------- ---------------------
<S> <C> <C>
Walter B. Grimm $0 $0
Trustee
Nancy E. Converse $0 $0
Trustee
Maurice G. Stark $7,772.17 $7,772.17
Trustee
Michael M. VanBuskirk(1) $7,772.17 $7,772.17
Trustee
James H. Woodward, Ph.D. $0 $0
Trustee
Chalmers P. Wylie $7,772.17 $7,772.17
Trustee
</TABLE>
___________________
*For purposes of this Table, Fund Complex means one or more mutual
funds, including the Funds, which have a common investment adviser or
affiliated investment advisers or which hold themselves out to the public as
being related.
(1) Mr. VanBuskirk resigned his position as a trustee of the Group
effective May 3, 1996.
Ms. Converse and Dr. Woodward were elected trustees of the Group on
June 28, 1996.
Investment Adviser
Investment advisory and management services are provided to the Fund
by Martindale, Andres & Company, Inc. (the "Adviser"), pursuant to an
Investment Advisory Agreement dated as of July 9, 1996, as amended as of
January ___, 1997. Under the Investment Advisory Agreement, the Adviser has
agreed to provide investment advisory services as described in the Prospectus.
For the services provided and expenses assumed pursuant to the Investment
Advisory Agreement, the Fund pays the Adviser a fee, computed daily and paid
monthly, at the annual rate of one percent (1.00%) of the average daily net
assets of the Fund. Pursuant to such Investment Advisory Agreement, the
Adviser also provides investment advisory and management services to four other
funds of the Group: The KeyPremier Prime Money Market Fund (the "Money Market
Fund"), The KeyPremier Pennsylvania Municipal Bond Fund (the "Pennsylvania Bond
Fund"), The KeyPremier Established Growth Fund (the "Growth Fund") and The
KeyPremier Intermediate Term Income Fund (the "Income Fund"). The Money Market
Fund pays the Adviser a fee, computed daily and paid monthly, at the annual
rate of forty one-hundredths
B-13
<PAGE> 55
of one percent (.40%) of the average daily net assets of the Money Market Fund.
The Pennsylvania Bond Fund and the Income Fund each pay the Adviser a fee,
computed daily and paid monthly, at the annual rate of sixty one-hundredths of
one percent (.60%) of the average daily net assets of such Fund. The Growth
Fund pays the Adviser a fee, computed daily and paid monthly, at the annual
rate of seventy-five one- hundredths of one percent (.75%) of the average daily
net assets of the Growth Fund. The Adviser may from time to time voluntarily
reduce all or a portion of its advisory fee with respect to a Fund to increase
the net income of that Fund available for distribution as dividends.
For the year ended June 30, 1996, the Adviser had not received any
compensation under the Advisory Agreement with respect to the Fund since the
Fund had not yet commenced operations.
Unless sooner terminated, the Investment Advisory Agreement will
continue in effect with respect to the Fund until July 9, 1998, and from year
to year thereafter, for successive annual periods ending on July 9th, if, as to
the Fund, such continuance is approved at least annually by the Group's Board
of Trustees or by vote of a majority of the outstanding Shares of the Fund (as
defined under "GENERAL INFORMATION - Miscellaneous" in the Prospectus), and a
majority of the Trustees who are not parties to the Investment Advisory
Agreement or interested persons (as defined in the 1940 Act) of any party to
the Investment Advisory Agreement by votes cast in person at a meeting called
for such purpose. The Investment Advisory Agreement is terminable as to the
Fund at any time on 60 days' written notice without penalty by the Trustees, by
vote of a majority of the outstanding Shares of the Fund, or by the Adviser.
The Investment Advisory Agreement also terminates automatically in the event of
any assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that the Adviser 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 the Investment Advisory
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 Adviser in the
performance of its duties, or from reckless disregard by the Adviser of its
duties and obligations thereunder.
The Adviser has agreed that the Fund and the Group may use the name
"KeyPremier" on a royalty-free basis and the Adviser has reserved to itself the
right to grant the non-exclusive right to use the name "KeyPremier" to any
other person. At such time as the Investment Advisory Agreement is no longer
in effect, the Adviser may require the Fund to cease using the name
"KeyPremier."
B-14
<PAGE> 56
Portfolio Transactions
Pursuant to the Investment Advisory Agreement, the Adviser determines,
subject to the general supervision of the Board of Trustees of the Group and in
accordance with the Fund's investment objective and restrictions, which
securities are to be purchased and sold by the Fund, and which brokers and
dealers are to be eligible to execute the Fund's portfolio transactions.
Purchases and sales of portfolio securities with respect to the Fund usually
are effected on a national securities exchange or in the over-the-counter
market. Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. Transactions in the over-the-counter market are
generally principal transactions with dealers. With respect to the
over-the-counter market, the Group, where possible, will deal directly with
dealers who make a market in the securities involved except in those
circumstances where better price and execution are available elsewhere.
Allocation of transactions, including their frequency, to various
brokers and dealers is determined by the Adviser in its best judgment and in a
manner deemed fair and reasonable to Shareholders. The primary consideration
is prompt execution of orders in an effective manner at the most favorable
price. Subject to this consideration, brokers and dealers who provide
supplemental investment research to the Adviser may receive orders for
transactions on behalf of the Fund. The Adviser is authorized to pay a
broker-dealer who provides such brokerage and research services a commission
for executing the Fund's brokerage transactions which is in excess of the
amount of commission another broker would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker viewed in terms of that particular
transaction or in terms of all of the accounts over which it exercises
investment discretion. Any such research and other statistical and factual
information provided by brokers to the Fund or to the Adviser is considered to
be in addition to and not in lieu of services required to be performed by the
Adviser under its agreement regarding management of the Fund. The cost, value
and specific application of such information are indeterminable and hence are
not practicably allocable among the Fund and other clients of the Adviser who
may indirectly benefit from the availability of such information. Similarly,
the Fund may indirectly benefit from information made available as a result of
transactions effected for such other clients. Under the Investment Advisory
Agreement, the Adviser is permitted to pay higher brokerage commissions for
brokerage and research services in accordance with Section 28(e) of the
Securities Exchange Act of 1934. In the event the Adviser does follow such a
practice, it
B-15
<PAGE> 57
will do so on a basis which is fair and equitable to the Group and the Fund.
While the Adviser generally seeks competitive commissions, the Group
may not necessarily pay the lowest commission available on each brokerage
transaction, for reasons discussed above. Information so received is in
addition to and not in lieu of services required to be performed by the Adviser
and does not reduce the advisory fees payable to the Adviser by the Fund. Such
information may be useful to the Adviser in serving both the Fund and other
clients and, conversely, supplemental information obtained by the placement of
business of other clients may be useful to the Adviser in carrying out its
obligations to the Fund.
Except as otherwise disclosed to the Shareholders of the Fund and as
permitted by applicable laws, rules and regulations, the Group will not, on
behalf of the Fund, execute portfolio transactions through, acquire portfolio
securities issued by, make savings deposits in, or enter into repurchase or
reverse repurchase agreements with the Adviser, Keystone, BISYS, or their
affiliates, and will not give preference to the Adviser's or Keystone's
correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.
Investment decisions for the Fund are made independently from those
for other funds of the Group or any other investment company or account managed
by the Adviser. Any such other fund, investment company or account may also
invest in the same securities as the Group on behalf of the Fund. When a
purchase or sale of the same security is made at substantially the same time on
behalf of the Fund and another fund of the Group, investment company or
account, the transaction will be averaged as to price and available investments
will be allocated as to amount in a manner which the Adviser believes to be
equitable to the Fund and such other fund, investment company or account. In
some instances, this investment procedure may adversely affect the price paid
or received by the Fund or the size of the position obtained by the Fund. To
the extent permitted by law, the Adviser may aggregate the securities to be
sold or purchased for the Fund with those to be sold or purchased for other
funds of the Group, investment companies or accounts in order to obtain best
execution. As provided by the Investment Advisory Agreement, in making
investment recommendations for the Fund, the Adviser will not inquire or take
into consideration whether an issuer of securities proposed for purchase or
sale by the Group is a customer of the Adviser, its parent or its subsidiaries
or affiliates and, in dealing with its customers, the Adviser, its parent,
subsidiaries, and affiliates will not inquire or take into consideration
whether securities of such customers are held by the Fund or any other fund of
the Group.
B-16
<PAGE> 58
Glass-Steagall Act
In 1971, the United States Supreme Court held in Investment Company
Institute v. Camp that the Federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a mutual fund for
the collective investment of managing agency accounts. Subsequently, the Board
of Governors of the Federal Reserve System (the "Board") issued a regulation
and interpretation to the effect that the Glass-Steagall Act and such decision:
(a) forbid a bank holding company registered under the Federal Bank Holding
Company Act of 1956 (the "Holding Company Act") or any non-bank affiliate
thereof from sponsoring, organizing, or controlling a registered, open-end
investment company continuously engaged in the issuance of its shares, but (b)
do not prohibit such a holding company or affiliate from acting as investment
adviser, transfer agent, and custodian to such an investment company. In 1981,
the United States Supreme Court held in Board of Governors of the Federal
Reserve System v. Investment Company Institute that the Board did not exceed
its authority under the Holding Company Act when it adopted its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to registered closed-end investment companies.
In the Board of Governors case, the Supreme Court also stated that if a
national bank complied with the restrictions imposed by the Board in its
regulation and interpretation authorizing bank holding companies and their
non-bank affiliates to act as investment advisers to investment companies, a
national bank performing investment advisory services for an investment company
would not violate the Glass-Steagall Act.
The Adviser believes that it possesses the legal authority to perform
the services for the Fund contemplated by the Prospectus, this Statement of
Additional Information and the Investment Advisory Agreement without violation
of applicable statutes and regulations. Future changes in either Federal or
state statutes and regulations relating to the permissible activities of banks
or bank holding companies and the subsidiaries or affiliates of those entities,
as well as further judicial or administrative decisions or interpretations of
present and future statutes and regulations, could prevent or restrict the
Adviser from continuing to perform such services for the Group. In addition,
current state securities laws on the issue of the registration of banks as
brokers or dealers may differ from the interpretation of federal law, and banks
and financial institutions may be required to register as dealers pursuant to
the laws of a specific state. Depending upon the nature of any changes in the
services which could be provided by the Adviser, the Board of Trustees of the
Group would review the Group's relationship with the Adviser and consider
taking all action necessary in the circumstances.
B-17
<PAGE> 59
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of the Adviser and/or the Adviser's
affiliated and correspondent banks in connection with Customer purchases of
Shares of the Fund, those banks might be required to alter materially or
discontinue the services offered by them to Customers. It is not anticipated,
however, that any change in the Group's method of operations would affect its
net asset value per share or result in financial losses to any Customer.
Administrator
BISYS serves as administrator (the "Administrator") to the Fund
pursuant to a Management and Administration Agreement dated July 9, 1996, as
amended as of January __, 1997 (the "Administration Agreement"). The
Administrator assists in supervising all operations of the Fund (other than
those performed by the Adviser under the Investment Advisory Agreement, by The
Bank of New York under the Custody Agreement and by BISYS Fund Services, Inc.
under the Transfer Agency Agreement and Fund Accounting Agreement). The
Administrator is a broker-dealer registered with the Commission, and is a
member of the National Association of Securities Dealers, Inc. The
Administrator provides financial services to institutional clients.
Under the Administration Agreement, the Administrator has agreed to
maintain office facilities; furnish statistical and research data, clerical,
certain bookkeeping services and stationery and office supplies; prepare the
periodic reports to the Commission on Form N-SAR or any replacement forms
therefor; compile data for, prepare for execution by the Fund and file all of
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
Group's counsel; assist to the extent requested by the Group with the Group's
preparation of its Annual and Semi-Annual Reports to Shareholders and its
Registration Statement (on Form N-1A or any replacement therefor); compile data
for, prepare and file timely Notices to the Commission required pursuant to
Rule 24f-2 under the 1940 Act; keep and maintain the financial accounts and
records of the Fund, including calculation of daily expense accruals; and
generally assist in all aspects of the Fund's operations other than those
performed by the Adviser under the Investment Advisory Agreement, by The Bank
of New York under the Custody Agreement and by BISYS Fund Services, Inc. under
the Transfer Agency Agreement and Fund Accounting Agreement. Under the
Administration Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
The Administrator receives a fee from the Fund for its services as
Administrator and expenses assumed pursuant to the Administration Agreement,
equal to a fee, calculated daily and paid
B-18
<PAGE> 60
periodically, at the annual rate equal to eleven and one-half one-hundredths of
one percent (.115%) of the Fund's average daily net assets.
For the fiscal year ended June 30, 1996, the Administrator had not
received any compensation under the Administration Agreement with respect to
the Fund since the Fund had not yet commenced operations.
Unless sooner terminated as provided therein, the Administration
Agreement has an initial term expiring on July 9, 1999, and thereafter shall be
renewed automatically for successive one-year terms, unless written notice not
to renew is given by the non-renewing party to the other party at least 60 days
prior to the expiration of the then-current term. The Administration Agreement
is terminable with respect to the Fund upon mutual agreement of the parties to
the Administration Agreement; through a failure to renew at the end of a
one-year term; upon 180 days' written notice by the Group after the initial
term but only in connection with the reorganization of the Fund into another
registered management investment company; and for cause (as defined in the
Administration Agreement) by the party alleging cause, on not less than 60
days' notice by the Group's Board of Trustees or by the Administrator.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered by
the Fund in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or
negligence in the performance of its duties, or from the reckless disregard by
the Administrator of its obligations and duties thereunder.
Distributor
BISYS serves as agent for the Fund in the distribution of its Shares
pursuant to a Distribution Agreement dated July 9, 1996, as amended as of
January __, 1997 (the "Distribution Agreement"). Unless otherwise terminated,
the Distribution Agreement has an initial term expiring on July 9, 1998, and
thereafter shall be renewed automatically for successive annual periods ending
July 9th if approved at least annually (i) by the Group's Board of Trustees or
by the vote of a majority of the outstanding Shares of the Fund, and (ii) by
the vote of a majority of the Trustees of the Group who are not parties to the
Distribution Agreement or interested persons (as defined in the 1940 Act) of
any party to the Distribution Agreement, cast in person at a meeting called for
the purpose of voting on such approval. The Distribution Agreement also
terminates automatically in the event of any assignment, as defined in the 1940
Act.
B-19
<PAGE> 61
In its capacity as Distributor, BISYS solicits orders for the sale of
Shares, advertises and pays the costs of advertising, office space and the
personnel involved in such activities. BISYS receives no compensation under
the Distribution Agreement with the Group but retain all or a portion of any
sales charge imposed upon a purchase of the Shares.
Administrative Services Plan
As described in the Prospectus, the Group has also adopted an
Administrative Services Plan (the "Services Plan") under which the Fund is
authorized to pay certain financial institutions, including the Adviser, its
affiliates and their correspondent banks, and BISYS (a "Service Organization"),
to provide certain ministerial, record keeping, and administrative support
services to their customers who own of record or beneficially Shares in the
Fund. Payments to such Service Organizations are made pursuant to Servicing
Agreements between the Group and the Service Organization. The Services Plan
authorizes the Fund to make payments to Service Organizations in an amount, on
an annual basis, of up to 0.25% of the average daily net asset value of the
Fund. The Services Plan has been approved by the Board of Trustees of the
Group, including a majority of the Trustees who are not interested persons of
the Group (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Services Plan or in any Servicing
Agreements thereunder (the "Disinterested Trustees"). The Services Plan may be
terminated as to the Fund by a vote of a majority of the Disinterested
Trustees. The Trustees review quarterly a written report of the amounts
expended pursuant to the Services Plan and the purposes for which such
expenditures were made. The Services Plan may be amended by a vote of the
Trustees, provided that any material amendments also require the vote of a
majority of the Disinterested Trustees. For so long as the Services Plan is in
effect, selection and nomination of those Disinterested Trustees shall be
committed to the discretion of the Group's Disinterested Trustees. All
Servicing Agreements may be terminated at any time without the payment of any
penalty by a vote of a majority of the Disinterested Trustees. The Services
Plan will continue in effect for successive one-year periods, provided that
each such continuance is specifically approved by a majority of the Board of
Trustees, including a majority of the Disinterested Trustees.
As authorized by the Services Plan, the Group has entered into a
Servicing Agreement with Keystone Brokerage, Inc., an affiliated of the Adviser
("Keystone Brokerage"), pursuant to which Keystone Brokerage has agreed to
provide certain administrative support services in connection with Shares of
the Fund owned of record or beneficially by its customers. Such administrative
support services may include, but are not limited to, (i) processing dividend
and distribution payments from the Fund on behalf of
B-20
<PAGE> 62
customers; (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by Keystone
Brokerage; (v) providing sub-accounting with respect to the Shares beneficially
owned by Keystone Brokerage's customers or the information necessary for
sub-accounting; (vi) if required by law, forwarding shareholder communications
from the Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to its
customers; (vii) aggregating and processing purchase, exchange, and redemption
requests from customers and placing net purchase, exchange, and redemption
orders for customers; and (viii) providing customers with a service that
invests the assets of their account in the Shares pursuant to specific or
pre-authorized instructions. In consideration of such services, the Group, on
behalf of the Fund, has agreed to pay Keystone Brokerage a monthly fee,
computed at the annual rate of .25% of the average aggregate net asset value of
Shares of the Fund held during the period by customers for whom Keystone
Brokerage has provided services under the Servicing Agreement.
Custodian
The Bank of New York, 48 Wall Street, New York, New York, 10286,
serves as custodian (the "Custodian") to the Fund pursuant to the Custody
Agreement dated as of July 9, 1996, as amended as of January __, 1997. The
Custodian's responsibilities include safeguarding and controlling the Fund's
cash and securities, handling the receipt and delivery of securities, and
collecting interest and dividends on the Fund's investments.
Transfer Agency and Fund Accounting Services
BISYS Fund Services, Inc. serves as transfer agent and dividend
disbursing agent (the "Transfer Agent") for the Fund pursuant to the Transfer
Agency Agreement dated July 9, 1996, as amended as of January __, 1997.
Pursuant to such Agreement, the Transfer Agent, among other things, performs
the following services in connection with the Fund's Shareholders of record:
maintenance of shareholder records for each of the Fund's Shareholders of
record; processing Shareholder purchase and redemption orders; processing
transfers and exchanges of Shares of the Fund on the Shareholder files and
records; processing dividend payments and reinvestments; and assistance in the
mailing of Shareholder reports and proxy solicitation materials. For such
services the Transfer Agent receives a fee based on the number of shareholders
of record. For the fiscal year ended June 30, 1996, the Transfer Agent
received no compensation from the Group for services as transfer agent for the
Fund since the Fund had not yet commenced operations.
B-21
<PAGE> 63
In addition, BISYS Fund Services, Inc. provides certain fund
accounting services to the Fund pursuant to the Fund Accounting Agreement dated
July 9, 1996, as amended as of January __, 1997. BISYS Fund Services, Inc.
receives a fee from the Fund for such services equal to the greater of (a) a
fee computed at an annual rate of three one-hundredths of one percent (.03%) of
the Fund's average daily net assets, or (b) the annual fee of $30,000. Under
such Agreement, BISYS Fund Services, Inc. maintains the accounting books and
records for the Fund, including journals containing an itemized daily record of
all purchases and sales of portfolio securities, all receipts and disbursements
of cash and all other debits and credits, general and auxiliary ledgers
reflecting all asset, liability, reserve, capital, income and expense accounts,
including interest accrued and interest received, and other required separate
ledger accounts; maintains a monthly trial balance of all ledger accounts;
performs certain accounting services for the Fund, including calculation of the
net asset value per share, calculation of the dividend and capital gain
distributions, if any, and of yield, reconciliation of cash movements with the
Fund's custodian, affirmation to the Fund's custodian of all portfolio trades
and cash settlements, verification and reconciliation with the Fund's custodian
of all daily trade activity; provides certain reports; obtains dealer
quotations, prices from a pricing service or matrix prices on all portfolio
securities in order to mark the portfolio to the market; and prepares an
interim balance sheet, statement of income and expense, and statement of
changes in net assets for the Fund.
Unless sooner terminated as provided therein, the Fund Accounting
Agreement has an initial term expiring on July 9, 1999, and thereafter shall be
renewed automatically for successive one-year terms, unless written notice not
to renew is given by the non-renewing party to the other party at least 60 days
prior to the expiration of the then-current term. The Fund Accounting
Agreement is terminable with respect to the Fund upon mutual agreement of the
parties to the Fund Accounting Agreement; upon 180 days' written notice by the
Group after the initial term but only in connection with the reorganization of
the Fund into another registered management investment company; and for cause
(as defined in the Fund Accounting Agreement) by the party alleging cause, on
not less than 60 days' notice by the Group's Board of Trustees or by BISYS Fund
Services, Inc.
The Fund Accounting Agreement provides that BISYS Fund Services, Inc.
shall not be liable for any error of judgment or mistake of law or any loss
suffered by the Fund in connection with the matters to which the Fund
Accounting Agreement relates, except a loss resulting from willful misfeasance,
bad faith, or negligence in the performance of its duties, or from the reckless
disregard by BISYS Fund Services, Inc. of its obligations and duties
thereunder.
B-22
<PAGE> 64
For the fiscal year ended June 30, 1996, BISYS Fund Services, Inc.
earned no fees with respect to its fund accounting services to the Fund since
the Fund had not yet commenced operations.
Auditors
KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio 43215, has
been selected as the independent auditors for the Fund and as such will audit
the financial statements of the Fund.
Legal Counsel
Baker & Hostetler, 65 East State Street, Columbus, Ohio 43215 is
counsel to the Group and will pass upon the legality of the Shares offered
hereby.
ADDITIONAL INFORMATION
Description of Shares
The Group is an Ohio business trust. The Group was organized on April
25, 1988, and the Group's Declaration of Trust was filed with the Secretary of
State of Ohio on April 25, 1988. The Declaration of Trust authorizes the Board
of Trustees to issue an unlimited number of shares, which are shares of
beneficial interest, without par value. The Group presently has seventeen
series of shares, one of which represents interests in the Fund. The other
sixteen series are Riverside Capital Money Market Fund, Riverside Capital Value
Equity Fund, Riverside Capital Fixed Income Fund, Riverside Capital Tennessee
Municipal Obligations Fund, Riverside Capital Low Duration Government
Securities Fund, Riverside Capital Growth Fund, the Money Market Fund, the
Pennsylvania Bond Fund, the Growth Fund, the Income Fund, 1st Source Monogram
U.S. Treasury Obligations Money Market Fund, 1st Source Monogram Diversified
Equity Fund, 1st Source Monogram Income Equity Fund, 1st Source Monogram
Special Equity Fund, 1st Source Monogram Income Fund and 1st Source Monogram
Intermediate Tax-Free Bond Fund. The Group's Declaration of Trust authorizes
the Board of Trustees to divide or redivide any unissued shares of the Group
into one or more additional series by setting or changing in any one or more
respects their respective preferences, conversion or other rights, voting
power, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Trustees may grant in its
discretion. When issued for payment as described in the Prospectus and this
Statement of Additional Information, the Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Group,
shareholders of a fund are entitled to receive the assets available for
distribution belonging
B-23
<PAGE> 65
to that fund, and a proportionate distribution, based upon the relative asset
values of the respective funds, of any general assets not belonging to any
particular fund which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Group shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding shares of a fund will be required in
connection with a matter, a fund will be deemed to be affected by a matter
unless it is clear that the interests of each fund in the matter are identical,
or that the matter does not affect any interest of the fund. 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 fund only
if approved by a majority of the outstanding shares of such fund. However,
Rule 18f-2 also provides that the election of Trustees may be effectively acted
upon by shareholders of the Group voting without regard to series.
As of the date immediately preceding the public offering of the Fund's
Shares, BISYS Fund Services Ohio, Inc. owned all of the issued and outstanding
Shares of the Fund. It is anticipated that, upon commencement of the public
offering of the Fund's Shares, BISYS Fund Services Ohio, Inc.'s holdings of
Shares in the Fund will be reduced below 5%.
Vote of a Majority of the Outstanding Shares
As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Fund means
the affirmative vote, at a meeting of Shareholders duly called, of the lesser
of (a) 67% or more of the votes of Shareholders of the Fund present at a
meeting at which the holders of more than 50% of the votes attributable to
Shareholders of record of the Fund are represented in person or by proxy, or
(b) the holders of more than 50% of the outstanding votes of Shareholders of
the Fund.
Additional General Tax Information
Each of the seventeen funds of the Group is treated as a separate
entity for federal income tax purposes and intends to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), for so long as such qualification is in the best interest of that
fund's shareholders. In order to qualify as a regulated investment company,
the Fund must, among other things: derive at least 90% of its gross income
B-24
<PAGE> 66
from dividends, interest, payments with respect to securities loans, and gains
from the sale or other disposition of securities or foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities, or currencies; derive less than 30% of its gross income from the
sale or other disposition of stock, securities, options, future contracts or
foreign currencies held less than three months; and diversify its investments
within certain prescribed limits. In addition, to utilize the tax provisions
specially applicable to regulated investment companies, the Fund must
distribute to its Shareholders at least 90% of its investment company taxable
income for the year. In general, the Fund's investment company taxable income
will be its taxable income subject to certain adjustments and excluding the
excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year.
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of
their ordinary income for the calendar year plus 98% of their capital gain net
income for the one-year period ending on October 31 of such calendar year. The
balance of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, the
Fund would be subject to a non-deductible excise tax equal to 4% of the
deficiency.
Although the Fund expects to qualify as a "regulated investment
company" 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, the Fund
may be subject to the tax laws of such states or localities. In addition, if
for any taxable year the Fund does not qualify for the special tax treatment
afforded regulated investment companies, all of its taxable income will be
subject to federal tax at regular corporate rates (without any deduction for
distributions to its Shareholders). In such event, dividend distributions
would be taxable to Shareholders to the extent of earnings and profits, and
would be eligible for the dividends received deduction for corporations.
It is expected that the Fund will distribute annually to Shareholders
all or substantially all of the Fund's net ordinary income and net realized
capital gains and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to Shareholders for federal
income tax purposes, even if paid in additional Shares of the Fund and not in
cash.
B-25
<PAGE> 67
Distribution by the Fund of the excess of net long-term capital gain
over net short-term capital loss, if any, is taxable to Shareholders as
long-term capital gain in the year in which it is received, regardless of how
long the Shareholder has held the Shares. Such distributions are not eligible
for the dividends-received deduction.
Federal taxable income of individuals is subject to graduated tax
rates of 15%, 28%, 31%, 36% and 39.6%. Further, the marginal tax rate may be
in excess of 39.6%, because adjustments reduce or eliminate the benefit of the
personal exemption and itemized deductions for individuals with gross income in
excess of certain threshold amounts.
Capital gains of individuals are subject to tax at the same rates
applicable to ordinary income; however, the tax rate on long-term capital gains
of individuals cannot exceed 28%. Capital losses may be used to offset capital
gains. In addition, individuals may deduct up to $3,000 of net capital loss
each year to offset ordinary income. Excess net capital loss may be carried
forward and deducted in future years.
Federal taxable income of corporations in excess of $75,000 up to $10
million is subject to a 34% tax rate; however, because the benefit of lower tax
rates on a corporation's taxable income of less than $75,000 is phased out for
corporations with income in excess of $100,000 but lower than $335,000, a
maximum marginal tax rate of 39% may result. Federal taxable income of
corporations in excess of $10 million is subject to a tax rate of 35%.
Further, a corporation's federal taxable income in excess of $15 million is
subject to an additional tax equal to 3% of taxable income over $15 million,
but not more than $100,000.
Capital gains of corporations are subject to tax at the same rates
applicable to ordinary income. Capital losses may be used only to offset
capital gains and excess net capital loss may be carried back three years and
forward five years.
Certain corporations are entitled to a 70% dividends received
deduction for distributions from certain domestic corporations. Because all of
the Fund's net investment income is expected to be derived from earned
interest, it is anticipated that no distributions from the Fund will qualify
for the 70% dividends received deduction.
Foreign taxes may be imposed on the Fund by foreign countries with
respect to its income from foreign securities. Since less than 50% in value of
the Fund's total assets at the end of its fiscal year are expected to be
invested in stocks or securities of foreign corporations, the Fund will not be
entitled under the Code to pass through to its Shareholders their pro rata
share of the
B-26
<PAGE> 68
foreign taxes paid by the Fund. These taxes will be taken as a deduction by
the Fund.
Under Section 1256 of the Code, gain or loss realized by the Fund from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. Gain
or loss will arise upon exercise or lapse of such futures and options as well
as from closing transactions. In addition, any such futures and options
remaining unexercised at the end of the Fund's taxable year will be treated as
sold for their then fair market value, resulting in additional gain or loss to
the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain futures
contracts or options transactions may be considered, for tax purposes, to
constitute "straddles." Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
straddles is governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, overrides or modifies the provisions of Section 1256. As such,
all or a portion of any short or long-term capital gain from certain straddle
and/or conversion transactions may be recharacterized as ordinary income.
If the Fund were treated as entering into straddles by reason of its
engaging in futures or options transactions, such straddles would be
characterized as "mixed straddles" if the futures or options comprising a part
of such straddles were governed by Section 1256 of the Code. The Fund may make
one or more elections with respect to mixed straddles. If no election is made,
to the extent the straddle rules apply to positions established by the Fund,
losses realized by the Fund will be deferred to the extent of unrealized gain
in any offsetting positions. Moreover, as a result of the straddle and
conversion transaction rules, short-term capital losses on straddle positions
may be recharacterized as long-term capital losses and long-term capital gains
may be recharacterized as short-term capital gain or ordinary income.
The Fund may be required by federal law to withhold and remit to the
U.S. Treasury 31% of taxable dividends, if any, and capital gain distributions
to any Shareholder, and the proceeds of redemption or the values of any
exchanges of Shares of the Fund, if such Shareholder (1) fails to furnish the
Fund with a correct taxpayer identification number, (2) under-reports dividend
or interest income, or (3) fails to certify to the Fund that he or she is not
subject to such withholding. An individual's taxpayer identification number is
his or her Social Security number.
Information set forth in the Prospectus and this Statement of
Additional Information which relates to Federal taxation is only a
B-27
<PAGE> 69
summary of some of the important Federal tax considerations generally affecting
purchasers of Shares of the Fund. No attempt has been made to present a
detailed explanation of the Federal income tax treatment of the Fund or its
Shareholders and this discussion is not intended as a substitute for careful
tax planning. Accordingly, potential purchasers of Shares of the Fund are
urged to consult their tax advisers with specific reference to their own tax
situation. In addition, the tax discussion in the Prospectus and this
Statement of Additional Information is based on tax laws and regulations which
are in effect on the date of the Prospectus and this Statement of Additional
Information; such laws and regulations may be changed by legislative or
administrative action. As of the date hereof, several proposals have been
introduced by the 104th Congress, which if enacted, could affect much of the
information contained in this section. However, it is not possible at this
time to assess which, if any, of such proposals will be acted upon and the
effect thereof, if any, on this information.
Information as to the federal income tax status of all distributions
will be mailed annually to each Shareholder.
Calculation of Total Return
As summarized in the Prospectus under the heading "PERFORMANCE
INFORMATION," average annual total return is a measure of the change in value
of an investment in the Fund over the period covered, which assumes any
dividends or capital gains distributions are reinvested in the Fund immediately
rather than paid to the investor in cash. Average annual total return will be
calculated by: (1) adding to the total number of Shares purchased by a
hypothetical $1,000 investment in the Fund (less the maximum sales charge) all
additional Shares which would have been purchased if all dividends and
distributions paid or distributed during the period had been immediately
reinvested; (2) calculating the value of the hypothetical initial investment of
$1,000 as of the end of the period by multiplying the total number of Shares
owned at the end of the period by the net asset value per share on the last
trading day of the period; (3) assuming redemption at the end of the period;
and (4) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. The Fund, however, may also advertise aggregate total return in
addition to average annual total return. Aggregate total return is a measure
of the change in value of an investment in the Fund over the relevant period
and is calculated similarly to average annual total return except that the
result is not annualized.
For the one year, five year and ten year periods ended October 31,
1996, and the period from commencement of operations to October 31, 1996, the
average annual total returns for the CIF (the Fund's predecessor) have been
restated to reflect the estimated fees for such Fund for the current fiscal
year and are as follows:
Average Annual Total Return
---------------------------
With Maxium Sales Load(1) Without Sales Load
- -------------------------- ------------------
Since Since
----- -----
1 Year 5 Year 10 Year Inception 1 Year 5 Year 10 Year Inception
- ------ ------ ------- --------- ------ ------ ------- ---------
- ---------
1 The maximum sales load for the Fund is 4.50%.
2 Commenced operations
---------------------.
Of course, past performance is no guarantee as to future performance.
B-28
<PAGE> 70
Performance Comparisons
Investors may judge the performance of the Fund by comparing it to the
performance of other mutual funds or mutual fund portfolios with comparable
investment objectives and policies through various mutual fund or market
indices such as those prepared by Dow Jones & Co., Inc. and Standard & Poor's
Corporation and to data prepared by Lipper Analytical Services, Inc., a widely
recognized independent service which monitors the performance of mutual funds.
Comparisons may also be made to indices or data published in Money Magazine,
Forbes, Barron's, The Wall Street Journal, Morningstar, Inc., Ibbotson
Associates, CDA/Wiesenberger, The New York Times, Business Week, U.S.A. Today
and local periodicals. In addition to performance information, general
information about the Fund that appears in a publication such as those
mentioned above may be included in advertisements, sales literature and reports
to shareholders. The Fund may also include in advertisements and reports to
shareholders information discussing the performance of the Adviser in
comparison to other investment advisers and to other institutions.
From time to time, the Group may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principles
(such as the effects of inflation, the power of compounding and the benefits of
dollar cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for the Fund; (5)
descriptions of investment strategies for the Fund; (6) descriptions or
comparisons of various investment products, which may or may not include the
Fund; (7) comparisons of investment products (including the Fund) with relevant
market or industry indices or other appropriate benchmarks; (8) discussions of
fund rankings or ratings by recognized rating organizations; and (9)
testimonials describing the experience of persons that have invested in the
Fund. The Group may also include calculations, such as hypothetical compounding
examples, which describe hypothetical investment results in such
communications. Such performance examples will be based on an express set of
assumptions and are not indicative of the performance of the Fund.
Current total return will fluctuate from time to time and are not
necessarily representative of future results. Accordingly, the Fund's total
return may not provide for comparison with bank deposits or other investments
that pay a fixed return for a stated period of time. Total return are
functions of the Fund's quality, composition, as well as expenses allocated to
the Fund. Fees imposed upon Customer accounts by the Adviser, its affiliates
or its affiliated or correspondent banks for cash management services
B-29
<PAGE> 71
or other services will reduce the Fund's effective total return to Customers.
Miscellaneous
Individual Trustees are generally elected by the shareholders and,
subject to removal by the vote of two-thirds of the Board of Trustees, serve
for a term lasting until the next meeting of shareholders at which Trustees are
elected. Such meetings are not required to be held at any specific intervals.
Generally, shareholders owning not less than 20% of the outstanding shares of
the Group entitled to vote may cause the Trustees to call a special meeting.
However, the Group has represented to the Commission that the Trustees will
call a special meeting for the purpose of considering the removal of one or
more Trustees upon written request therefor from shareholders owning not less
than 10% of the outstanding votes of the Group entitled to vote. At such a
meeting, a quorum of shareholders (constituting a majority of votes
attributable to all outstanding shares of the Group), by majority vote, has the
power to remove one or more Trustees.
The Group is registered with the Commission as a management investment
company. Such registration does not involve supervision by the Commission of
the management or policies of the Group.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the 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 are not 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 representation other than those contained
in the Prospectus and this Statement of Additional Information.
B-30
<PAGE> 72
APPENDIX
Commercial Paper Ratings. Commercial paper ratings of Standard &
Poor's Corporation ("S&P") are current assessments of the likelihood of timely
payment of debt considered short term in the relevant market. Commercial paper
rated A-1 by S&P indicates that the degree of safety regarding timely payment
is strong. Those issues determined to possess extremely strong safety
characteristics are denoted A-1+. Commercial paper rated A-2 by S&P indicates
that capacity for timely payment on issues is satisfactory. However, the
relative degree of safety is not as high as for issues designated A-1.
Moody's Investors Service, Inc.'s ("Moody's") commercial paper rating
are opinions of the ability of issuers to repay punctually senior debt
obligations which have an original maturity not exceeding one year. The rating
Prime-1 is the highest commercial paper rating assigned by Moody's. Issuers
rated Prime-1 (or supporting institutions) are considered to have a superior
capacity for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well established industries; high rates of return
on funds employed; conservative capitalization structure with moderate reliance
on debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of alternate
liquidity. Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics of Prime-1 rated issuers,
but to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variations. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
Commercial paper rated F-1+ by Fitch Investors Service ("Fitch") is
regarded as having the strongest degree of assurance for timely payments.
Commercial paper rated F-1 by Fitch is regarded as having an assurance of
timely payment only slightly less than the strongest rating, i.e., F-1+.
Commercial paper rated F-2 by Fitch is regarded as having a satisfactory degree
of assurance of timely payment, but the margin of safety is not as great as for
issues assigned F-1+ or F-1 ratings.
The description of the two highest short-term debt ratings by Duff &
Phelps, Inc. ("Duff") (Duff incorporates gradations of "1+" (one plus) and "1-"
(one minus) to assist investors in recognizing quality differences within the
highest rating category) are as follows. Duff 1+ is regarded as having the
highest certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1 is regarded as having a very high certainty of timely
payment. Liquidity factors are excellent and
A-1
<PAGE> 73
supported by good fundamental protection factors. Risk factors are minor.
Duff 1- is regarded as having a high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are minor. Duff 2 is regarded as having a good certainty of timely
payment. Liquidity factors and company fundamentals are sound. Although
ongoing funding needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are small.
Commercial paper rated A1 by IBCA Limited and its affiliate, IBCA Inc.
(collectively "IBCA") is regarded by IBCA as obligations supported by the
highest capacity for timely repayment. Where issues possess a particularly
strong credit feature, a rating of A1+ is assigned. Obligations rated A2 are
supported by a good capacity for timely repayment.
The following summarizes the description of the two highest short-term
ratings of Thomson BankWatch, Inc. ("Thomson"). TBW-1 is the highest category
and indicates a very high likelihood that principal and interest will be paid
on a timely basis. TBW-2 is the second highest category indicating that while
the degree of safety regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for issues rated
"TBW-1."
The plus (+) sign is used after a rating symbol to designate the
relative position of an issuer within the rating category.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
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 to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and
A-2
<PAGE> 74
credit of the U.S. Government. These obligations may include Treasury bills,
notes and bonds, and issues of agencies and instrumentalities of the U.S.
Government, provided such obligations are guaranteed as to payment of principal
and interest by the full faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations of the U.S. Government include Treasury bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, the Tennessee Valley Authority, the Farmers Home
Administration, the Federal Home Loan Banks, the Federal Intermediate Credit
Banks, the Federal Farm Credit Banks, the Federal Land Banks, the Federal
Housing Administration, the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, and the Student Loan Marketing Association.
Some of these obligations, such as those of the Government National Mortgage
Association, are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Federal National Mortgage Association, are
supported by the right of the issuer to borrow from the Treasury; others, such
as those of the Student Loan Marketing Association, are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Federal Farm Credit Banks, are
supported only by the credit of the 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.
A-3
<PAGE> 75
Registration Statement
of
THE SESSIONS GROUP
on
Form N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
(i) Riverside Capital Money Market Fund
Financial Highlights
(ii) Riverside Capital Value Equity Fund
Financial Highlights
(iii) Riverside Capital Fixed Income Fund
Financial Highlights
(iv) Riverside Capital Tennessee Municipal Obligations Fund
Financial Highlights
(v) Riverside Capital Low Duration Government Securities
Fund
Financial Highlights
(vi) Riverside Capital Growth Fund
Financial Highlights
(vii) KeyPremier Prime Money Market Fund
None
(viii) KeyPremier Pennsylvania Municipal Bond Fund
None
C-1
<PAGE> 76
(ix) 1st Source Monogram U.S. Treasury Obligations Money Market
Fund
None
(x) 1st Source Monogram Diversified Equity Fund
None
(xi) 1st Source Monogram Income Equity Fund
None
(xii) 1st Source Monogram Special Equity Fund
None
(xiii) 1st Source Monogram Income Fund
None
(xiv) 1st Source Monogram Intermediate Tax-Free Bond Fund
None
(xv) KeyPremier Established Growth Fund
None
(xvi) KeyPremier Intermediate Term Income Fund
None
(xvii) KeyPremier Aggressive Growth Fund
None
Included in Part B:
(i) Riverside Capital Money Market Fund
Independent Auditors' Report dated August 26, 1996.
Statements of Assets and Liabilities dated
June 30, 1996.
Statements of Operations for the year ended June 30, 1996.
Statements of Changes in Net Assets for the years ended
June 30, 1996 and 1995.
C-2
<PAGE> 77
Schedule of Portfolio Investments as of June 30, 1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30, 1996,
1995, 1994, 1993 and 1992.
(ii) Riverside Capital Value Equity Fund
Independent Auditors' Report dated August 26, 1996.
Statements of Assets and Liabilities dated June 30, 1996.
Statements of Operations for the year ended June 30, 1996.
Statements of Changes in Net Assets for the years ended June
30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30, 1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30, 1996,
1995, 1994 and 1993, and the period from commencement of
operations (October 31, 1991) to June 30, 1992.
(iii) Riverside Capital Fixed Income Fund
Independent Auditors' Report dated August 26, 1996.
Statements of Assets and Liabilities dated June 30, 1996.
Statements of Operations for the year ended June 30, 1996.
Statements of Changes in Net Assets for the years ended June
30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30, 1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30, 1996,
1995, 1994 and 1993, and the period from
C-3
<PAGE> 78
commencement of operations (October 31, 1991) to June 30,
1992.
(iv) Riverside Capital Tennessee Municipal Obligations Fund
Independent Auditors' Report dated August 26, 1996.
Statements of Assets and Liabilities at June 30, 1996.
Statements of Operations for the year ended June 30, 1996.
Statements of Changes in Net Assets for the years ended June
30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30, 1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30, 1996, 1995
and 1994, and for the period from commencement of operations
(November 4, 1992) to June 30, 1993.
(v) Riverside Capital Low Duration Government Securities Fund
Independent Auditor's Report dated August 26, 1996.
Statements of Assets and Liabilities at June 30, 1996.
Statements of Operations for the year ended June 30, 1996.
Statements of Changes in Net Assets for the years ended June
30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30, 1996.
Notes to Financial Statements.
Financial Highlights for the year ended June 30, 1996 and
1995, and for the period from commencement of operations
(April 18, 1994) to June 30, 1994.
C-4
<PAGE> 79
(vi) Riverside Capital Growth Fund
Independent Auditor's Report dated August 26, 1996.
Statements of Assets and Liabilities at June 30, 1996.
Statements of Operations for the year ended June 30, 1996.
Statements of Changes in Net Assets for the years ended June
30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30, 1996.
Notes to Financial Statements.
Financial Highlights for the year ended June 30, 1996 and
1995, and for the period from commencement of operations
(April 18, 1994) to June 30, 1994.
(vii) KeyPremier Prime Money Market Fund
To be filed by amendment.
(viii) KeyPremier Pennsylvania Municipal Bond Fund
To be filed by amendment.
(ix) 1st Source Monogram U.S. Treasury Obligations Money Market
Fund
To be filed by amendment.
(x) 1st Source Monogram Diversified Equity Fund
To be filed by amendment.
(xi) 1st Source Monogram Income Equity Fund
To be filed by amendment.
(xii) 1st Source Monogram Special Equity Fund
To be filed by amendment.
(xiii) 1st Source Monogram Income Fund
To be filed by amendment.
C-5
<PAGE> 80
(xiv) 1st Source Monogram Intermediate Tax-Free Bond Fund
To be filed by amendment.
(xv) KeyPremier Established Growth Fund
To be filed by amendment.
(xvi) KeyPremier Intermediate Term Income Fund
To be filed by amendment.
(xvii) KeyPremier Aggressive Growth Fund
To be filed by amendment.
(xviii) All required financial statements are included in Part B
hereof. All other financial statements and schedules are
inapplicable.
(b) Exhibits:
(1) (a) Declaration of Trust, dated as of April 25,
1988, is incorporated by reference to Exhibit
(1)(a) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(b) Amendment of Article IV, Section 4.2 of
Declaration of Trust adopted August 15, 1989,
is incorporated by reference to Exhibit
(1)(b) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(c) Amendment of Article V, Section 5.3 of
Declaration of Trust adopted October 23,
1989, is incorporated by reference to Exhibit
(1)(c) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(d) Amendment of Article IV, Section 4.2 of
Declaration of Trust adopted July 23, 1991,
is incorporated by reference to Exhibit
(1)(d) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(e) Amendment of Article IV, Section 4.2 of
Declaration of Trust as adopted August 13,
1992, is incorporated by reference to Exhibit
C-6
<PAGE> 81
(1)(e) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(f) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted October 28,
1992, is incorporated by reference to Exhibit
(1)(f) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(g) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted February 18,
1994, is incorporated by reference to Exhibit
(1)(g) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(h) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted May 16, 1994,
is incorporated by reference to Exhibit
(1)(h) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(i) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted April 10,
1996, is incorporated by reference to Exhibit
(1)(i) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(j) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted May 16, 1996,
is incorporated by reference to Exhibit
(1)(j) of Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No.
33-21489) filed on June 6, 1996.
(k) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted August 15,
1996, is incorporated by reference to Exhibit
(1)(k) of Post-Effective Amendment No. 36 to
Registrant's Registration Statement (No.
33-21489) filed on August 16, 1996.
(l) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted as of
September 27, 1996.
(2) By-Laws are incorporated by reference to Exhibit (2)
of Post-Effective Amendment No. 34 to
C-7
<PAGE> 82
Registrant's Registration Statement (No. 33-21489)
filed on April 25, 1996.
(3) None.
(4) Certificates for Shares are not issued. Articles IV,
V, VI and VII of the Declaration of Trust, filed as
Exhibit 1 hereto, define rights of holders of Shares.
(5) (a) Investment Advisory Agreement dated as of
July 19, 1988, between Registrant and
National Bank of Commerce (with respect to
Riverside Capital Money Market Fund) is
incorporated by reference to Exhibit (5)(a)
of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(b) Investment Advisory Agreement dated as of
September 20, 1991, between Registrant and
National Bank of Commerce (with respect to
Riverside Capital Value Equity Fund and
Riverside Capital Fixed Income Fund) is
incorporated by reference to Exhibit (5)(b)
of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(c) Investment Advisory Agreement dated as of
October 27, 1992, between Registrant and
National Bank of Commerce (with respect to
Riverside Capital Tennessee Municipal
Obligations Fund) is incorporated by
reference to Exhibit (5)(c) of Post-Effective
Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25,
1996.
(d) Investment Advisory Agreement dated April 5,
1994, as amended June 3, 1994, between
Registrant and National Bank of Commerce
(with respect to Riverside Capital Low
Duration Government Securities Fund and
Riverside Capital Growth Fund) is
incorporated by reference to Exhibit (5)(d)
of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(e) Investment Advisory Agreement dated July 9,
1996, as proposed to be amended as of January
__, 1997, between Registrant and Martindale
C-8
<PAGE> 83
Andres & Company, Inc. (with respect to the
KeyPremier Funds).
(f) Investment Advisory Agreement dated August
20, 1996, between Registrant and 1st Source
Bank (with respect to the 1st Source Monogram
Funds) is incorporated by reference to
Exhibit (5)(f) of Post-Effective Amendment
No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21,
1996.
(g) Sub-Investment Advisory Agreement dated
August 20, 1996, between 1st Source Bank and
Miller, Anderson and Sherrerd, LLP (with
respect to 1st Source Monogram Diversified
Equity Fund) is incorporated by reference to
Exhibit (5)(g) of Post-Effective Amendment
No. 37 to Registrant's Registration Statement
(No. 33-21489) filed on October 21, 1996.
(h) Sub-Investment Advisory Agreement dated
August 20, 1996, between 1st Source Bank and
Loomis Sayles & Company, L.P. (with respect
to 1st Source Monogram Diversified Equity
Fund) is incorporated by reference to Exhibit
(5)(h) of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(i) Sub-Investment Advisory Agreement dated
August 20, 1996, between 1st Source Bank and
Columbus Circle Investors (with respect to
1st Source Monogram Diversified Equity Fund)
is incorporated by reference to Exhibit
(5)(i) of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(6) (a) Distribution Agreement dated October 1, 1993,
as amended as of June 3, 1994, between
Registrant and The Winsbury Company Limited
Partnership is incorporated by reference to
Exhibit (6)(a) of Post-Effective Amendment
No. 30 to Registrant's Registration Statement
(No. 33-21489) filed on August 24, 1994.
(b) Form of Selected Dealer Agreement is
incorporated by reference to Exhibit (6)(b)
of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
C-9
<PAGE> 84
(c) Distribution Agreement dated as of July 9,
1996, as proposed to be amended as of January
__, 1997, between Registrant and BISYS Fund
Services Limited Partnership (relating to the
KeyPremier Funds).
(d) Form of Shareholder Services Agreement is
incorporated by reference to Exhibit (6)(d)
of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(e) Distribution Agreement dated as of August 20,
1996, between Registrant and BISYS Fund
Services Limited Partnership (relating to the
1st Source Monogram Funds) is incorporated by
reference to Exhibit (6)(e) of Post-Effective
Amendment No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21,
1996.
(7) None.
(8) (a) Custodial Services Agreement dated as of
March 1, 1995, between Registrant and
National City Bank (with respect to the
Riverside Capital Funds) is incorporated by
reference to Exhibit (8) of Post-Effective
Amendment No. 33 to Registrant's Registration
Statement (No. 33-21489) filed on October 30,
1995.
(b) Custody Agreement dated July 9, 1996, as
proposed to be amended as of January __,
1997, between Registrant and The Bank of New
York (with respect to the KeyPremier Funds).
(c) Custody Agreement dated August 20, 1996,
between Registrant and The Fifth Third Bank
(with respect to the 1st Source Monogram
Funds) is incorporated by reference to
Exhibit (8)(c) of Post-Effective Amendment
No. 37 to Registrant's Registration Statement
(No. 33-21489) filed on October 21, 1996.
(9) (a) Management and Administration Agreement dated
August 23, 1990, as amended October 27, 1992,
between Registrant and The Winsbury Company
Limited Partnership (with respect to
Riverside Capital Money Market Fund,
Riverside Capital Value Equity Fund,
Riverside Capital Fixed Income Fund and
Riverside Capital Tennessee Municipal
Obligations Fund) is incorporated by
C-10
<PAGE> 85
reference to Exhibit (9)(a) of Post-Effective
Amendment No. 25 to Registrant's Registration
Statement (No. 33-21489) filed on April 27,
1993.
(g) Transfer Agency Agreement dated as of
September 1, 1992, as amended as of May 1,
1994, between Registrant and BISYS Fund
Services Ohio, Inc. (formerly The Winsbury
Service Corporation) (with respect to the
Riverside Capital Funds) is incorporated by
reference to Exhibit (9)(g) of Post-Effective
Amendment No. 30 to Registrant's Registration
Statement (No. 33-21489) filed on August 24,
1994.
(h) Fund Accounting Agreement dated February 4,
1993, between Registrant and The Winsbury
Service Corporation (with respect to
Riverside Capital Money Market Fund,
Riverside Capital Equity Fund, Riverside
Capital Fixed Income Fund and Riverside
Capital Tennessee Municipal Obligations Fund)
is incorporated by reference to Exhibit
(9)(h) of Post-Effective Amendment No. 25 to
Registrant's Registration Statement (No.
33-21489) filed on April 27, 1993.
(r) Administrative Services Plan effective
October 19, 1993 is incorporated by reference
to Exhibit (9)(r) of Post-Effective Amendment
No. 28 to Registrant's Registration Statement
(No. 33-21489) filed on February 4, 1994.
(s) Servicing Agreement to Administrative
Services Plan dated as of October 19, 1993,
between Registrant and National Bank of
Commerce (with respect to Riverside Capital
Money Market Fund, Riverside Capital Equity
Fund, Riverside Capital Fixed Income Fund and
Riverside Capital Tennessee Municipal
Obligations Fund) is incorporated by
reference to Exhibit (9)(s) of Post-Effective
Amendment No. 29 to Registrant's Registration
Statement (No. 33-21489) filed on April 4,
1994.
(u) Management and Administration Agreement
between Registrant and The Winsbury Company
Limited Partnership dated April 5, 1994, as
amended as of June 3, 1994 (with respect to
Riverside Capital Low Duration Government
Securities Fund and Riverside Capital Growth
Fund) is incorporated by reference to Exhibit
(9)(u) of Post-Effective Amendment No. 30 to
C-11
<PAGE> 86
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(v) Fund Accounting Agreement dated April 5,
1994, as amended June 3, 1994, between
Registrant and The Winsbury Service
Corporation (with respect to Riverside
Capital Low Duration Government Securities
Fund and Riverside Capital Growth Fund) is
incorporated by reference to Exhibit (9)(v)
of Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(w) Servicing Agreement to Administrative
Services Plan dated April 5, 1994, between
Registrant and National Bank of Commerce
(with respect to Riverside Capital Low
Duration Government Securities Fund and
Riverside Capital Growth Fund) is
incorporated by reference to Exhibit (9)(w)
of Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(x) Management and Administration Agreement dated
July 9, 1996, as proposed to be amended as of
January __, 1997, between Registrant and
BISYS Fund Services Limited Partnership (with
respect to the KeyPremier Funds).
(y) Fund Accounting Agreement dated July 9, 1996,
as proposed to be amended as of January __,
1997, between Registrant and BISYS Fund
Services, Inc. (with respect to the
KeyPremier Funds).
(z) Transfer Agency Agreement dated July 9, 1996,
as proposed to be amended as of January __,
1997, between Registrant and BISYS Fund
Services, Inc. (with respect to the
KeyPremier Funds).
(aa) Management and Administration Agreement dated
August 20, 1996, between Registrant and BISYS
Fund Services Limited Partnership (with
respect to the 1st Source Monogram Funds) is
incorporated by reference to Exhibit (9)(aa)
of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
C-12
<PAGE> 87
(ab) Fund Accounting Agreement dated August 20,
1996, between Registrant and BISYS Fund
Services, Inc. (with respect to the 1st
Source Monogram Funds) is incorporated by
reference to Exhibit (9)(ab) of
Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(ac) Transfer Agency Agreement dated August 20,
1996, between Registrant and BISYS Fund
Services, Inc. (with respect to the 1st
Source Monogram Funds) is incorporated by
reference to Exhibit (9)(ac) of
Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(ad) Form of Servicing Agreement to Administrative
Services Plan is incorporated by reference to
Exhibit (9)(ad) of Post-Effective Amendment
No. 35 to Registrant's Registration Statement
(No. 33-21489) filed on June 6, 1996.
(10) (a) Opinion of Counsel with respect to shares of
KeyPremier Aggressive Growth Fund. Opinion
of Counsel with respect to shares of
KeyPremier Established Growth Fund and
KeyPremier Intermediate Term Income Fund is
incorporated by reference to Exhibit (10)(a)
of Post-Effective Amendment No. 36 to
Registrant's Registration Statement (No.
33-21489) filed on August 16, 1996. Opinion
of Counsel with respect to Shares of 1st
Source Monogram U.S. Treasury Obligations
Money Market Fund, 1st Source Monogram
Diversified Equity Fund, 1st Source Monogram
Income Equity Fund, 1st Source Monogram
Special Equity Fund, 1st Source Monogram
Income Fund and 1st Source Monogram
Intermediate Tax-Free Bond Fund is
incorporated by reference to Exhibit (10)(a)
of Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No.
33-21489) filed on June 6, 1996. Opinion of
Counsel with respect to Shares of the
KeyPremier Prime Money Market Fund and the
KeyPremier Pennsylvania Municipal Bond Fund
is incorporated by reference to Exhibit
(10)(a) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996. An
Opinion of Counsel with respect to Shares of
Riverside Capital Money Market Fund,
Riverside Capital
C-13
<PAGE> 88
Value Equity Fund, Riverside Capital Fixed
Income Fund, Riverside Capital Tennessee
Municipal Obligations Fund, Riverside Capital
Low Duration Government Securities Fund and
Riverside Capital Growth Fund was filed with
Registrant's Notice filed on August 28, 1996,
pursuant to Rule 24f-2.
(b) Opinion of Special Counsel with respect to
Riverside Capital Tennessee Municipal
Obligations Fund is incorporated by reference
to Exhibit (10)(b) of Post-Effective
Amendment No. 23 to Registrant's Registration
Statement (No. 33-21489) filed on October 30,
1992.
(11) (a) Consent of KPMG Peat Marwick LLP.
(b) Consent of Burch, Porter & Johnson is
incorporated by reference to Exhibit (11)(b)
of Post-Effective Amendment No. 23 to
Registrant's Registration Statement (No.
33-21489) filed on October 30, 1992.
(c) Consent of Coopers & Lybrand L.L.P. is
incorporated by reference to Exhibit (11)(c)
of Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No.
33-21489) filed on June 6, 1996.
(12) None.
(13) Purchase Agreement dated as of July 19, 1988, between
Registrant and Winsbury Associates is incorporated by
reference to Exhibit (13) of Pre-Effective Amendment
No. 2 to Registrant's Registration Statement (No.
33-21489) filed on July 21, 1988.
(14) None.
(15) (a) Rule 12b-1 Plan (with respect to the
Riverside Capital Funds) is incorporated by
reference to Exhibit (15)(a) of Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement (No. 33-21489) filed on July 21,
1988.
(c) Rule 12b-1 Plan (with respect to the 1st
Source Monogram Funds) is incorporated by
reference to Exhibit (15)(c) of
Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No.
33-21489) filed on June 6, 1996.
C-14
<PAGE> 89
(h) Rule 12b-1 Agreement dated October 1, 1993,
between The Winsbury Company Limited
Partnership and National Bank of Commerce
(with respect to Riverside Capital Money
Market Fund, Riverside Capital Equity Fund,
Riverside Capital Fixed Income Fund and
Riverside Capital Tennessee Municipal
Obligations Fund) is incorporated by
reference to Exhibit (15)(h) of
Post-Effective Amendment No. 27 to
Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(m) Rule 12b-1 Agreement dated October 1, 1993,
between The Winsbury Company Limited
Partnership and Commerce Investment
Corporation (with respect to Riverside
Capital Money Market Fund, Riverside Capital
Value Equity Fund, Riverside Capital Fixed
Income Fund and Riverside Capital Tennessee
Municipal Obligations Fund) is incorporated
by reference to Exhibit (15)(m) of
Post-Effective Amendment No. 27 to
Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(n) Rule 12b-1 Agreement dated October 19, 1993,
between Registrant and The Winsbury Company
Limited Partnership (with respect to
Riverside Capital Money Market Fund,
Riverside Capital Equity Fund, Riverside
Capital Fixed Income Fund and Riverside
Capital Tennessee Municipal Obligations Fund)
is incorporated by reference to Exhibit
(15)(n) of Post-Effective Amendment No. 28 to
Registrant's Registration Statement (No.
33-21489) filed on February 4, 1994.
(o) Rule 12b-1 Agreement dated as of April 5,
1994, between The Winsbury Company Limited
Partnership and Commerce Investment
Corporation (with respect to Riverside
Capital Low Duration Government Securities
Fund and Riverside Capital Growth Fund) is
incorporated by reference to Exhibit (15)(o)
of Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(p) Rule 12b-1 Agreement dated as of April 5,
1994, between Registrant and The Winsbury
Company Limited Partnership (with respect to
Riverside Capital Low Duration Government
Securities Fund and Riverside Capital Growth
Fund) is incorporated by reference to Exhibit
C-15
<PAGE> 90
(15)(p) of Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(s) Rule 12b-1 Agreement dated as of May 16,
1994, between J.C. Bradford & Co. and The
Winsbury Company Limited Partnership (with
respect to the Riverside Capital Funds) is
incorporated by reference to Exhibit (15)(s)
of Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(t) Rule 12b-1 Agreement dated as of May 16,
1994, between Morgan, Keegan & Co. and The
Winsbury Company Limited Partnership (with
respect to the Riverside Capital Funds) is
incorporated by reference to Exhibit (15)(t)
of Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(u) Rule 12b-1 Agreement dated as of August 1,
1994, between J.J.B. Hilliard, W.L. Lyons,
Inc. and The Winsbury Company Limited
Partnership (with respect to the Riverside
Capital Funds) is incorporated by reference
to Exhibit (15)(u) of Post-Effective
Amendment No. 31 to Registrant's Registration
Statement (No. 33-21489) filed on October 14,
1994.
(v) Rule 12b-1 Agreement dated as of August 31,
1994, between TrustMark Investments, Inc. and
The Winsbury Company Limited Partnership
(with respect to the Riverside Capital Funds)
is incorporated by reference to Exhibit
(15)(v) of Post-Effective Amendment No. 31 to
Registrant's Registration Statement (No.
33-21489) filed on October 14, 1994.
(16) (a) Computation of Performance Quotations for
Riverside Capital Money Market Fund is
incorporated by reference to Exhibit (16)(a)
of Post-Effective Amendment No. 27 to
Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(b) Computation of Performance Quotations for
Riverside Capital Value Equity Fund and
Riverside Capital Fixed Income Fund is
incorporated by reference to Exhibit (16)(b)
of Post-Effective Amendment No. 27 to
C-16
<PAGE> 91
Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(f) Computation of Performance Quotations for
Riverside Capital Tennessee Municipal
Obligations Fund is incorporated by reference
to Exhibit (16)(f) of Post-Effective
Amendment No. 27 to Registrant's Registration
Statement (No. 33-21489) filed on October 19,
1993.
(h) Computation of Performance Quotations for
Riverside Capital Low Duration Government
Securities Fund and Riverside Capital Growth
Fund is incorporated by reference to Exhibit
(16)(h) of Post-Effective Amendment No. 33
to Registrant's Registration Statement (No.
33-21489) filed on October 30, 1995.
(i) Computation of Performance Quotations for
KeyPremier Established Growth Fund and
KeyPremier Aggressive Growth Fund.
Computation of Performance Quotations for
KeyPremier Prime Money Market Fund,
KeyPremier Pennsylvania Municipal Bond Fund
and KeyPremier Intermediate Term Income Fund
to be filed by amendment.
(j) Computation of Performance Quotations for the
1st Source Monogram Funds is incorporated by
reference to Exhibit (16)(j) of
Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(17) Financial Data Schedules for the Riverside
Capital Funds are incorporated by reference
to Exhibit (17) of Post-Effective Amendment
No. 37 to Registrant's Registration Statement
(No. 33-21489) filed on October 21, 1996.
Financial Data Schedules for the KeyPremier
Funds and the 1st Source Monogram Funds to be
filed by amendment.
(18) None.
(19) (a) Powers of Attorney of Stephen G. Mintos,
Chalmers P. Wylie, Walter B. Grimm and
Maurice G. Stark are incorporated by
reference to Exhibit (17)(a) of
Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(b) Consent of Baker & Hostetler.
(c) Power of Attorney of Nancy E. Converse is
incorporated by reference to Exhibit
C-17
<PAGE> 92
(19)(c) of Post-Effective Amendment No. 36 to
Registrant's Registration Statement (No.
33-21489) filed on August 16, 1996.
(d) Power of Attorney of James H. Woodward is
incorporated by reference to Exhibit (19)(d)
of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
Item 25. Persons Controlled By or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
As of September 24, 1996, the number of record holders of
each series of shares of the Registrant were as follows:
<TABLE>
<CAPTION>
Title of Series Number of Record Holders
--------------- ------------------------
<S> <C>
Riverside Capital Money
Market Fund 29
Riverside Capital
Value Equity Fund 155
Riverside Capital
Fixed Income Fund 35
Riverside Capital Tennessee Municipal
Obligations Fund 19
Riverside Capital Low Duration
Government Securities Fund 7
Riverside Capital Growth Fund 58
KeyPremier Prime
Money Market Fund 0
KeyPremier Pennsylvania
Municipal Bond Fund 0
1st Source Monogram U.S. Treasury
Obligations Money Market Fund 0
1st Source Monogram Diversified
Equity Fund 0
1st Source Monogram Income Equity Fund 0
1st Source Monogram Special Equity Fund 0
1st Source Monogram Income Fund 0
1st Source Monogram Intermediate Tax-Free
Bond Fund 0
KeyPremier Established Growth Fund 0
KeyPremier Intermediate Term
Income Fund 0
KeyPremier Aggressive Growth Fund 0
</TABLE>
C-18
<PAGE> 93
Item 27. Indemnification
Article VI, Section 6.4 of the Registrant's Declaration of
Trust, filed as Exhibit 1 hereto, provides for the
indemnification of Registrant's Trustees and officers.
Indemnification of the Group's principal underwriter,
custodians, investment advisers, manager and administrator,
transfer agent and fund accountant is provided for,
respectively, in Section 1.11 of the Distribution Agreements
filed as Exhibits 6(a), 6(c) and 6(e) hereto, Section 8 of the
Custodial Services Agreement filed as Exhibit 8(a) hereto,
Article XVII, Section 14 of the Custody Agreement filed as
Exhibit 8(b) hereto, Article VIII, Section 8.1 of the Custody
Agreement filed as Exhibit 8(c) hereto, Section 8 of the
Investment Advisory Agreements filed as Exhibits 5(a), 5(b),
5(c), 5(d), 5(e) and 5(f) hereto, Section 4 of the Management
and Administration Agreements filed as Exhibits 9(a), 9(u),
9(x) and 9(aa) hereto, Section 9 of the Transfer Agency
Agreements filed as Exhibits 9(g), 9(z) and 9(ac) hereto, and
Section 6 of the Fund Accounting Agreements filed as Exhibits
9(h), 9(v), 9(y) and 9(ab) hereto. As of the effective date of
this Registration Statement, the Group will have obtained from
a major insurance carrier a trustees' and officers' liability
policy covering certain types of errors and omissions. In no
event will Registrant indemnify any of its trustees, officers,
employees or agents against any liability to which such person
would otherwise be subject by reason of his willful
misfeasance, bad faith, or gross negligence in the performance
of his duties, or by reason of his reckless disregard of the
duties involved in the conduct of his office or under his
agreement with Registrant. Registrant will comply with Rule
484 under the Securities Act of 1933 and Release 11330 under
the Investment Company Act of 1940 in connection with any
indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by Registrant of expenses incurred or paid by a
trustee, officer, or controlling person of Registrant in the
successful defense of any action, suit, or proceeding) is
asserted by such trustee, officer, or controlling person in
connection with the securities
C-19
<PAGE> 94
being registered, 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 of
whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) National Bank of Commerce, Memphis, Tennessee ("NBC"), is the
investment adviser for Riverside Capital Money Market Fund,
Riverside Capital Value Equity Fund, Riverside Capital Fixed
Income Fund, Riverside Capital Tennessee Municipal Obligations
Fund, Riverside Capital Low Duration Government Securities Fund
and Riverside Capital Growth Fund. NBC is a wholly owned
subsidiary of National Commerce Bancorporation. In addition to
serving as investment adviser of such Funds, NBC and its
affiliates hold and manage, on behalf of their clients, assets
which as of September 30, 1996, totalled $3.9 billion, and of
which approximately $989 million are managed in a variety of
balanced, equity and fixed income portfolios.
To the knowledge of Registrant, none of the directors or
officers of NBC, except those set forth below, is or has been
at any time during the past two fiscal years engaged in any
other business, profession, vocation or employment of a
substantial nature, except that certain officers and directors
of NBC also hold positions with NBC's parent, National Commerce
Bancorporation. Set forth below are the names and principal
businesses of the directors of NBC who are engaged in any other
business, profession, vocation, or employment of a substantial
nature.
<TABLE>
<CAPTION>
Position
Name with NBC Principal Occupation
---- -------- --------------------
<S> <C> <C>
Frank G. Barton, Jr. Director Chairman of the Board
Barton Group, Inc.
2620 Thousand Oaks Blvd., Suite 1200
Memphis, Tennessee 38118
(Retail Equipment Sales)
Jack R. Blair Director Smith & Nephew North America
1450 East Brooks Road
Memphis, Tennessee 38116
(Medical Devices)
R. Grattan Brown, Jr. Director Partner, law firm of
Glankler, Brown, Gilliland, Chase,
Robinson & Raines
One Commerce Square
Memphis, Tennessee 38103
</TABLE>
C-20
<PAGE> 95
<TABLE>
<S> <C> <C>
Bruce E. Campbell, Jr. Director Former Chairman
National Bank of Commerce
and National Commerce
Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Christopher W. Canale Director President
D. Canale Beverages, Inc.
45 E.H. Crumps Blvd.
Memphis, Tennessee 38106
(Distribution)
John D. Canale III Director President
D. Canale & Food Services, Inc.
7 West Georgia
Memphis, Tennessee 38103
(Distribution)
Edmond D. Cicala Director President
Edmond Enterprises, Inc.
1213 Park Place Center
Suite 200
Memphis, Tennessee 38119
(Consulting)
John S. Evans Director Former President
National Bank of Commerce
One Commerce Square
Memphis, Tennessee 38150
Thomas C. Farnsworth, Jr. Director Farnsworth Investment Co.
2175 Business Center Drive
Suite 11
Memphis, Tennessee 38134-5621
(Real Estate)
Thomas M. Garrott Chairman Chairman of the Board and
Chief Executive Officer
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Mackie H. Gober President/ President
Director National Bank of Commerce
One Commerce Square
Memphis, Tennessee 38150
Lewis E. Holland Director Executive Vice President and
Chief Financial Officer
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
prior thereto -
Partner
Ernst & Young
One Commerce Square
Memphis, Tennessee 38103
(Accounting)
</TABLE>
C-21
<PAGE> 96
<TABLE>
<S> <C> <C>
R. Lee Jenkins Director Retired
6075 Poplar, Suite 721
Memphis, Tennessee 38119
James E. McGehee, Jr. Director President
McGehee Realty & Development Company
675 Oakleaf Office Lane, Suite 102
Memphis, Tennessee 38117
(Real Estate)
W. Neely Mallory, Jr. Director President
Memphis Compress & Storage Company
P.O. Box 9436
Memphis, Tennessee 38109
(Cotton Warehousing)
Harry J. Phillips, Sr. Director Chairman of the Executive Committee
Browning-Ferris Industries
2750 One Commerce Square
Memphis, Tennessee 38103
(Waste Disposal Services)
William R. Reed, Jr. Director Executive Vice President
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Rudi E. Scheidt Director Retired
54 South White Station
Memphis, Tennessee 38117
Lucy Y. Shaw Director President
Common Denominator, Inc.
2195 Poplar Avenue
Suite 505
East Memphis, Tennessee 381014
prior thereto -
Chief Executive Officer
Regional Medical Center at Memphis
877 Jefferson Avenue
Memphis, Tennessee 38103
(Hospital)
Robert M. Solmson Director President
RFS Hotel Investors, Inc.
1213 Park Place Center, Suite 200
Memphis, Tennessee 38119
(Real Estate)
Sidney A. Stewart, Jr. Director Retired
5350 Poplar Avenue
Memphis, Tennessee 38119
R. Lee Taylor Director Private Investor
1755-A Lynnfield Drive
Suite 232
Memphis, Tennessee 38119
Henry M. Turley, Jr. Director President
Henry Turley Company
65 Union Avenue, Suite 1200
Memphis, Tennessee 38103
(Real Estate Management and Investment)
</TABLE>
C-22
<PAGE> 97
(b) Martindale Andres & Company, Inc., West Conshohocken,
Pennsylvania ("Martindale Andres"), is the investment adviser
for KeyPremier Prime Money Market Fund, KeyPremier
Pennsylvania Municipal Bond Fund, KeyPremier Established
Growth Fund, KeyPremier Intermediate Term Income Fund and
KeyPremier Aggressive Growth Fund. Martindale Andres is a
wholly-owned subsidiary of Keystone Financial, Inc. In
addition to serving as investment adviser of such Funds,
Martindale Andres has managed since its founding the
investment portfolios of high net worth individuals,
endowments and pension and common trust funds. Martindale
Andres currently has over $1.6 billion under management,
including over $400 million of municipal securities.
To the knowledge of Registrant, none of the directors or
officers of Martindale Andres is or has been at any time
during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial
nature, except that certain officers and directors of
Martindale Andres also hold positions with Martindale Andres'
parent, Keystone Financial, Inc.
(c) 1st Source Bank, South Bend, Indiana ("FSB"), is the
investment adviser for 1st Source Monogram U.S. Treasury
Obligations Money Market Fund, 1st Source Monogram Diversified
Equity Fund, 1st Source Monogram Income Equity Fund, 1st
Source Monogram Special Equity Fund, 1st Source Monogram
Income Fund and 1st Source Monogram Intermediate Tax-Free Bond
Fund. FSB is a wholly-owned subsidiary of 1st Source
Corporation. In addition to serving as investment adviser of
such Funds, FSB and its affiliates administer and manage, on
behalf of their clients, trust assets which as of March, 1996,
totalled approximately $1.2 billion. Of such amount,
approximately $668 million are managed on behalf of personal
trust customers and approximately $500 million are managed on
behalf of employee benefit plans. The Adviser has over 60
years of banking experience and as of December 31, 1995, on a
consolidated basis with 1st Source Corporation, had over $1.6
billion in assets.
To the knowledge of Registrant, none of the directors or
officers of FSB, except those set forth below, is or has been
at any time during the past two fiscal years engaged in any
other business, profession, vocation or employment of a
substantial nature, except that certain officers and directors
of FSB also hold positions with FSB's parent, First Source
Corporation. Set forth below are the names and principal
businesses of the directors of FSB who are engaged in any
other business, profession, vocation, or employment of a
substantial nature.
C-23
<PAGE> 98
<TABLE>
<CAPTION>
Position
Name with FSB Principal Occupation
- ---- -------- --------------------
<S> <C> <C>
Rev. E. William Beauchamp Director Executive Vice President
University of Notre Dame
South Bend, IN 46556
Paul R. Bowles Director Former Senior Vice
President
Clark Equipment Company
1202 East Jefferson
South Bend, IN 46617
(off-highway components
and construction machinery
manufacturing)
Philip J. Faccenda Director President
Bear Financial, Inc.
1222 E. Erskine
Manor Hill
South Bend, IN 46617
(venture capital)
Vice President and
General Counsel Emeritus
University of Notre Dame
South Bend, IN 46556
Daniel B. Fitzpatrick Director Chairman, President,
Chief Executive
Officer and Director
Quality Dining, Inc.
P. O. Box 416
South Band, IN 46624
(quick service and
casual dining
restaurant operator)
Terry L. Gerber Director President and Chief
Executive Officer
Gerber Manufacturing
Company
1417 Olivia Circle
South Bend, IN 46614
(manufacturer of police and
emergency outerwear)
Lawrence E. Hiler Director President
Hiler Industries
P.O. Box 639
La Porte, IN 46350
(metal casting)
</TABLE>
C-24
<PAGE> 99
<TABLE>
<S> <C> <C>
Anne M. Hillman Director Civic Leader
3904 Nall Court
South Bend, IN 46614
Hollis E. Hughes, Jr. Director Executive Director
United Way of
St. Joseph County
3517 E. Jefferson
P.O. Box 6396
South Bend, IN 46660
H. Thomas Jackson Director Chairman
Bornemann Coated Fabrics
Bornemann Products
P. O. Box 208
Bremen, IN 46506
(vinyl sales)
William P. Johnson Director Chairman & CEO
Goshen Rubber Co., Inc.
1525 S. 10th
Goshen, IN 46527
(manufacturer of
automotive rubber parts)
Craig A. Kapson Director President
Jordan Ford, Toyota, Volvo,
Lincoln Mercury
609 E. Jefferson
Mishawaka, IN 46545
(automobile sales)
David L. Lerman Director President
Steel Warehouse Company,
Inc.
2722 West Tucker Drive
South Bend, IN 46624
(warehouse storage)
Richard J. Pfeil Director Chairman and President
Koontz-Wagner Electric Co.
3801 Voorde Drive
South Bend, IN 46628
(electrical equipment repair,
construction and installation)
John T. Phair Director Vice President
The Holladay Corporation
220 Colfax, Suite 200
South Bend, IN 46601
(property management)
</TABLE>
C-25
<PAGE> 100
<TABLE>
<S> <C> <C>
Mark D. Schwabero Director Executive Vice President
Bosch Braking Systems Corp.
401 N. Bendix Drive
South Bend, IN 46634
(manufacturers of
automotive brakes and
brake components)
Elmer H. Tepe Director President
E.H. Tepe Co.
c/o 1st Source Corporation
100 North Michigan Street
South Bend, IN 46634
(holding company)
</TABLE>
(d) Miller Anderson and Sherrerd LLP, West Conshohocken,
Pennsylvania ("Miller Anderson") is a sub-investment adviser
for 1st Source Monogram Diversified Equity Fund. Miller
Anderson is wholly owned by Morgan Stanley Group, Inc., 1585
Broadway, New York, New York 10036. In addition to serving as
sub-investment adviser of such Fund, Miller Anderson provides
advice primarily to institutions, including other investment
companies, and currently has approximately $35 billion in
assets under management, of which approximately $2.4 billion
is managed using Miller Anderson's value style.
To the knowledge of Registrant, none of the directors or
officers of Miller Anderson, except those set forth below, is
or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or
employment of a substantial nature, except that certain
officers and directors of Miller Anderson also hold positions
with Miller Anderson's parent, Morgan Stanley Group, Inc. Set
forth below are the names and principal businesses of the
directors of Miller Anderson who are engaged in any other
business, profession, vocation, or employment of a substantial
nature.
<TABLE>
<CAPTION>
Partner Name and Address Nature of
of Miller Anderson of Business Connection
- ------------------ ---------------- ----------
<S> <C> <C>
Dean Williams Shanghai Dazhong Taxi Director
Co., Ltd.
920 Nanjing Road
16th Floor
Shanghai, China 200041
Marna C. Whittington Rohm & Haas Company Director
Independence Mall West
Philadelphia, PA 19105
</TABLE>
C-26
<PAGE> 101
<TABLE>
<S> <C> <C>
Berwind Group Director
1500 Market Street
3000 Centre Square West
Philadelphia, PA 19102
Ellen D. Harvey, CFA Owosso Corporation Director
One Tower Bridge
14th Floor
W. Conshohocken, PA 19428
</TABLE>
(e) Loomis Sayles & Company, L.P., Chicago, Illinois ("Loomis") is
a sub-investment adviser for 1st Source Monogram Diversified
Equity Fund. The sole general partner of Loomis is Loomis
Sayles & Company, Incorporated, One Financial Center, Boston,
Massachusetts 02111. In addition to serving as sub-investment
adviser of such Fund, Loomis provides investment advice to the
nine series of the Loomis Sayles Funds, nine series of Loomis
Sayles Investment Trust, six series of New England Funds Trust
I, one series of New England Funds Trust III, and three series
of New England Zenith Funds, all of which are registered
investment companies, and to other organizations and
individuals.
To the knowledge of Registrant, none of the directors or
officers of Loomis is or has been at any time during the past
two fiscal years engaged in any other business, profession,
vocation or employment of a substantial nature.
(f) Columbus Circle Investors ("CCI") is a general partnership
formed on September 9, 1994, which is registered as an
investment adviser under the Investment Advisers Act of 1940.
PIMCO Advisors L.P. and Columbus Circle Investors Management
Inc. ("CCI, Inc."), a wholly-owned subsidiary of PIMCO
Advisors L.P., are the general partners of CCI. CCI consists
of the personnel of the former Columbus Circle Investors
Division of Thomson Advisory Group L.P. ("TAGLP") and the
investment personnel of the former Mutual Funds Division of
TAGLP. CCI acts as sub-adviser to other mutual funds and also
advises and manages individual accounts, profit sharing and
pension funds and institutional accounts.
To the knowledge of Registrant, set forth below are the
substantial business engagements during at least the two past
fiscal years of each director or senior executive officer of
CCI:
C-27
<PAGE> 102
<TABLE>
<CAPTION>
NAME AND POSITION BUSINESS AND
WITH CCI OTHER CONNECTIONS
- ----------------- -----------------
<S> <C>
Irwin F. Smith Member of Equity and Operating Boards and
Chairman, Managing Operating Committee, PIMCO Advisors L.P.;
Director, Chief Director and Chairman, Columbus Circle
Executive Officer and Investors Management, Inc., Director,
Chief Investment Columbus Circle Trust Company
Officer
Donald A. Chiboucas Member of Operating Board, PIMCO Advisors
President and L.P.; Director and President, Columbus
Managing Director Circle Investors Management, Inc.
Louis P. Celentano Director and Vice President, Columbus
Managing Director Circle Investors Management, Inc.,
Director and Chairman, Columbus Circle
Trust Company
Daniel S. Pickett Member of Operating Board, PIMCO Advisors
Managing Director L.P. (1995); Director, Columbus Circle
Investors Management, Inc.
Amy M. Hogan Member of Operating Board, PIMCO Advisors
Managing Director L.P. (1996); Director, Columbus Circle
Investors Management, Inc.
Robert W. Fehrmann Director, Columbus Circle Investors
Managing Director Management Inc.
</TABLE>
The address of CCI, Columbus Circle Trust Company and Columbus
Circle Investors management Inc. is One Station Place,
Stamford, CT 06902.
PIMCO Advisors L.P. was organized as a limited partnership
under Delaware law in 1987 and is registered as an investment
adviser under the Investment Advisers Act of 1940. In
November 1994, PIMCO Advisors L.P. (then known as Thomson
Advisory Group, L.P. ("TAGLP")) combined its investment
advisory business with the investment advisory business of
several subsidiaries of Pacific Mutual Life Insurance Company
and changed its name to PIMCO Advisors L.P. PIMCO Advisors
L.P. manages three mutual fund complexes. PIMCO Advisors L.P.
also has various subsidiary partnerships, including CCI, which
advise and manage mutual funds, individual accounts,
profit-sharing and pension funds and institutional accounts
and act as sub-advisers to certain mutual funds.
PIMCO Partners, G.P. ("PIMCO GP"), PIMCO Advisors L.P.'s
general partner, is a general partnership with two partners:
(i) an indirect wholly-owned subsidiary of
C-28
<PAGE> 103
Pacific Mutual Life Insurance Company; and (ii) PIMCO
Partners, L.L.C. ("LLC"), a limited liability company, all of
the interests of which are held directly by the Managing
Directors of Pacific Investment Management Company who are
William H. Gross, Dean S. Meiling, James F. Muzzy, William F.
Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L.
Hague, William S. Thompson, Jr., William C. Powers, David H.
Edington and Benjamin L. Trosky (collectively, the "Managing
Directors"). PIMCO Partners, G.P. has substantially delegated
its management and control of PIMCO Advisors L.P. to an Equity
Board and an Operating board of PIMCO Advisors L.P. The
activities of PIMCO Advisors L.P. are controlled by its
Operating Board except that certain non-routine or
extraordinary actions may not be effected by the Operating
Board without the approval of PIMCO Advisors L.P.'s Equity
Board. The Operating Board has in turn delegated the
authority to manage day-to-day operations and policies to an
Operating Committee. The Operating Board is composed of
twelve members, of which seven (including the chairman) are
designated by Pacific Investment Management Company, a
subsidiary general partnership of PIMCO Advisors L.P. and a
sub-adviser to several mutual funds. The Equity Board is
composed of twelve members including the chief executive
officer of PIMCO Advisors L.P., three members designated by
Pacific Financial Asset Management Company, the chairman of
the Operating Board, two members designated by LLC, two
members designated by holders of Series B Preferred Stock of
Thomson Advisory Group Inc., the former general partner of
PIMCO Advisors L.P., and three independent members. Because
of the ability to designate a majority of the Members of the
Operating Board, Pacific Investment Management Company and the
Managing Directors could be said to control PIMCO Advisors
L.P., although the Managing Directors disclaim such authority.
Item 29. Principal Underwriter
(a) BISYS Fund Services Limited Partnership d/b/a BISYS Fund
Services ("BISYS") acts as distributor and administrator for
Registrant. BISYS also distributes the securities of The
Victory Portfolios, The HighMark Group, The Parkstone Group of
Funds, the AmSouth Mutual Funds, the American Performance
Funds, The Coventry Group, the BB&T Mutual Funds Group, The
ARCH Fund, Inc., The M.S.D.& T. Funds, Inc., the Pacific
Capital Funds, the MMA Praxis Mutual Funds, The Riverfront
Funds, Inc., the Summit Investment Trust, the Qualivest Funds
and the Marketwatch Funds, each of which is a management
investment company.
C-29
<PAGE> 104
(b) To the best of Registrant's knowledge, the partners of BISYS
are as follows:
<TABLE>
<CAPTION>
Positions and Offices Positions and
Name and Principal with The Winsbury Offices with
Business Address Company Registrant
------------------ --------------------- --------------
<S> <C> <C>
BISYS Fund Services, Sole General Partner None
Inc.
3435 Stelzer Road
Columbus, Ohio 43219
WC Subsidiary Limited Partner None
Corporation
3435 Stelzer Rd.
Columbus, Ohio 43229
</TABLE>
Item 30. Location of Accounts and Records
(1) National Bank of Commerce, One Commerce Square, Memphis,
Tennessee 38150 (records relating to its functions as
investment adviser for the Riverside Capital Funds).
(2) Martindale Andres & Company, Inc., 200 Four Falls Corporate
Center, West Conshohocken, Pennsylvania 19428 (records
relating to its functions as investment adviser for the
KeyPremier Funds).
(3) 1st Source Bank, 100 North Michigan Street, South Bend,
Indiana 46634 (records relating to its functions as investment
adviser for the 1st Source Monogram Funds).
(4) Miller Anderson and Sherrerd LLP, One Tower Bridge, Suite
1100, West Conshohocken, Pennsylvania 19428 (records relating
to its functions as sub-investment adviser for 1st Source
Monogram Diversified Equity Fund).
(5) Loomis Sayles & Company, L.P., 3 First National Plaza, Suite
5450, Chicago, Illinois 60600 (records relating to its
functions as sub-investment adviser for 1st Source Monogram
Diversified Equity Fund).
(6) Columbus Circle Investors, #1 Metro Place, Stamford,
Connecticut 06902 (records relating to its functions as
sub-investment adviser for 1st Source Monogram Diversified
Equity Fund).
(7) BISYS Fund Services Limited Partnership, 3435 Stelzer Road,
Columbus, Ohio 43219 (records relating to its functions as
manager, administrator and distributor).
(8) BISYS Fund Services Ohio, Inc. and BISYS Fund Services, Inc.,
3435 Stelzer Road, Columbus, Ohio 43219 (records
C-30
<PAGE> 105
relating to its functions as transfer agent and as fund
accountant).
(9) Baker & Hostetler, 65 East State Street, Columbus, Ohio 43215
(Declaration of Trust, By-Laws, and Minute Books).
(10) National City Bank, 1900 East 9th Street, Cleveland, Ohio
44114 (records relating to its function as custodian for the
Riverside Capital Funds).
(11) The Bank of New York, 48 Wall Street, New York, New York 10286
(records relating to its function as custodian for the
KeyPremier Funds).
(12) The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati,
Ohio 45263 (records relating to its function as custodian for
the 1st Source Monogram Funds).
Item 31. Management Services
None
Item 32. Undertakings
Registrant undertakes to file a post-effective amendment,
using reasonably current financial statements of KeyPremier
Aggressive Growth Fund, which need not be certified, within
four to six months of the commencement of operations of such
Fund.
C-31
<PAGE> 106
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbus, Ohio, on the 14th day of November,
1996.
THE SESSIONS GROUP
Registrant
/s/ Walter B. Grimm
-------------------------------
Walter B. Grimm, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Walter B. Grimm Principal Executive November 14, 1996
- -------------------------- Officer and Trustee
Walter B. Grimm
/s/*Stephen G. Mintos Principal Financial November 14, 1996
- -------------------------- Officer and Principal
Stephen G. Mintos Accounting Officer
/s/*Nancy E. Converse Trustee November 14, 1996
- --------------------------
Nancy E. Converse
/s/*Maurice G. Stark Trustee November 14, 1996
- --------------------------
Maurice G. Stark
/s/*James H. Woodward Trustee November 14, 1996
- --------------------------
James H. Woodward
/s/*Chalmers P. Wylie Trustee November 14, 1996
- --------------------------
Chalmers P. Wylie
*By/s/ Walter B. Grimm November 14, 1996
-----------------------
Walter B. Grimm
Attorney-In-Fact
</TABLE>
C-32
<PAGE> 107
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
Declaration of Trust dated as of April 25, 1988, was filed as
1(a) Exhibit (1)(a) to Post-Effective Amendment No. 34 to Registrant's
Registration Statement (No. 33-21489) filed on April 25, 1996.
(b) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted August 15, 1989, was filed as Exhibit (1)(b) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(c) Amendment of Article V, Section 5.3 of Declaration of Trust
adopted October 23, 1989, was filed as Exhibit (1)(c) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(d) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted July 23, 1991, was filed as Exhibit (1)(d) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(e) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted August 13, 1992, was filed as Exhibit (1)(e) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(f) Amendment of Article IV, Section 4.2 of Declaration of Trust as
adopted October 28, 1992, was filed as Exhibit (1)(f) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
</TABLE>
C-33
<PAGE> 108
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(g) Amendment of Article IV, Section 4.2 of Declaration of Trust as
adopted February 18, 1994, was filed as Exhibit (1)(g) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(h) Amendment of Article IV, Section 4.2 of Declaration of Trust as
adopted May 16, 1994, was filed as Exhibit (1)(h) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(i) Amendment to Article IV, Section 4.2 of Declaration of Trust as
adopted April 10, 10, 1996, was filed as Exhibit (1)(i) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(j) Amendment to Article IV, Section 4.2 of Declaration of Trust as
adopted May 16, 1996, was filed as Exhibit (1)(j) to
Post-Effective Amendment No. 35 to Registrant's Registration
Statement (No. 33-21489) filed on June 6, 1996.
(k) Amendment to Article IV, Section 4.2 of Declaration of Trust as
adopted August 15, 1996, was filed as Exhibit (1)(k) to
Post-Effective Amendment No. 36 to Registrant's Registration
Statement (No. 33-21489) filed on August 16, 1996.
(l) Amendment to Article IV, Section 4.2 of Declaration of Trust as
adopted as of September 27, 1996.
2 By-Laws were filed as Exhibit (2) to Post-Effective Amendment No.
34 to Registrant's Registration Statement (No. 33-21489) filed on
April 25, 1996.
</TABLE>
C-34
<PAGE> 109
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
5(a) Investment Advisory Agreement dated as of July 19, 1988, between
Registrant and National Bank of Commerce (with respect to
Riverside Capital Money Market Fund) was filed as Exhibit (5)(a)
to Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(b) Investment Advisory Agreement dated as of September 20, 1991,
between Registrant and National Bank of Commerce (with respect to
Riverside Capital Value Equity Fund and Riverside Capital Fixed
Income Fund) was filed as Exhibit (5)(b) to Post-Effective
Amendment No. 34 to Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(c) Investment Advisory Agreement dated as of October 27, 1992,
between Registrant and National Bank of Commerce (with respect to
Riverside Capital Tennessee Municipal Obligations Fund) was filed
as Exhibit (5)(c) to Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No. 33-21489) filed on April
25, 1996.
(d) Investment Advisory Agreement dated April 5, 1994, as amended June
3, 1994, between Registrant and National Bank of Commerce (with
respect to Riverside Capital Low Duration Government Securities
Fund and Riverside Capital Growth Fund) was filed as Exhibit
(5)(d) to Post-Effective Amendment No. 34 to Registrant's
Registration Statement (No. 33-21489) filed on April 25, 1996.
(e) Investment Advisory Agreement dated July 9, 1996, as proposed to
be amended as of January __, 1997, between Registrant and
Martindale Andres & Company, Inc. (with respect to the KeyPremier
Funds).
</TABLE>
C-35
<PAGE> 110
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(f) Investment Advisory Agreement dated August 20, 1996, between
Registrant and 1st Source Bank (with respect to 1st Source
Monogram Funds) was filed as Exhibit (5)(f) to Post-Effective
Amendment No. 37 to Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(g) Sub-Investment Advisory Agreement dated August 20, 1996, between
1st Source Bank and Miller Anderson & Sherrerd LLP (with respect
to 1st Source Monogram Diversified Equity Fund) was filed as
Exhibit (5)(g) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement (No. 33-21489) filed on October 21, 1996.
(h) Sub-Investment Advisory Agreement dated August 20, 1996, between
1st Source Bank and Loomis Sayles & Company, L.P. (with respect to
1st Source Monogram Diversified Equity Fund) was filed as Exhibit
(5)(h) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement (No. 33-21489) filed on October 21, 1996.
(i) Sub-Investment Advisory Agreement dated August 20, 1996, between
1st Source Bank and Columbus Circle Investors (with respect to 1st
Source Monogram Diversified Equity Fund) was filed as Exhibit
(5)(i) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement (No. 33-21489) filed on October 21, 1996.
</TABLE>
C-36
<PAGE> 111
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
6(a) Distribution Agreement dated October 1, 1993, as amended as of
June 3, 1994, between Registrant and The Winsbury Company Limited
Partnership was filed as Exhibit (6)(a) to Post-Effective
Amendment No. 30 to Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(b) Form of Selected Dealer Agreement was filed as Exhibit (6)(b) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(c) Distribution Agreement dated as of July 9, 1996, as proposed to be
amended as of January __, 1997, between Registrant and BISYS Fund
Services Limited Partnership (relating to the KeyPremier Funds).
(d) Form of Shareholder Services Agreement was filed as Exhibit (6)(d)
to Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(e) Distribution Agreement dated as of August 20, 1996, between
Registrant and BISYS Fund Services Limited Partnership (relating
to the 1st Source Monogram Funds) was filed as Exhibit (6)(e) to
Post-Effective Amendment No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21, 1996.
8(a) Custodial Services Agreement dated as of March 1, 1995, between
Registrant and National City Bank (with respect to the Riverside
Capital Funds) was filed as Exhibit (8) of Post-Effective
Amendment No. 33 to Registrant's Registration Statement (No.
33-21489) filed on October 30, 1995.
</TABLE>
C-37
<PAGE> 112
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(b) Custody Agreement dated July 9, 1996, as proposed to be amended as
of January __, 1997, between Registrant and The Bank of New York
(with respect to the KeyPremier Funds).
(c) Custody Agreement dated August 20, 1996, between Registrant and
The Fifth Third Bank (with respect to the 1st Source Monogram
Funds) was filed as Exhibit (8)(c) to Post-Effective Amendment No.
37 to Registrant's Registration Statement (No. 33-21489) filed on
October 21, 1996.
9(a) Management and Administration Agreement dated August 23, 1990, as
amended October 27, 1992, between Registrant and The Winsbury
Company Limited Partnership (with respect to Riverside Capital
Money Market Fund, Riverside Capital Equity Fund, Riverside
Capital Fixed Income Fund and Riverside Capital Tennessee
Municipal Obligations Fund) was filed as Exhibit (9)(a) to
Post-Effective Amendment No. 25 to Registrant's Registration
Statement (No. 33-21489) filed on April 27, 1993.
(g) Transfer Agency Agreement dated as of September 1, 1992, as
amended as of May 1, 1994, between Registrant and BISYS Fund
Services Ohio, Inc. (formerly The Winsbury Service Corporation)
(with respect to the Riverside Capital Funds) was filed as Exhibit
(9)(g) to Post-Effective Amendment No. 30 to Registrant's
Registration Statement (No. 33-21489) filed on August 24, 1994.
</TABLE>
C-38
<PAGE> 113
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(h) Fund Accounting Agreement dated February 4, 1993, between
Registrant and The Winsbury Service Corporation (with respect to
Riverside Capital Money Market Fund, Riverside Capital Equity
Fund, Riverside Capital Fixed Income Fund and Riverside Capital
Municipal Obligations Fund) was filed as Exhibit (9)(h) to
Post-Effective Amendment No. 25 to Registrant's Registration
Statement (No. 33-21489) filed on April 27, 1993.
(r) Administrative Services Plan of Registrant effective October 19,
1993 was filed as Exhibit (9)(r) to Post-Effective Amendment No.
28 to Registrant's Registration Statement (No. 33-21489) filed on
February 4, 1994.
(s) Servicing Agreement to Administrative Services Plan dated as of
October 19, 1993, between Registrant and National Bank of Commerce
(with respect to Riverside Capital Money Market Fund, Riverside
Capital Equity Fund, Riverside Capital Fixed Income Fund and
Riverside Capital Tennessee Municipal Obligations Fund) was filed
as Exhibit (9)(s) to Post-Effective Amendment No. 29 to
Registrant's Registration Statement (No. 33-21489) filed on April
4, 1994.
(u) Management and Administration Agreement dated April 5, 1994, as
amended as of June 3, 1994, between Registrant and The Winsbury
Company Limited Partnership (with respect to Riverside Capital Low
Duration Government Securities Fund and Riverside Capital Growth
Fund) was filed as Exhibit (9)(u) to Post-Effective Amendment No.
30 to Registrant's Registration Statement (No. 33-21489) filed on
August 24, 1994.
</TABLE>
C-39
<PAGE> 114
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(v) Fund Accounting Agreement dated April 5, 1994, as amended June 3,
1994, between Registrant and The Winsbury Service Corporation
(with respect to Riverside Capital Low Duration Government
Securities Fund and Riverside Capital Growth Fund) was filed as
Exhibit (9)(v) to Post-Effective Amendment No. 30 to Registrant's
Registration Statement (No. 33-21489) filed on August 24, 1994.
(w) Servicing Agreement to Administrative Services Plan dated April 5,
1994, between Registrant and National Bank of Commerce (with
respect to Riverside Capital Low Duration Government Securities
Fund and Riverside Capital Growth Fund) was filed as Exhibit
(9)(w) to Post-Effective Amendment No. 30 to Registrant's
Registration Statement (No. 33-21489) filed on August 24, 1994.
(x) Management and Administration Agreement dated July 9, 1996, as
proposed to be amended as of January __, 1997, between Registrant
and BISYS Fund Services Limited Partnership (with respect to the
KeyPremier Funds).
(y) Fund Accounting Agreement dated July 9, 1996, as proposed to be
amended as of January __, 1997, between Registrant and BISYS Fund
Services, Inc. (with respect to the KeyPremier Funds).
(z) Transfer Agency Agreement dated July 9, 1996, as proposed to be
amended as of January __, 1997, between Registrant and BISYS Fund
Services, Inc. (with respect to the KeyPremier Funds).
(aa) Management and Administration Agreement dated August 20, 1996,
between Registrant and BISYS Fund Services Limited Partnership
(with respect to the 1st Source Funds) was filed as Exhibit
(9)(aa) to Post-Effective Amendment No. 37 to Registrant's
Registration
</TABLE>
C-40
<PAGE> 115
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
Statement (No. 33-21489) filed on October 21, 1996.
(ab) Fund Accounting Agreement dated August 20, 1996, between
Registrant and BISYS Fund Services, Inc. (with respect to the 1st
Source Monogram Funds) was filed as Exhibit (9)(ab) to
Post-Effective Amendment No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21, 1996.
(ac) Transfer Agency Agreement dated August 20, 1996, between
Registrant and BISYS Fund Services, Inc. (with respect to the 1st
Source Monogram Funds) was filed as Exhibit (9)(ac) to
Post-Effective Amendment No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21, 1996.
(ad) Form of Servicing Agreement to Administrative Services Plan was
filed as Exhibit (9)(ad) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No. 33-21489) filed on June
6, 1996.
10(a) Opinion of Counsel with respect to Shares of KeyPremier Aggressive
Growth Fund. Opinion of Counsel with respect to Shares of
KeyPremier Established Growth Fund and KeyPremier Intermediate
Term Income Fund was filed as Exhibit (10)(a) to Post-Effective
Amendment No. 36 to Registrant's Registration Statement (No.
33-21489) filed on August 16, 1996. Opinion of Counsel with
respect to Shares of 1st Source Monogram U.S. Treasury Obligations
Money Market Fund, 1st Source Monogram Diversified Equity Fund,
1st Source Monogram Income Equity Fund, 1st Source Monogram
Special Equity Fund, 1st Source Monogram Income Fund and 1st
Source Monogram Intermediate Tax-Free Bond Fund was filed as
Exhibit (10)(a) to Post-Effective Amendment No. 35 to
</TABLE>
C-41
<PAGE> 116
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
Registrant's Registration Statement (No. 33-21489) filed on June
6, 1996. Opinion of Counsel with respect to Shares of the
KeyPremier Prime Money Market Fund and the KeyPremier Pennsylvania
Municipal Bond Fund was filed as Exhibit (10)(a) to Post-Effective
Amendment No. 34 to Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996. An Opinion of Counsel was
filed by Notice on August 28, 1996, pursuant to Rule 24f-2 (with
respect to Riverside Capital Money Market Fund, Riverside Capital
Value Equity Fund, Riverside Capital Fixed Income Fund, Riverside
Capital Tennessee Municipal Obligations Fund, Riverside Capital
Low Duration Government Securities Fund and Riverside Capital
Growth Fund).
(b) Opinion of Special Counsel with respect to Riverside Capital
Tennessee Municipal Obligations Fund was filed as Exhibit (10)(b)
to Post-Effective Amendment No. 23 to Registrant's Registration
Statement (No. 33-21489) filed on October 30, 1992.
11(a) Consent of KPMG Peat Marwick LLP.
(b) Consent of Burch, Porter & Johnson was filed as Exhibit (11)(b) to
Post-Effective Amendment No. 23 to Registrant's Registration
Statement (No. 33-21489) filed on October 30, 1992.
(c) Consent of Coopers & Lybrand L.L.P. was filed as Exhibit (11)(c)
to Post-Effective Amendment No. 35 to Registrant's Registration
Statement (No. 33-21489) filed on June 6, 1996
13 Purchase Agreement dated as of July 19, 1988, between Registrant
and Winsbury Associates was filed as Exhibit (13) to Pre-Effective
Amendment No. 2
</TABLE>
C-42
<PAGE> 117
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
to Registrant's Registration Statement (No. 33-21489) filed on
July 21, 1988.
15(a) Rule 12b-1 Plan (with respect to the Riverside Capital Funds) was
filed as Exhibit (15)(a) to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement (No. 33-21489) filed on
July 21, 1988.
(c) Rule 12b-1 Plan (with respect to the 1st Source Monogram Funds)
was filed as Exhibit (15)(c) to Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No. 33-21489) filed on June
6, 1996.
(h) Rule 12b-1 Agreement dated October 1, 1993, between The Winsbury
Company Limited Partnership and National Bank of Commerce (with
respect to Riverside Capital Money Market Fund, Riverside Capital
Equity Fund, Riverside Capital Fixed Income Fund and Riverside
Capital Tennessee Municipal Obligations Fund) was filed as Exhibit
(15)(h) to Post-Effective Amendment No. 27 to Registrant's
Registration Statement (No. 33-21489) filed on October 19, 1993.
(m) Rule 12b-1 Agreement dated October 1, 1993, between The Winsbury
Company Limited Partnership and Commerce Investment Corporation
(with respect to Riverside Capital Money Market Fund, Riverside
Capital Value Equity Fund, Riverside Capital Fixed Income Fund and
Riverside Capital Tennessee Municipal Obligations Fund) was filed
as Exhibit (15)(m) to Post-Effective Amendment No. 27 to
Registrant's Registration Statement (No. 33-21489) filed on
October 19, 1993.
(n) Rule 12b-1 Agreement dated October 19, 1993, between Registrant
and The Winsbury Company Limited Partnership
</TABLE>
C-43
<PAGE> 118
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(with respect to Riverside Capital Money Market Fund, Riverside
Capital Value Equity Fund, Riverside Capital Fixed Income Fund and
Riverside Capital Tennessee Municipal Obligations Fund) was filed
as Exhibit (15)(n) to Post-Effective Amendment No. 28 to
Registrant's Registration Statement (No. 33-21489) filed on
February 4, 1994.
(o) Rule 12b-1 Agreement dated as of April 5, 1994, between The
Winsbury Company Limited Partnership and Commerce Investment
Corporation (with respect to Riverside Capital Low Duration
Government Securities Fund and Riverside Capital Growth Fund) was
filed as Exhibit (15)(o) to Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No. 33-21489) filed on August
24, 1994.
(p) Rule 12b-1 Agreement dated as of April 5, 1994, between Registrant
and The Winsbury Company Limited Partnership (with respect to
Riverside Capital Low Duration Government Securities Fund and
Riverside Capital Growth Fund) was filed as Exhibit (15)(p) to
Post-Effective Amendment No. 30 to Registrant's Registration
Statement (No. 33-21489) filed on August 24, 1994.
(s) Rule 12b-1 Agreement dated as of May 16, 1994, between J.C.
Bradford & Co. and The Winsbury Company Limited Partnership (with
respect to The Riverside Capital Funds) was filed as Exhibit
(15)(s) to Post-Effective Amendment No. 30 to Registrant's
Registration Statement (No. 33-21489) filed on August 24, 1994.
(t) Rule 12b-1 Agreement dated as of May 16, 1994, between Morgan,
Keegan & Co. and The Winsbury Company Limited Partnership (with
respect to The Riverside Capital Funds) was filed as Exhibit
(15)(t) to Post-Effective Amendment No. 30 to Registrant's
Registration Statement (No. 33-21489) filed on August 24, 1994.
</TABLE>
C-44
<PAGE> 119
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(u) Rule 12b-1 Agreement dated as of August 1, 1994, between J.J.B.
Hilliard, W.L. Lyons, Inc. and The Winsbury Company Limited
Partnership (with respect to the Riverside Capital Funds) was
filed as Exhibit (15)(u) to Post-Effective Amendment No. 31 to
Registrant's Registration Statement (No. 33-21489) filed on
October 14, 1994.
(v) Rule 12b-1 Agreement dated as of August 31, 1994, between
TrustMark Investments, Inc. and The Winsbury Company Limited
Partnership Agreement (with respect to the Riverside Capital
Funds) was filed as Exhibit (15)(v) to Post-Effective Amendment
No. 31 to Registrant's Registration Statement (No. 33-21489) filed
on October 14, 1994.
16(a) Computation of Performance Quotations for Riverside Capital Money
Market Fund was filed as Exhibit (16)(a) to Post-Effective
Amendment No. 27 to Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(b) Computation of Performance Quotations for Riverside Capital Value
Equity Fund and Riverside Capital Fixed Income Fund was filed as
Exhibit (16)(b) to Post-Effective Amendment No. 27 to Registrant's
Registration Statement (No. 33-21489) filed on October 19, 1993.
(f) Computation of Performance Quotations for Riverside Capital
Tennessee Municipal Obligations Fund was filed as Exhibit (16)(f)
to Post-Effective Amendment No. 27 to Registrant's Registration
Statement (No. 33-21489) filed on October 19, 1993.
(h) Computation of Performance Quotations for Riverside Capital Low
Duration Government Securities Fund and Riverside Capital Growth
Fund was filed as Exhibit (16)(h) to Post-Effective Amendment No.
33 to Registrant's Registration Statement (No. 33-21489) filed on
October 30, 1995.
</TABLE>
C-45
<PAGE> 120
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(i) Computation of Performance Quotations for KeyPremier Established
Growth Fund and KeyPremier Aggressive Growth Fund. Computation of
Performance Quotations for KeyPremier Prime Money Market Fund,
KeyPremier Pennsylvania Municipal Bond Fund and KeyPremier
Intermediate Term Income Fund to be filed by amendment.
(j) Computation of Performance Quotations for the 1st Source Monogram
Funds was filed as Exhibit (16)(j) to Post-Effective Amendment No.
37 to Registrant's Registration Statement (No. 33-21489) filed on
October 21, 1996.
17 Financial Data Schedules for the Riverside Capital Funds were
filed as Exhibit (17) to Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No. 33-21489) filed on
October 21, 1996. Financial Data Schedules for the KeyPremier
Funds and the 1st Source Monogram Funds to be filed by amendment.
18 None.
19(a) Powers of Attorney of Stephen G. Mintos, Maurice G. Stark and
Chalmers P. Wylie, Walter B. Grimm were filed as Exhibit (17)(a)
to Post-Effective Amendment No. 30 to Registrant's Registration
Statement (No. 33-21489) filed on August 24, 1994.
(b) Consent of Baker & Hostetler
(c) Power of Attorney of Nancy E. Converse was filed as Exhibit
(19)(c) to Post-Effective Amendment No. 36 to Registrant's
Registration Statement (No. 33-21489) filed on August 16, 1996.
(d) Power of Attorney of James H. Woodward was filed as Exhibit
(19)(d) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement (No. 33-21489) filed on October 21, 1996.
</TABLE>
C-46
<PAGE> 121
As filed with the Securities and Exchange Commission November 15, 1996
1933 Act Registration No. 33-21489
1940 Act File No. 811-5545
EXHIBITS TO
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 38 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT [X]
COMPANY ACT OF 1940
Amendment No. 40 [X]
The Sessions Group
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(800) 752-1823
<PAGE> 1
EXHIBIT (1)(l)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
Amended: September 27, 1996
The first paragraph of ARTICLE IV, Section 4.2 of the Group's
Declaration of Trust dated as of April 25, 1988, as amended to date, is amended
further amended by deleting such first paragraph of ARTICLE IV, Section 4.2 in
its entirety and by substituting in place thereof the following new first
paragraph of ARTICLE IV, Section 4.2:
"Section 4.2. Establishment and Designation of Series
Without limiting the authority of the Trustees set forth in Section
4.1 to establish and designate any further series, there is hereby established
and designated an initial series of shares designated Series A, which shall
represent interests in Riverside Capital Money Market Fund, and there is
further established and designated additional series of shares designated
Series D, which shall represent interests in Riverside Capital Value Equity
Fund, Series E, which shall represent interests in Riverside Capital Fixed
Income Fund, Series M, which shall represent interests in Riverside capital
Tennessee Municipal Obligations Fund, Series Q, which shall represent interests
in Riverside Capital Low Duration Government Securities Fund, Series S, which
shall represent interests in Riverside capital Growth Fund, Series U, which
shall represent interests in KeyPremier Prime Money Market Fund, Series V,
which shall represent interests in KeyPremier Pennsylvania Municipal Bond Fund,
Series W, which shall represent interests in 1st Source Monogram U.S. Treasury
Obligations Money Market Fund, Series X, which shall represent interests in 1st
Source Monogram Diversified Equity Fund, Series Y, which shall represent
interests in 1st Source Monogram Income Equity Fund, Series Z, which shall
represent interests in 1st Source Monogram Special Equity Fund, Series AA,
which shall represent interests in 1st Source Monogram Income Fund, Series AB,
which shall represent interests in 1st Source Monogram Intermediate Tax-Free
Bond Fund, Series AC, which shall represent interests in KeyPremier Established
Growth Fund, Series AD, which shall represent interests in KeyPremier
Intermediate Term Income Fund, and Series AE, which shall represent interests
in KeyPremier Aggressive Growth Fund. Shares of Series A, Series D, Series E,
Series M, Series Q, Series S, Series U, Series V, Series W, Series X, Series Y,
Series Z, Series AA, Series AB, Series AC, Series AD, Series AE and of any
further series that may from time to time be established and designated by the
Trustees shall (unless the Trustees otherwise determine with respect to some
further series or subseries at the time of establishing and designating the
same) have the following relative rights and preferences:"
<PAGE> 1
Exhibit (5)(e)
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of July 9, 1996, between THE SESSIONS GROUP,
an Ohio business trust (the "Trust"), and Martindale Andres & Company, Inc., a
Pennsylvania corporation (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to
provide, or to arrange for the provision of, investment advisory services to
two newly created investment portfolios of the Trust and may retain the
Investment Adviser to serve in such capacity to certain additional investment
portfolios of the Trust, all as now or hereafter may be identified in Schedule
A hereto (such new investment portfolios and any such additional investment
portfolios together called the "Funds") and the Investment Adviser represents
that it is willing and possesses legal authority to so furnish such services
without violation of applicable laws (including the Glass-Steagall Act) and
regulations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
Section 1. Appointment. The Trust hereby appoints the
Investment Adviser to act as investment adviser to the Funds for the period and
on the terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. Additional investment portfolios may from time
to time be added to those covered by this Agreement by the parties executing a
new Schedule A which shall become effective upon its execution and shall
supersede any Schedule A having an earlier date.
Section 2. Delivery of Documents. The Trust has furnished the
Investment Adviser with copies properly certified or authenticated of each of
the following:
(a) the Trust's Declaration of Trust, executed as of
April 25, 1988, and as filed with the Secretary of State of Ohio on
April 25, 1988, as amended or restated to the date hereof (such
Declaration, as presently in effect and as it shall from time to time
be amended or restated, is herein called the "Declaration of Trust");
(b) the Trust's By-Laws and any amendments thereto;
<PAGE> 3
(c) resolutions of the Trust's Board of Trustees
authorizing the appointment of the Investment Adviser and approving
this Agreement;
(d) the Trust's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange
Commission on April 27, 1988 and all amendments thereto;
(e) all of the Trust's procedures and guidelines and all
resolutions of the Trust's Board relevant to the services to be
provided by the Investment Adviser hereunder;
(f) the Trust's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended ("1933 Act"), (File No.
33-21489), and under the 1940 Act as filed with the Securities and
Exchange Commission and the most recent amendment thereto; and
(g) the most recent Prospectus and Statement of
Additional Information of each of the Funds (such Prospectus and
Statement of Additional Information, as presently in effect, and all
amendments and supplements thereto, are herein collectively called the
"Prospectus").
The Trust will furnish the Investment Adviser from time to
time with copies of all amendments of or supplements to the foregoing.
Section 3. Management. Subject to the supervision of the
Trust's Board of Trustees, the Investment Adviser will provide a continuous
investment program for each of the Funds, including investment research and
management with respect to all securities and investments and cash equivalents
in the Funds. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Trust with respect to the Funds and will implement such determinations through
the placement, in the name of the Funds, of orders for the execution of
portfolio transactions with or through such brokers or dealers as it may
select. The Investment Adviser will provide the services under this Agreement
in accordance with each of the Fund's investment objectives, policies, and
restrictions as stated in the Prospectus, as the same may be amended,
supplemented or restated from time to time, and resolutions of the Trust's
Board of Trustees.
In fulfilling its responsibilities hereunder, the Investment Adviser
further agrees that it will:
- 2 -
<PAGE> 4
(a) 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;
(b) conform with all applicable Rules and Regulations of
the Securities and Exchange Commission and in addition will conduct
its activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Investment Adviser;
(c) not make loans to any person to purchase or carry
shares of beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to its investment
determinations for the Funds either directly with the issuer or with
any broker or dealer. In placing orders with brokers and dealers, the
Investment Adviser will attempt to obtain prompt execution of orders
in an effective manner at the most favorable price. In assessing the
best execution available for any transaction, the Investment Adviser
shall consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial
condition and execution capability of the broker-dealer and the
reasonableness of the commission, if any (for the specific transaction
and on a continuing basis). Consistent with this obligation, the
Investment Adviser may, in its discretion and to the extent permitted
by law, purchase and sell portfolio securities to and from brokers and
dealers who provide brokerage and research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934) to or
for the benefit of the Funds and/or other accounts over which the
Investment Adviser exercises investment discretion. Subject to the
review of the Trust's Board of Trustees from time to time with respect
to the extent and continuation of the policy, the Investment Adviser
is authorized to pay a broker or dealer who provides such brokerage
and research services a commission for effecting a securities
transaction for any of the Funds which is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Investment Adviser determines in
good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker
or dealer, viewed in terms of either that particular transaction or
the overall responsibilities of the Investment Adviser with respect to
the accounts as to which it exercises investment discretion. In
placing orders with brokers and dealers, consistent with applicable
laws, rules and regulations, the Investment Adviser may consider the
sale
- 3 -
<PAGE> 5
of shares of the Trust. Except as otherwise permitted by applicable
laws, rules and regulations, in no instance will portfolio securities
be purchased from or sold to BISYS Fund Services Limited Partnership,
the Investment Adviser or any affiliated person of the Trust, BISYS
Fund Services Limited Partnership or the Investment Adviser;
(e) will maintain all books and records with respect to
the securities transactions of the Funds and will furnish the Trust's
Board of Trustees such periodic and special reports as the Board may
request;
(f) will treat confidentially and as proprietary
information of the Trust all records and other information relative to
the Trust and the Funds 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 Trust,
which approval shall not be unreasonably withheld and may not be
withheld where the Investment 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 Trust; and
(g) will maintain its policy and practice of conducting
its fiduciary functions independently. In making investment
recommendations for the Funds, the Investment Adviser's personnel will
not inquire or take into consideration whether the issuers of
securities proposed for purchase or sale for the Trust's account are
customers of the Investment Adviser or of its parents, subsidiaries or
affiliates. In dealing with such customers, the Investment Adviser
and its parents, subsidiaries, and affiliates will not inquire or take
into consideration whether securities of those customers are held by
the Trust.
Section 4. Services Not Exclusive. The investment management
services furnished by the Investment Adviser hereunder are not to be deemed
exclusive, and the Investment Adviser shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired
thereby.
Section 5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Investment Adviser hereby
agrees that all records which it maintains for the Funds are the property of
the Trust and further agrees to surrender promptly to the Trust any of such
records upon the Trust's request. The Investment Adviser further agrees to
preserve for the periods
- 4 -
<PAGE> 6
prescribed by Rule 31a-2 under the 1940 Act, the records required to be
maintained by Rule 31a-1 under the 1940 Act.
Section 6. Expenses. During the term of this Agreement, the
Investment 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 Funds.
Section 7. Compensation. For the services provided and the
expenses assumed pursuant to this Agreement, each of the Funds will pay the
Investment Adviser and the Investment Adviser will accept as full compensation
therefor a fee as set forth on Schedule A hereto. The obligations of the Funds
to pay the above-described fee to the Investment Adviser will begin as of the
respective dates of the initial public sale of shares in the Funds; provided,
however, that the Investment Adviser shall waive all such fees until such time
as it notifies the Trust that it has terminated such waiver. Thereafter, the
Investment Adviser may from time to time waive some or all of such fees until
such time as it notifies the Trust that it has terminated such waiver. Upon
any termination of this Agreement before the end of any month, the fee for such
part of a month shall be prorated 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 the Investment Adviser,
the value of the net assets of a particular Fund shall be computed in the
manner described in the Trust's Declaration of Trust or in the Prospectus or
Statement of Additional Information respecting that Fund as from time to time
is in effect for the computation of the value of such net assets in connection
with the determination of the liquidating value of the shares of such Fund.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, the Investment
Adviser will reimburse the Fund for a portion of such excess expenses equal to
such excess times the ratio of the fees otherwise payable by the Fund to the
Investment Adviser hereunder to the aggregate fees otherwise payable by the
Fund to the Investment Adviser hereunder and to BISYS Fund Services Limited
Partnership under the Administration Agreement between BISYS Fund Services
Limited Partnership and the Trust and to BISYS Fund Services, Inc. under the
Fund Accounting Agreement between BISYS Fund Services, Inc. and the Trust. The
obligation of the Investment Adviser to reimburse the Funds 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 Investment
Adviser shall
- 5 -
<PAGE> 7
reimburse the Funds for such proportion 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 Trust so
require. Such expense reimbursement, if any, will be estimated daily and
reconciled and paid on a monthly basis.
Section 8. Limitation of Liability. Notwithstanding anything
herein to the contrary, the Investment Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Funds 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 Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under
this Agreement.
Section 9. Duration and Termination. This Agreement will become
effective as of the date first written above (or, if a particular Fund is not
in existence on that date, on the date a registration statement relating to
that Fund becomes effective with the Securities and Exchange Commission and
Schedule A hereto is amended to add such Fund), provided that it shall have
been approved by vote of a majority of the outstanding voting securities of
such Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until July 9,
1998.
Thereafter, if not terminated, this Agreement shall continue
in effect as to a particular Fund for successive periods of twelve months each
ending on July 9 of each year, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of
the Trust's Board of Trustees 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 vote of a
majority of the Trust's Board of Trustees or by the vote of a majority of all
votes attributable to the outstanding Shares of such Fund. Notwithstanding the
foregoing, this Agreement may be terminated as to a particular Fund at any time
on sixty days' written notice, without the payment of any penalty, by the Trust
(by vote of the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund) or by the Investment Adviser. 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 meanings as ascribed
to such terms in the 1940 Act.)
- 6 -
<PAGE> 8
Section 10. Investment Adviser's Representations. The Investment
Adviser hereby represents that it is willing and possesses all requisite legal
authority to provide the services contemplated by this Agreement without
violation of applicable laws and regulations, including but not limited to the
Glass-Steagall Act and the regulations promulgated thereunder.
Section 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.
Section 12. Name. The Trust hereby acknowledges that the name
"KeyPremier" is a property right of the Investment Adviser. The Investment
Adviser agrees that the Trust and the Funds may, so long as this Agreement
remains in effect, use "KeyPremier" as part of its name. The Investment
Adviser may permit other persons, firms or corporations, including other
investment companies, to use such name and may, upon termination of this
Agreement, require the Trust and the Funds to refrain from using the name
"KeyPremier" in any form or combination in its name or in its business or in
the name of any of its Funds, and the Trust shall, as soon as practicable
following its receipt of any such request from the Investment Adviser, so
refrain from using such name.
Section 13. 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 the law of the State of Ohio.
The Sessions Group is a business trust organized under Chapter
1746, Ohio Revised Code and under a Declaration of Trust, to which reference is
hereby made and a copy of which is on file at the office of the Secretary of
State of Ohio as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "The Sessions Group" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in
Section 1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Funds of the Trust must look solely to the assets of the Trust belonging to
such Fund for the enforcement of any claims against the Trust.
- 7 -
<PAGE> 9
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.
THE SESSIONS GROUP
By /s/ Walter B. Grimm
-------------------------------
Name Walter B. Grimm
Title President
----------------------------
MARTINDALE ANDRES & COMPANY, INC.
By /s/ Robert P. Andres
-------------------------------
Name Robert P. Andres
Title Chief Operating Officer
----------------------------
- 8 -
<PAGE> 10
Dated: January __, 1997
Schedule A
to the
Investment Advisory Agreement
between The Sessions Group and
Martindale Andres & Company, Inc.
dated as of July 9, 1996
<TABLE>
<S> <C> <C>
Name of Fund Compensation* Date
------------ ------------ ----
The KeyPremier Prime Annual Rate of forty July 9, 1996
Money Market Fund one-hundredths of one
percent (0.40%) of such
Fund's average net
assets
The KeyPremier Annual rate of sixty July 9, 1996
Pennsylvania Municipal one-hundredths of one
Bond Fund percent (.60%) of such
Fund's average daily net
assets
The KeyPremier Annual rate of seventy- October __, 1996
Established Growth Fund five one-hundredths of
one percent (.75%) of
such Fund's average
daily net assets
The KeyPremier Annual rate of sixty October __, 1996
Intermediate Term Income one-hundredths of one
Fund percent (.60%) of such
Fund's average daily net
assets
The KeyPremier Aggressive Annual rate of one January __, 1997
Growth Fund percent (1.00%) of such
Fund's average daily net
assets
</TABLE>
MARTINDALE ANDRES & COMPANY, INC. THE SESSIONS GROUP
By By
---------------------------- --------------------------
Name Robert P. Andres Name Walter B. Grimm
------------------------- ----------------------
Title Chief Operating Officer Title President
------------------------- ----------------------
__________________________________
*All Fees are computed daily and paid monthly.
A-1
<PAGE> 1
EXHIBIT (6)(c)
<PAGE> 2
DISTRIBUTION AGREEMENT
This Agreement is made this 9th day of July, 1996, between The
Sessions Group, an Ohio business trust (the "Trust"), 3435 Stelzer Road,
Columbus, Ohio 43219, and BISYS Fund Services Limited Partnership d/b/a BISYS
Fund Services, an Ohio limited partnership ("Distributor"), 3435 Stelzer Road,
Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment company,
organized as an Ohio business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios of
the Trust identified on Schedule A hereto as such Schedule may be amended from
time to time (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor.
1.1 Distributor will act as agent for the distribution of the
Shares covered by the registration statement and prospectus of the Trust then
in effect under the Securities Act of 1933, as amended ("1933 Act"). As used
in this Agreement, the term "registration statement" shall mean Parts A (the
prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N- 1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term
"prospectus" shall mean each form of prospectus and Statement of Additional
Information used by the Funds for delivery to shareholders and prospective
shareholders after the effective dates of the above referenced registration
statements, together with any amendments and supplements thereto.
1.2 Distributor 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
Trust understands that Distributor is now and, in the future, may be the
distributor of the shares of several investment companies or series (together,
"Companies") including Companies having investment objectives similar to those
of the Trust. The Trust further understands that investors and potential
investors in the Trust may invest in shares of such other Companies. The Trust
agrees that Distributor's duties to such Companies shall not be deemed in
conflict with its duties to the Trust under this paragraph 1.2.
<PAGE> 3
Distributor 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 In its capacity as distributor of the Shares, all activities
of Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all rules and regulations promulgated by the Commission thereunder and all
rules and regulations adopted by any securities association registered under
the Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5 Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent and custodian for
the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust'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 Distributor 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 Trust 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 Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall fairly
show or represent what they purport to show or represent. The Trust shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Trust, (b) a monthly itemized
list of the securities in the Funds, (c) monthly
- 2 -
<PAGE> 4
balance sheets as soon as practicable after the end of each month, and (d) from
time to time such additional information regarding the financial condition of
the Funds as Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Trust with
the Commission under the 1933 Act have been carefully prepared in conformity
with the requirements of said Act and rules and regulations of the Commission
thereunder and all statements of fact contained in any such registration
statement and prospectus will be true and correct when such registration
statement becomes effective. Furthermore, neither any registration statement
nor any prospectus when such registration statement becomes effective includes
an untrue statement of a material fact or omits 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 Trust 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 Trust's
counsel, be necessary or advisable. If the Trust shall not propose such
amendment or amendments and/or supplement or supplements within fifteen days
after receipt by the Trust of a written request from Distributor to do so,
Distributor may, at its option, terminate this Agreement. The Trust shall not
file any amendment to any registration statement or supplement to any
prospectus without giving Distributor reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any way
limit the Trust's right to file at any time such amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Trust may deem advisable, such right being in all respects absolute and
unconditional.
1.11 The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Trust agrees to indemnify, defend and hold Distributor, its
several partners and employees, and any person who controls Distributor within
the meaning of Section 15 of the 1933 Act free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor, its partners and
employees, or any such controlling person, may incur under the 1933 Act or
under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact
- 3 -
<PAGE> 5
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 Trust's agreement to indemnify Distributor, its partners or
employees, 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 and in such financial and
other statements as are furnished in writing to the Trust by Distributor 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 Trust's agreement to
indemnify Distributor and the Trust's representations and warranties
hereinbefore set forth in paragraph 1.10 shall not be deemed to cover any
liability to the Trust or its Shareholders to which Distributor would otherwise
be subject by reason of willful misfeasance, bad faith or negligence in the
performance of its duties, or by reason of Distributor's reckless disregard of
its obligations and duties under this Agreement. The Trust's agreement to
indemnify Distributor, its partners and employees, and any such controlling
person, as aforesaid, is expressly conditioned upon the Trust's being notified
of any action brought against Distributor, its partners or employees, or any
such controlling person, such notification to be given by letter or by telegram
addressed to the Trust at its principal office in Columbus, Ohio and sent to
the Trust by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served. The
failure to so notify the Trust of any such action shall not relieve the Trust
from any liability which the Trust 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 Trust's
indemnity agreement contained in this paragraph 1.11. The Trust 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 Trust and approved by Distributor, which
approval shall not be unreasonably withheld. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing
approved by Distributor, the defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any of them; but in
case the Trust does not elect to assume the defense of any such suit, or in
case Distributor reasonably does not approve of counsel chosen by the Trust,
the Trust will reimburse Distributor, its partners and employees, or the
controlling person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by Distributor or them.
- 4 -
<PAGE> 6
The Trust's indemnification agreement contained in this paragraph 1.11 and the
Trust's representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of Distributor, its partners and employees, or any controlling person,
and shall survive the delivery of any Shares.
This agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several partners and employees, and their
respective estates, and to the benefit of the controlling persons and their
successors. The Trust agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the issue and sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the Trust,
its several officers and Trustees and any person who controls the Trust within
the meaning of Section 15 of the 1933 Act 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 Trust, its officers or
Trustees or any such controlling person, may incur under the 1933 Act or under
common law or otherwise, but only to the extent that such liability or expense
incurred by the Trust, its officers or Trustees 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 Distributor to the Trust 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 Distributor to the
Trust required to be stated in such answers or necessary to make such
information not misleading. Distributor's agreement to indemnify the Trust,
its officers and Trustees, and any such controlling person, as aforesaid, is
expressly conditioned upon Distributor's being notified of any action brought
against the Trust, its officers or Trustees, or any such controlling person,
such notification to be given by letter or telegram addressed to Distributor at
its principal office in Columbus, Ohio, and sent to Distributor by the person
against whom such action is brought, within 10 days after the summons or other
first legal process shall have been served. Distributor shall have the right
of first control of the defense of such action, with counsel of its own
choosing, satisfactory to the Trust, if such action is based solely upon such
alleged misstatement or omission on Distributor's part, and in any other event
the Trust, its officers or Trustees or such controlling person shall each have
the right to participate in the defense or preparation of the defense
- 5 -
<PAGE> 7
of any such action. The failure to so notify Distributor of any such action
shall not relieve Distributor from any liability which Distributor may have to
the Trust, its officers or Trustees, 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 Distributor's indemnity agreement contained in
this paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust 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 1933
Act or if and so long as a current prospectus as required by Section 10(a) of
said Act is not on file with the 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 Trust's obligation to repurchase Shares from
any Shareholder in accordance with the provisions of the Trust's prospectus,
Declaration of Trust, or By-Laws.
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the 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 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 Trust 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 action of the Commission with respect to any
amendment to any registration statement or prospectus which may from
time to time be filed with the Commission.
- 6 -
<PAGE> 8
For purposes of this section, informal requests by or acts of the
Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to 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 Trust, which
approval shall not be unreasonably withheld and may not be withheld where
Distributor 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 Trust.
1.16 This Agreement shall be governed by the laws of the State of
Ohio.
2. Sale and Payment.
Under this Agreement, the following provisions shall apply with
respect to the sale of and payment of Shares of a Fund sold at an offering
price which includes a sales load (collectively, the "Load Shares;"
individually, a "Load Share") as described in the prospectuses of any Funds
identified on Schedule B hereto (collectively, the "Load Funds"; individually,
a "Load Fund"):
(a) Distributor shall have the right, as principal, to
purchase Load Shares at their net asset value and to sell such Load
Shares to the public against orders therefor at the applicable public
offering price, as defined in Section 4 hereof. Distributor shall
also have the right, as principal, to sell Load Shares to dealers
against orders therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the
amount of the sales charge or underwriting discount, if any, referred
to in Section 3 below.
(b) Prior to the time of delivery of any Load Shares by a
Load Fund to, or on the order of, Distributor, Distributor shall pay
or cause to be paid to the Load Fund or to its order an amount in
Boston or New York clearing house funds equal to the applicable net
asset value of such Shares. Distributor may retain so much of any
sales charge or underwriting discount as is not allowed by Distributor
as a concession to dealers.
- 7 -
<PAGE> 9
3. Public Offering Price.
The public offering price of a Load Share shall be the net asset value
of such Load Shares, plus any applicable sales charge, all as set forth in the
current prospectus of the Load Fund. The net asset value of Shares shall be
determined in accordance with the provisions of the Declaration of Trust and
By-Laws of the Trust and the then current prospectus of the Load Fund.
4. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell Load Shares at
net asset value (a) in connection with the merger or consolidation of the Trust
or the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a
pro rata distribution directly to the holders of Shares in the nature of a
stock dividend or split; (c) upon the exercise of subscription rights granted
to the holders of Shares on a pro rata basis; (d) in connection with the
issuance of Load Shares pursuant to any exchange and reinvestment privileges
described in any then current prospectus of the Load Fund; and (e) otherwise in
accordance with any then current prospectus of the Load Fund.
5. Term, Duration and Matters Relating to the Trust as an Ohio
Business Trust.
This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date first set forth above (or, if a particular
Fund is not in existence on such date, on the date an amendment to Schedule A to
this Agreement relating to that Fund is executed), and, unless sooner terminated
as provided herein, shall continue in effect until July 9, 1998. Thereafter, if
not terminated as provided herein, this Agreement shall continue with respect to
a particular Fund in effect automatically for successive one-year periods ending
on July 9 of each year with respect to each of the Funds, provided such
continuance is specifically approved at least annually by (a) the Trust's Board
of Trustees or (b) by "vote of a majority of the outstanding voting securities"
(as defined below) of the Trust, provided, however, that in either event the
continuance is also approved by a majority of the Trust's Trustees who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, 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' prior written notice, by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities (as defined in the
- 8 -
<PAGE> 10
1940 Act) of the Trust or by Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
The Sessions Group is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is
hereby made and a copy of which is on file at the office of the Secretary of
State of Ohio as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "The Sessions Group" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in
Section 1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Funds of the Trust must look solely to the assets of the Trust belonging to
such Fund for the enforcement of any claims against the Trust.
BISYS FUND SERVICES THE SESSIONS GROUP
LIMITED PARTNERSHIP
By BISYS Fund Services, Inc., By /s/ Walter B. Grimm
General Partner ------------------------------
Name Walter B. Grimm
----------------------------
By /s/ J. David Huber Title President
-------------------------- ---------------------------
Name J. David Huber
-------------------------
Title President
------------------------
- 9 -
<PAGE> 11
Dated: January __, 1997
Schedule A
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July 9, 1996
Name of Fund Date
- ------------ ----
The KeyPremier Prime Money July 9, 1996
Market Fund
The KeyPremier Pennsylvania
Municipal Bond Fund July 9, 1996
The KeyPremier Established
Growth Fund October __, 1996
The KeyPremier Intermediate
Term Income Fund October __, 1996
The KeyPremier Aggressive
Growth Fund January __, 1997
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By By
--------------------------- ---------------------------
Name J. David Huber Name Walter B. Grimm
------------------------- -------------------------
Title President Title President
------------------------ ------------------------
A-1
<PAGE> 12
Dated: January __, 1997
Schedule B
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July 9, 1996
Name of Load Fund Date
- ----------------- ----
The KeyPremier Pennsylvania
Municipal Bond Fund July 9, 1996
The KeyPremier Established
Growth Fund October __, 1996
The KeyPremier Intermediate
Term Income Fund October __, 1996
The KeyPremier Aggressive
Growth Fund January __, 1997
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By By
--------------------------- ---------------------------
Name J. David Huber Name Walter B. Grimm
------------------------- -------------------------
Title President Title President
------------------------ ------------------------
B-1
<PAGE> 1
EXHIBIT (8)(b)
<PAGE> 2
CUSTODY AGREEMENT
-----------------
Agreement made as of this 9th day of July, 1996, between The Sessions
Group, an Ohio business trust organized and existing under the laws of the State
of Ohio, having its principal office and place of business at 3435 Stelzer Road,
Columbus, Ohio 43219 (hereinafter called the "Fund"), and THE BANK OF NEW YORK,
a New York corporation authorized to do a banking business, having its principal
office and place of business at 48 Wall Street, New York, New York 10286
(hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Book-Entry System" shall mean the Federal Reserve/Treas- ury
book-entry system for United States and federal agency securities, its successor
or successors and its nominee or nominees.
2. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is actually received by the Custodian and signed on behalf
of the Fund by any two Officers, and the term Certificate shall also include
instructions by the Fund to the Custodian communicated by a Terminal Link.
4. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
<PAGE> 3
5. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
6. "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer thereof and subject
to appropriate restrictions.
7. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Trustees specifically approving deposits therein by the
Custodian.
8. "Financial Futures Contract" shall mean the firm commit- ment to buy
or sell fixed income securities including, without limitation, U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
9. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
10. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
11. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
-2-
<PAGE> 4
12. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority, commercial
paper, certificates of deposit and bankers' acceptances, repurchase agreements
with respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale.
13. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
14. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Treasurer, any Assistant Secretary, any Assistant
Treasurer, and any other person or persons, whether or not any such other person
is an officer of the Fund, duly authorized by the Board of Trustees of the Fund
to execute any Certificate, instruction, notice or other instrument on behalf of
the Fund and listed in the Certificate annexed hereto as Appendix A or such
other Certificate as may be received by the Custodian from time to time.
15. "Option" shall mean a Call Option, Covered Call Option,
Stock Index Option and/or a Put Option.
16. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Officer or from a person
reasonably believed by the Custodian to be an Officer.
17. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
18. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
19. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to common
stocks,
-3-
<PAGE> 5
preferred stocks, debt obligations issued by state or municipal governments and
by public authorities, (including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing any
other rights or interest therein, or any property or assets.
20. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
21. "Series" shall mean the various portfolios, if any, of the Fund as
described from time to time in the current and effective prospectus for the Fund
and listed on Appendix B hereto as amended from time to time.
22. "Shares" shall mean the shares of beneficial interest of the Fund,
each of which is, in the case of a Fund having Series, allocated to a particular
Series.
23. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
24. "Stock Index Option" shall mean an exchange traded option entitling
the holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
25. "Terminal Link" shall mean an electronic data transmission link
between the Fund, an Intermediary (as hereinafter defined), and the Custodian
requiring in connection with each use of the Terminal Link by or on behalf of
the Fund use of an authorization code provided by the Custodian and at least two
access codes established by the Fund. As used herein the term "Intermediary"
shall mean a third party that maintains a transmission line to the Custodian and
has been selected by the Fund to receive electronic data transmissions from the
Custodian or the Fund and forward the same to the Fund or the Custodian,
respectively.
-4-
<PAGE> 6
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian
of the Securities and moneys at any time owned by the Series during the period
of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all moneys owned by a Series, at any time during the period
of this Agreement, and shall specify with respect to such Securities and money
the Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart. The
Custodian will not be responsible for any Securities and moneys not actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and moneys are
not finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the Custodian on a
continuous and ongoing basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities collateral. Prior
to a deposit of Securities specifically allocated to a Series in the Depository,
the Fund shall deliver to the Custodian a certified resolution of the Board of
Trustees of the Fund, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities specifically allocated to
such Series eligible for deposit therein, and to utilize the Depository to the
extent possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys deposited
in either the Book-Entry System or the Depository
-5-
<PAGE> 7
will be represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custodian
acts in a fiduciary or representative capacity and will be specifically
allocated on the Custodian's books to the separate account for the applicable
Series. Prior to the Custodian's accepting, utilizing and acting with respect to
Clearing Member confirmations for Options and transactions in Options for a
Series as provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees, substantially in the form
of Exhibit C hereto, approving, authorizing and instructing the Custodian on a
continuous and ongoing basis, until instructed to the contrary by a Certificate
actually received by the Custodian, to accept, utilize and act in accordance
with such confirmations as provided in this Agreement with respect to such
Series.
2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all moneys received by it for the account of the Fund with respect to such
Series. Money credited to a separate account for a Series shall be disbursed by
the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the Series account from
which payment is to be made and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series basis,
of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance with
this Agreement during said day. Where Securities are transferred to the account
of the Fund for a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Fund with a detailed statement, on a per Series basis, of the Securities and
moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except
-6-
<PAGE> 8
such Securities as are held in the Book-Entry System, shall be held by the
Custodian in that form; all other Securities held hereunder may be registered in
the name of the Fund, in the name of any duly appointed registered nominee of
the Custodian as the Custodian may from time to time determine, or in the name
of the Book-Entry System or the Depository or their successor or successors, or
their nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee or in
the name of the Book-Entry System or the Depository any Securities which it may
hold hereunder and which may from time to time be registered in the name of the
Fund. The Custodian shall hold all such Securities specifically allocated to a
Series which are not held in the Book-Entry System or in the Depository in a
separate account in the name of such Series physically segregated at all times
from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
held hereunder and therein deposited, shall promptly and diligently with respect
to all Securities held for the Fund hereunder in accordance with preceding
paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon
such Securities which are called, but only if either (i) the Custodian receives
a written notice of such call, or (ii) notice of such call appears in one or
more of the publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian without the prior notification or consent
of the Fund;
(c) Present for payment and collect the amount payable
upon all Securities which mature;
(d) Surrender Securities in temporary form for defini-
tive Securities;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder.
-7-
<PAGE> 9
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities held by the
Custodian hereunder for the Series specified in such Certificate may be
exercised;
(b) Deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;
(c) Deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically allocated to such
Series such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the
Series specified in such Certificate, and take such other steps as shall be
stated in such Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a Certificate no later
than the business day preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall comply with Section
17(f) of the Investment Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing out or writing of Futures Contracts,
Options,
-8-
<PAGE> 10
or Futures Contract Options by making payments or deliveries specified in
Certificates received by the Custodian in connection with any such purchase,
sale, writing, settlement or closing out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be, confirming that such
Security is held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of the Custodian (or any nominee of
the Custodian) as custodian for the Fund, provided, however, that
notwithstanding the foregoing, payments to or deliveries from the Margin Account
and payments with respect to Securities to which a Margin Account relates, shall
be made in accordance with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or certificate delivered to
the Custodian shall be held by the Custodian hereunder in accordance with, and
subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of an Option, a Futures Contract, or a Futures Contract Option, the
Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate or Oral
Instructions, specifying with respect to each such purchase: (a) the Series to
which such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total amount
payable upon such purchase; (g) the name of the person from whom or the broker
through whom the purchase was made, and the name of the clearing broker, if any;
and (h) the name of the broker to whom payment is to be made. The Custodian
shall, upon receipt of Securities purchased by or for the Fund, pay to the
broker
-9-
<PAGE> 11
specified in the Certificate out of the moneys held for the account of such
Series the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Certificate or Oral
Instructions.
2. Promptly after each sale of Securities by the Fund, other than a
sale of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a Certificate or
Oral Instructions, specifying with respect to each such sale: (a) the Series to
which such Securities were specifically allocated; (b) the name of the issuer
and the title of the Security; (c) the number of shares or principal amount
sold, and accrued interest, if any; (d) the date of sale; (e) the sale price per
unit; (f) the total amount payable to the Fund upon such sale; (g) the name of
the broker through whom or the person to whom the sale was made, and the name of
the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver the Securities
specifically allocated to such Series to the broker specified in the Certificate
against payment upon receipt of the total amount payable to the Fund upon such
sale, provided that the same conforms to the total amount payable as set forth
in such Certificate or Oral Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund
shall deliver to the Custodian a Certificate specifying with respect to each
Option purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the name of the issuer and the title
and number of shares subject to such Option or, in the case of a Stock Index
Option, the stock index to which such Option relates and the number of Stock
Index Options purchased; (d) the expiration date; (e) the exercise price; (f)
the dates of purchase and settlement; (g) the total amount payable by the Fund
in connection with such purchase; (h) the name of the Clearing Member through
whom such Option was purchased; and (i) the name of the broker to whom payment
is to be made. The Custodian shall pay, upon receipt of a Clearing Member's
statement confirming the purchase of such Option held by such Clearing Member
for the account of the Custodian (or any duly appointed and registered nominee
of the Custodian) as custodian for the Fund, out of moneys held for the account
of the Series to which such Option is to be specifically allocated, the total
amount payable upon such purchase to the Clearing Member through whom the
purchase was made, provided that the same conforms to the total amount payable
as set forth in such Certificate.
-10-
<PAGE> 12
2. Promptly after the sale of any Option purchased by the Fund pursuant
to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the Series to which such Option
was specifically allocated; (b) the type of Option (put or call); (c) the name
of the issuer and the title and number of shares subject to such Option or, in
the case of a Stock Index Option, the stock index to which such Option relates
and the number of Stock Index Options sold; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the Clearing Member through whom the sale was
made. The Custodian shall consent to the delivery of the Option sold by the
Clearing Member which previously supplied the confirmation described in
preceding paragraph 1 of this Article with respect to such Option against
payment to the Custodian of the total amount payable to the Fund, provided that
the same conforms to the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Call Option: (a) the
Series to which such Call Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid by the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Call Option was exercised.
The Custodian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the Series to
which such Call Option was specifically allocated the total amount payable to
the Clearing Member through whom the Call Option was exercised, provided that
the same conforms to the total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Put Option: (a) the
Series to which such Put Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid to the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the exercise of the
Put Option, deliver or direct the Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the amount
payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index
Option purchased by the Fund pursuant to paragraph 1 hereof, the
-11-
<PAGE> 13
Fund shall deliver to the Custodian a Certificate specifying with respect to
such Stock Index Option: (a) the Series to which such Stock Index Option was
specifically allocated; (b) the type of Stock Index Option (put or call); (c)
the number of Options being exercised; (d) the stock index to which such Option
relates; (e) the expiration date; (f) the exercise price; (g) the total amount
to be received by the Fund in connection with such exercise; and (h) the
Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Covered Call Option: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and (g) the name of the
Clearing Member through whom the premium is to be received. The Custodian shall
deliver or cause to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call Option, such
receipts as are required in accordance with the customs prevailing among
Clearing Members dealing in Covered Call Options and shall impose, or direct the
Depository to impose, upon the underlying Securities specified in the
Certificate specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time to refuse to
issue any receipts for Securities in the possession of the Custodian and not
deposited with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares subject
to the Covered Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount payable to the Fund
upon such delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver,
or direct the Depository to deliver, the underlying Securities as specified in
the Certificate against payment of the amount to be received as set forth in
such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the name of
the issuer and the title and number of shares for which the Put Option is
written and which
-12-
<PAGE> 14
underlie the same; (c) the expiration date; (d) the exercise price; (e) the
premium to be received by the Fund; (f) the date such Put Option is written; (g)
the name of the Clearing Member through whom the premium is to be received and
to whom a Put Option guarantee letter is to be delivered; (h) the amount of
cash, and/or the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in the Senior Security Account for such Series;
and (i) the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited into the Collateral Account for such
Series. The Custodian shall, after making the deposits into the Collateral
Account specified in the Certificate, issue a Put Option guarantee letter
substantially in the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the Certificate against
receipt of the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue any Put Option
guarantee letter or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of shares subject to
the Put Option; (c) the Clearing Member from whom the underlying Securities are
to be received; (d) the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of Securities,
specifically allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the moneys held for the account
of the Series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate against delivery of such Securities, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index Option was
written; (b) whether such Stock Index Option is a put or a call; (c) the number
of options written; (d) the stock index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through whom
such Option was written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Security Account for such
Series; (j) the
-13-
<PAGE> 15
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Collateral Account for such
Series; and (k) the amount of cash and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in a Margin Account,
and the name in which such account is to be or has been established. The
Custodian shall, upon receipt of the premium specified in the Certificate, make
the deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the Custodian
has specifically agreed to issue, which are in accordance with the customs
prevailing among Clearing Members in Stock Index Options and make the deposits
into the Collateral Account specified in the Certificate, or (2) make the
deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the Series for which such Stock Index Option was written; (b)
such information as may be necessary to identify the Stock Index Option being
exercised; (c) the Clearing Member through whom such Stock Index Option is being
exercised; (d) the total amount payable upon such exercise, and whether such
amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Margin Account; and (f) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account for such Series; and the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or cancellation of the receipt, if
any, delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series to
which such Stock Index Option was specifically allocated to the Clearing Member
specified in the Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction; (b) the
Series for which the Option was written; (c) the name of the issuer and the
title and number of shares subject to the Option, or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the type of Option (put or call); (h) the date of
such purchase; (i) the name of the Clearing Member to whom the premium is to be
paid; and (j) the amount of cash and/or the
-14-
<PAGE> 16
amount and kind of Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security Account for such
Series. Upon the Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8 or 10 of this
Article with respect to the Option being liquidated through the Closing Purchase
Transaction, the Custodian shall remove, or direct the Depository to remove, the
previously imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the Fund and
described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein,
and upon the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, and the Margin Account
and/or the Senior Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Futures Contract, (or with respect to any number of identical Futures
Contract(s)): (a) the Series for which the Futures Contract is being entered;
(b) the category of Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures Contracts entered
into; (d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity date; (f)
whether the Fund is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Senior Security Account for such Series; (h) the
name of the broker, dealer, or futures commission merchant through whom the
Futures Contract was entered into; and (i) the amount of fee or commission, if
any, to be paid and the name of the broker, dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian shall make the
deposits, if any, to the Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The Custodian shall make payment out
of the moneys specifically allocated to such Series of the fee or commission, if
any, specified in the Certificate and deposit in the Senior Security Account for
such Series the amount of cash and/or the amount and kind of Securities
specified in said Certificate.
-15-
<PAGE> 17
2. (a) Any variation margin payment or similar payment required to be
made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract, shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a)
the Futures Contract and the Series to which the same relates; (b) with respect
to a Stock Index Futures Contract, the total cash settlement amount to be paid
or received, and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the broker, dealer, or
futures commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn from the
Senior Security Account for such Series. The custodian shall make the payment or
delivery specified in the Certificate, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option
by the Fund, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Futures Contract
Option: (a) the Series to which such Option is specifically
-16-
<PAGE> 18
allocated; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the amount of premium to be paid by the Fund upon such purchase;
(h) the name of the broker or futures commission merchant through whom such
option was purchased; and (i) the name of the broker, or futures commission
merchant, to whom payment is to be made. The Custodian shall pay out of the
moneys specifically allocated to such Series, the total amount to be paid upon
such purchase to the broker or futures commissions merchant through whom the
purchase was made, provided that the same conforms to the amount set forth in
such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) Series to
which such Futures Contract Option was specifically allocated; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract and such
other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker or futures commission merchant through
whom the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms to the total amount
payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise; (e) the name
of the broker or futures commission merchant through whom the Futures Contract
Option is exercised; (f) the net total amount, if any, payable by the Fund; (g)
the amount, if any, to be received by the Fund; and (h) the amount of cash
and/or the amount and kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
-17-
<PAGE> 19
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the Fund; (g)
the name of the broker or futures commission merchant through whom the premium
is to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for such
Series. The Custodian shall, upon receipt of the premium specified in the
Certificate, make out of the moneys and Securities specifically allocated to
such Series the deposits into the Senior Security Account, if any, as specified
in the Certificate. The deposits, if any, to be made to the Margin Account shall
be made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a
call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in such Certificate make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Option was specifically
allocated; (b) the particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through whom such Futures Contract Option
is exercised; (e) the net total amount, if any, payable to the Fund upon such
exercise; (f) the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn
from or deposited in, the Senior Security Account for such Series, if any. The
Custodian
-18-
<PAGE> 20
shall, upon its receipt of the net total amount payable to the Fund, if any,
specified in the Certificate, make out of the moneys and Securities specifically
allocated to such Series, the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The deposits to
and/or withdrawals from the Margin Account, if any, shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to
a previously written Futures Contract Option described in this Article in order
to liquidate its position as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to which such Option
is specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f) the expiration date;
(g) the name of the broker or futures commission merchant to whom the premium is
to be paid; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for such Series. The
Custodian shall effect the withdrawals from the Senior Security Account
specified in the Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased by
the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from the Margin
Account, if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund
shall promptly deliver to the Custodian a Certificate specifying: (a) the Series
for which such short sale was made; (b)
-19-
<PAGE> 21
the name of the issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest or dividends, if any; (d) the
dates of the sale and settlement; (e) the sale price per unit; (f) the total
amount credited to the Fund upon such sale, if any, (g) the amount of cash
and/or the amount and kind of Securities, if any, which are to be deposited in a
Margin Account and the name in which such Margin Account has been or is to be
established; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in a Senior Security Account, and (i) the name of the
broker through whom such short sale was made. The Custodian shall upon its
receipt of a statement from such broker confirming such sale and that the total
amount credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a receipt or make the
deposits into the Margin Account and the Senior Security Account specified in
the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing out: (a) the Series for which such transaction is being made; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or the principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing-out; (g) the net total amount
payable to the broker upon such closing-out; (h) the amount of cash and the
amount and kind of Securities to be withdrawn, if any, from the Margin Account;
(i) the amount of cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (j) the name of the broker
through whom the Fund is effecting such closing-out. The Custodian shall, upon
receipt of the net total amount payable to the Fund upon such closing-out, and
the return and/or cancellation of the receipts, if any, issued by the Custodian
with respect to the short sale being closed-out, pay out of the moneys held for
the account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior Security
Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate or Oral Instructions
specifying: (a) the Series for which the Reverse Repurchase
-20-
<PAGE> 22
Agreement is entered; (b) the total amount payable to the Fund in connection
with such Reverse Repurchase Agreement and specifically allocated to such
Series; (c) the broker or dealer through or with whom the Reverse Repurchase
Agreement is entered; (d) the amount and kind of Securities to be delivered by
the Fund to such broker or dealer; (e) the date of such Reverse Repurchase
Agreement; and (f) the amount of cash and/or the amount and kind of Securities,
if any, specifically allocated to such Series to be deposited in a Senior
Security Account for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to the
Fund specified in the Certificate or Oral Instructions make the delivery to the
broker or dealer, and the deposits, if any, to the Senior Security Account,
specified in such Certificate or Oral Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money Market
Security, a Certificate or Oral Instructions to the Custodian specifying: (a)
the Reverse Repurchase Agreement being terminated and the Series for which same
was entered; (b) the total amount payable by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received by the Fund
and specifically allocated to such Series in connection with such termination;
(d) the date of termination; (e) the name of the broker or dealer with or
through whom the Reverse Repurchase Agreement is to be terminated; and (f) the
amount of cash and/or the amount and kind of Securities to be withdrawn from the
Senior Securities Account for such Series. The Custodian shall, upon receipt of
the amount and kind of Securities to be received by the Fund specified in the
Certificate or Oral Instructions, make the payment to the broker or dealer, and
the withdrawals, if any, from the Senior Security Account, specified in such
Certificate or Oral Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall deliver or
cause to be delivered to the Custodian a Certificate specifying with respect to
each such loan: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities, (c) the
number of shares or the principal amount loaned, (d) the date of loan and
delivery, (e) the total amount to be delivered to the Custodian against the loan
of the Securities, including the amount of cash collateral and the premium, if
any, separately identified, and (f) the name of the broker, dealer, or financial
institution to which the loan was made. The Custodian shall deliver the
-21-
<PAGE> 23
Securities thus designated to the broker, dealer or financial institution to
which the loan was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York Clearing House funds
and may deliver Securities in accordance with the customs prevailing among
dealers in securities.
2. Promptly after each termination of the loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be returned, (d)
the date of termination, (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under no obligation to
make any such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing Member in
whose name, or for whose benefit, the account was established as specified in
the Margin Account Agreement.
-22-
<PAGE> 24
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account for any Series,
the Custodian shall furnish the Fund with a statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding the
delivery to the Fund of such statement, the Fund shall furnish to the Custodian
a Certificate specifying the then market value of the Securities described in
such statement. In the event such then market value is indicated to be less than
the Custodian's obligation with respect to any outstanding Put Option guarantee
letter or similar document, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such Collateral Account to
eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, either (i) setting forth with
respect to the Series specified therein the date of the declaration of a
dividend or
-23-
<PAGE> 25
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
Share of such Series to the shareholders of record as of that date and the total
amount payable to the Dividend Agent and any sub-dividend agent or co-dividend
agent of the Fund on the payment date, or (ii) authorizing with respect to the
Series specified therein the declaration of dividends and distributions on a
daily basis and authorizing the Custodian to rely on Oral Instructions or a
Certificate setting forth the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
Share of such Series to the shareholders of record as of that date and the total
amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions or Certificate, as the case may be, the Custodian shall pay out-of
the moneys held for the account of each Series the total amount payable to the
Dividend Agent and any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver
to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date,
and price; and
(b) The amount of money to be received by the Custodian for
the sale of such Shares and specifically allocated to the separate account in
the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account in the name of the Series for
which such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money held for
the account of such Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall furnish to the Custodian a
Certificate specifying:
-24-
<PAGE> 26
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the moneys held in
the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate or Oral Instructions, or
which results in an overdraft in the separate account of such Series for some
other reason, or if the Fund is indebted to The Bank of New York under the
Fund's Cash Management and Related Services Agreement (except a borrowing for
investment or for temporary or emergency purposes using Securities as collateral
pursuant to a separate agreement and subject to the provisions of paragraph 2 of
this Article), such overdraft or indebtedness shall be deemed to be a loan made
by the Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day year for
the actual number of days involved) equal to 1/2% over Custodian's prime
commercial lending rate in effect from time to time, such rate to be adjusted on
the effective date of any change in such prime commercial lending rate but in no
event to be less than 6% per annum. In addition, the Fund hereby agrees that the
Custodian shall have a continuing and enforceable lien and security interest in
and to any property specifically allocated to such Series at any time held by it
for the benefit of such Series or in which the Series may have an interest which
is then in the Custodian's possession or control or
-25-
<PAGE> 27
in possession or control of any third party acting in the Custodian's behalf,
having at the time such overdraft or indebtedness is incurred a fair market
value equal to 150% of such overdraft or indebtedness. The Fund authorizes the
Custodian, in its sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any balance of account
standing to such Series' credit on the Custodian's books. In addition, the Fund
hereby covenants that on each Business Day on which either it intends to enter a
Reverse Repurchase Agreement and/or otherwise borrow from a third party, or
which next succeeds a Business Day on which at the close of business the Fund
had outstanding a Reverse Repurchase Agreement or such a borrowing, it shall
prior to 9 a.m., New York City time, advise the Custodian, in writing, of each
such borrowing, shall specify the Series to which the same relates, and shall
not incur any indebtedness not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
-26-
<PAGE> 28
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XV
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be obligated to
have or utilize the Terminal Link, and the provisions of this Article shall
apply if, but only if, the Fund in its sole and absolute discretion elects to
utilize the Terminal Link to transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized by the Fund only for the purpose
of the Fund providing Certificates to the Custodian with respect to transactions
involving Securities or for the transfer of money to be applied to the payment
of dividends, distributions or redemptions of Fund Shares, and shall be utilized
by the Custodian only for the purpose of providing notices to the Fund. Such use
shall commence only after the Fund shall have delivered to the Custodian a
Certificate substantially in the form of Exhibit D and shall have established
access codes and safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes and shall have reviewed
the safekeeping procedures established by the Intermediary to assure that
transmissions inputted by the Fund, and only such transmissions, are forwarded
by the Intermediary to the Custodian without any alteration or omission. Each
use of the Terminal Link by the Fund shall constitute a representation and
warranty that the Terminal Link is being used only for the purposes permitted
hereby, that at least two Officers have each utilized an access code, that such
safekeeping procedures have been established by the Fund, that the Intermediary
has safekeeping procedures reviewed by the Fund to assure that all transmissions
inputted by the Fund, and only such transmissions, are forwarded by the
Intermediary to the Custodian without any alteration or omission by the
Intermediary, and that such use does not contravene the Investment Company Act
of 1940, as amended, or the rules or regulations thereunder.
3. The Fund shall obtain and maintain at its own cost and expense all
equipment and services, including, but not limited to communications services,
necessary for it to utilize the Terminal Link, and the Custodian shall not be
responsible for the reliability or availability of any such equipment or
services.
-27-
<PAGE> 29
4. The Fund acknowledges that any data bases made available as part of,
or through the Terminal Link and any proprietary data, software, processes,
information and documentation (other than any such which are or become part of
the public domain or are legally required to be made available to the public)
(collectively, the "Information"), are the exclusive and confidential property
of the Custodian. The Fund shall, and shall cause others to which it discloses
the Information, including, without limitation the Intermediary, to keep the
Information confidential by using the same care and discretion it uses with
respect to its own confidential property and trade secrets, and shall neither
make nor permit any disclosure without the express prior written consent of the
Custodian.
5. Upon termination of this Agreement for any reason, the Fund shall
return to the Custodian any and all copies of the Information which are in the
Fund's possession or under its control, or which the Fund distributed to third
parties, including, without limitation, the Intermediary. The provisions of this
Article shall not affect the copyright status of any of the Information which
may be copyrighted and shall apply to all Information whether or not
copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from
time to time without notice to the Fund or the Intermediary except that the
Custodian shall give the Fund notice not less than 75 days in advance of any
modification which would materially adversely affect the Fund's operation, and
the Fund agrees that neither the Fund nor the Intermediary shall modify or
attempt to modify the Terminal Link without the Custodian's prior written
consent. The Fund acknowledges that any software or procedures provided the Fund
or the Intermediary as part of the Terminal Link are the property of the
Custodian and, accordingly, the Fund agrees that any modifications to the
Terminal Link, whether by the Fund, the Intermediary or by the Custodian and
whether with or without the Custodian's consent, shall become the property of
the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it
utilizes or the Fund or the Intermediary utilizes in connection with the
Terminal Link makes any warranties or representations, express or implied, in
fact or in law, including but not limited to warranties of merchantability and
fitness for a particular purpose.
8. The Fund will cause its Officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and irrevocably authorizes the Custodian to act in accordance with
and rely on Certificates received by it through the Terminal Link. The Fund
acknowledges that it is its responsibility to assure that only its Officers and
authorized persons of the Intermediary use the Terminal Link on its behalf, and
that a Custodian shall not be responsible nor liable for use of the Terminal
Link on the Fund's behalf by persons other than such
-28-
<PAGE> 30
persons or Officers, or by only a single Officer, nor for any alteration,
omission, or failure to promptly forward by the Intermediary.
9. The Custodian shall have no liability for any losses, damages,
injuries, claims, costs or expenses arising out of or in connection with any
hardware or software failure or malfunction of the Terminal Link, unless first,
such failure or malfunction is the direct result of the negligence of the
Custodian, and, second the Fund has both (a) complied with the provisions of
Section 11 of this Article, and (b) mitigated its damages by using either
Certificates delivered otherwise than through the Terminal Link or, where
appropriate, Oral Instructions. If the Custodian is liable for any such failure
or malfunction incident, its liability shall be limited to direct money damages
not exceeding $25,000.
10. Without limiting the generality of the foregoing, in no event shall
the Custodian or any manufacturer or supplier of its computer equipment,
software or services relating to the Terminal Link be responsible for any
special, indirect, incidental or consequential damages which the Fund or the
Intermediary may incur or experience by reason of its use of the Terminal Link
even if the Custodian or any manufacturer or supplier has been advised of the
possibility of such damages, nor with respect to the use of the Terminal Link
shall the Custodian or any such manufacturer or supplier be liable for acts of
God, or with respect to the following to the extent beyond such person's
reasonable control: machine or computer breakdown or malfunction, interruption
or malfunction of communication facilities, labor difficulties or any other
similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as promptly
as practicable, and in any event within 24 hours after the earliest of (i)
discovery thereof, (ii) the Business Day on which discovery should have occurred
through the exercise of reasonable care and (iii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error, it
being agreed that discovery and receipt of notice may only occur on a business
day. The Custodian shall promptly advise the Fund or the Intermediary whenever
the Custodian learns of any errors, omissions or interruption in, or delay or
unavailability of, the Terminal Link.
12. The Custodian shall acknowledge to the Fund or to the Intermediary,
by use of the Terminal Link, receipt of each Certificate the Custodian receives
through the Terminal Link, and in the absence of such acknowledgment, the
Custodian shall not be liable for any failure to act in accordance with such
Certificate and the Fund may not claim that such Certificate was received by the
Custodian. Such verification, which may occur after the Custodian has acted upon
such Certificate, shall be accomplished on the same day on which such
Certificate is received.
-29-
<PAGE> 31
ARTICLE XVI
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to employ, as
sub-custodian for each Series' Foreign Securities (as such term is defined in
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of 1940, as
amended) and other assets, the foreign banking institutions and foreign
securities depositories and clearing agencies designated on Schedule I hereto
("Foreign Sub-Custodians") to carry out their respective responsibilities in
accordance with the terms of the sub-custodian agreement between each such
Foreign Sub-Custodian and the Custodian, copies of which have been previously
delivered to the Fund and receipt of which is hereby acknowledged (each such
agreement, a "Foreign Sub-Custodian Agreement"). Upon receipt of a Certificate,
together with a certified resolution substantially in the form attached as
Exhibit E of the Fund's Board of Trustees, the Fund may designate any additional
foreign sub-custodian with which the Custodian has an agreement for such entity
to act as the Custodian's agent, as its sub-custodian and any such additional
foreign sub-custodian shall be deemed added to Schedule I. Upon receipt of a
Certificate from the Fund, the Custodian shall cease the employment of any one
or more Foreign Sub-Custodians for maintaining custody of the Fund's assets and
such Foreign Sub-Custodian shall be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be substantially in the
form previously delivered to the Fund and will not be amended in a way that
materially adversely affects the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as belonging to each
Series of the Fund the Foreign Securities of such Series held by each Foreign
Sub-Custodian. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims by the Fund
or any Series against a Foreign Sub-Custodian as a consequence of any loss,
damage, cost, expense, liability or claim sustained or incurred by the Fund or
any Series if and to the extent that the Fund or such Series has not been made
whole for any such loss, damage, cost, expense, liability or claim.
4. Upon request of the Fund, the Custodian will, consistent with the
terms of the applicable Foreign Sub-Custodian Agreement, use reasonable efforts
to arrange for the independent accountants of the Fund to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as such books and
records relate to the performance of such Foreign Sub-Custodian under its
agreement with the Custodian on behalf of the Fund.
-30-
<PAGE> 32
5. The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Series held by Foreign Sub-Custodians, including but not limited to, an
identification of entities having possession of each Series' Foreign Securities
and other assets, and advices or notifications of any transfers of Foreign
Securities to or from each custodial account maintained by a Foreign
Sub-Custodian for the Custodian on behalf of the Series.
6. The Custodian shall furnish annually to the Fund, as mutually agreed
upon, information concerning the Foreign Sub-Custodians employed by the
Custodian. Such information shall be similar in kind and scope to that furnished
to the Fund in connection with the Fund's initial approval of such Foreign
Sub-Custodians and, in any event, shall include information pertaining to (i)
the Foreign Custodians' financial strength, general reputation and standing in
the countries in which they are located and their ability to provide the
custodial services required, and (ii) whether the Foreign Sub-Custodians would
provide a level of safeguards for safekeeping and custody of securities not
materially different from those prevailing in the United States. The Custodian
shall monitor the general operating performance of each Foreign Sub-Custodian.
The Custodian agrees that it will use reasonable care in monitoring compliance
by each Foreign Sub-Custodian with the terms of the relevant Foreign
Sub-Custodian Agreement and that if it learns of any breach of such Foreign
Sub-Custodian Agreement believed by the Custodian to have a material adverse
effect on the Fund or any Series it will promptly notify the Fund of such
breach. The Custodian also agrees to use reasonable and diligent efforts to
enforce its rights under the relevant Foreign Sub-Custodian Agreement.
7. The Custodian shall transmit promptly to the Fund all notices,
reports or other written information received pertaining to the Fund's Foreign
Securities, including without limitation, notices of corporate action, proxies
and proxy solicitation materials.
8. Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of any Series and
delivery of securities maintained for the account of such Series may be effected
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
9. Notwithstanding any other provision in this Agreement to
the contrary, with respect to any losses or damages arising out of
or relating to any actions or omissions of any Foreign
-31-
<PAGE> 33
Sub-Custodian the sole responsibility and liability of the Custodian shall be to
take appropriate action at the Fund's expense to recover such loss or damage
from the Foreign Sub-Custodian. It is expressly understood and agreed that the
Custodian's sole responsibility and liability shall be limited to amounts so
recovered from the Foreign Sub-Custodian.
ARTICLE XVII
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in Article XVI
neither the Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except for
any such loss or damage arising out of its own negligence or willful misconduct.
In no event shall the Custodian be liable to the Fund or any third party for
special, indirect or consequential damages or lost profits or loss of business,
arising under or in connection with this Agreement, even if previously informed
of the possibility of such damages and regardless of the form of action. The
Custodian may, with respect to questions of law arising hereunder or under any
Margin Account Agreement, apply for and obtain the advice and opinion of counsel
to the Fund or of its own counsel, at the expense of the Fund, and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall be liable to the
Fund for any loss or damage resulting from the use of the Book-Entry System or
any Depository arising by reason of any negligence or willful misconduct on the
part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased,
sold, or written by or for the Fund, the legality of the purchase, sale or
writing thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor;
(c) The legality of the declaration or payment of any
dividend by the Fund;
(d) The legality of any borrowing by the Fund using
Securities as collateral;
-32-
<PAGE> 34
(e) The legality of any loan of portfolio Securities, nor
shall the Custodian be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer, or financial institution or held
by it at any time as a result of such loan of portfolio Securities of the Fund
is adequate collateral for the Fund against any loss it might sustain as a
result of such loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the Fund is
sufficient collateral for the Fund, but such duty or obligation shall be the
sole responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of the Fund are lent pursuant to Article XIV of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Fund. In addition, the Custodian
shall be under no duty or obligation to see that any broker, dealer, futures
commission merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may be entitled to
receive from such broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or
non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchange offers,
tenders, interest rate changes or similar matters relating to Securities held in
the Depository, unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
the Fund of an overdue
-33-
<PAGE> 35
amount on Securities held in the Depository the Custodian shall make a claim
against the Depository on behalf of the Fund, except that the Custodian shall
not be under any obligation to appear in, prosecute or defend any action, suit
or proceeding in respect to any Securities held by the Depository which in its
opinion may involve it in expense or liability, unless indemnity satisfactory to
it against all expense and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may in addition to the employment of Foreign
Sub-Custodians pursuant to Article XVI appoint one or more banking institutions
as Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as
Co-Custodian or Co-Custodians including, but not limited to, banking
institutions located in foreign countries, of Securities and moneys at any time
owned by a Series, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the Custodian, the Fund and
the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it or by
any Foreign Sub-Custodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or (b) to ascertain
whether any transactions by the Fund, whether or not involving the Custodian,
are such transactions as may properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between and by the Custodian and the Fund. The
Custodian may charge such compensation and any expenses with respect to a Series
incurred by the Custodian in the performance of its duties pursuant to such
agreement against any money specifically allocated to such Series. Unless and
until the Fund instructs the Custodian by a Certificate to apportion any loss,
damage, liability or expense among the
-34-
<PAGE> 36
Series in a specified manner, the Custodian shall also be entitled to charge
against any money held by it for the account of a Series such Series' pro rata
share (based on such Series net asset value at the time of the charge to the
aggregate net asset value of all Series at that time) of the amount of any loss,
damage, liability or expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this Agreement. The expenses
for which the Custodian shall be entitled to reimbursement hereunder shall
include, but are not limited to, the expenses of sub-custodians and foreign
branches of the Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions actually received by the Custodian
hereinabove provided for. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral Instructions in such
manner so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery, telecopier or other similar device, or
otherwise, by the close of business of the same day that such Oral Instructions
are given to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received, or that contrary instructions are received, by
the Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund in acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from an
Officer.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the
-35-
<PAGE> 37
Fund's authorized representative, and the Fund shall reimburse the Custodian its
expenses of providing such copies. Upon reasonable request of the Fund, the
Custodian shall provide in hard copy or on micro-film, whichever the Custodian
elects, any records included in any such delivery which are maintained by the
Custodian on a computer disc, or are similarly maintained, and the Fund shall
reimburse the Custodian for its expenses of providing such hard copy or
micro-film.
13. The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System, the Depository or O.C.C., and with such reports on its own systems of
internal accounting control as the Fund may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with this Agreement, including the Custodian's payment or non-payment
of checks pursuant to paragraph 6 of Article XIII as part of any check
redemption privilege program of the Fund, except for any such liability, claim,
loss and demand arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this Agreement, including,
without limitation, those contained in Article XVI the Custodian may deliver and
receive Securities, and receipts with respect to such Securities, and arrange
for payments to be made and received by the Custodian in accordance with the
customs prevailing from time to time among brokers or dealers in such
Securities. When the Custodian is instructed to deliver Securities against
payment, delivery of such Securities and receipt of payment therefor may not be
completed simultaneously. The Fund assumes all responsibility and liability for
all credit risks involved in connection with the Custodian's delivery of
Securities pursuant to instructions of the Fund, which responsibility and
liability shall continue until final payment in full has been received by the
Custodian.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XVIII
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90)
-36-
<PAGE> 38
days after the date of giving of such notice. In the event such notice is given
by the Fund, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Fund, certified by the Secretary, the Clerk, any Assistant
Secretary or any Assistant Clerk, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a copy of a
resolution of the Board of Trustees of the Fund, certified by the Secretary, the
Clerk, any Assistant Secretary or any Assistant Clerk, designating a successor
custodian or custodians. In the absence of such designation by the Fund, the
Custodian may designate a successor custodian which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus and undivided
profits. Upon the date set forth in such notice this Agreement shall terminate,
and the Custodian shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Series and held by it as Custodian,
after deducting all fees, expenses and other amounts for the payment or
reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Series be deemed to be its own custodian and the Custodian shall thereby
be relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event that any
such present Officer ceases to be an Officer of the Fund, or in the event that
other or additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Officers as set forth in the last delivered Certificate.
-37-
<PAGE> 39
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other place as the
Custodian may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing.
4. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Trustees of the Fund.
5. 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 the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Trustees.
6. This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.
7. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
The Sessions Group is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "The Sessions Group" entered into in the
name or on behalf thereof by any of the Trustees, officers, employees or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, officers, employees, agents or shareholders of the Fund
personally, but bind only the assets of the Fund, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Series of
the Fund must look solely to the assets of the Fund belonging to such Series for
the enforcement of any claims against the Fund.
-38-
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
THE SESSIONS GROUP
By: /s/ Walter B. Grimm
----------------------------
[SEAL]
Attest:
/s/ Nancy E. Converse
THE BANK OF NEW YORK
By: /s/ Stephen E. Grunston
---------------------------
Name: Stephen E. Grunston
Title: Vice President
[SEAL]
Attest:
/s/ Ira Rosner
- -----------------------
-39-
<PAGE> 41
APPENDIX A
I, Walter B. Grimm, President and I, Nancy E. Converse,
Secretary,of The Sessions Group, an Ohio business trust (the
"Fund"), do hereby certify that:
The following individuals serve in the following positions with the
Fund and each has been duly elected or appointed by the Board of Trustees of the
Fund to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws, and the signatures set forth opposite their
respective names are their true and correct signatures:
<TABLE>
<CAPTION>
Name Position Signature
<S> <C> <C>
Walter B. Grimm President /s/ Walter B. Grimm
Nancy E. Converse Secretary /s/ Nancy E. Converse
</TABLE>
-40-
<PAGE> 42
APPENDIX B
As of October __, 1996
SERIES
The KeyPremier Prime Money Market Fund
The KeyPremier Pennsylvania Municipal Bond Fund
The KeyPremier Established Growth Fund
The KeyPremier Intermediate Term Income Fund
The KeyPremier Aggressive Growth Fund
-41-
<PAGE> 43
APPENDIX C
I, Ira Rosner, a Vice President with THE BANK OF NEW YORK
do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
-42-
<PAGE> 44
EXHIBIT A
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Session Group, an Ohio business
trust (the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to deposit in the
Book-Entry System, as defined in the Custody Agreement, all securities
eligible for deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
[SEAL]
/s/ Walter B. Grimm
----------------------------
-43-
<PAGE> 45
EXHIBIT B
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Sessions Group, an Ohio business
trust (the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996, (the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary to deposit in the Depository, as defined in the Custody
Agreement, all securities eligible for deposit therein, regardless of
the Series to which the same are specifically allocated, and to utilize
the Depository to the extent possible in connection with its
performance thereunder, including, without limitation, in connection
with settlements of purchases and sales of securities, loans of
securities, and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ Walter B. Grimm
----------------------------
[SEAL]
-44-
<PAGE> 46
EXHIBIT B-1
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Sessions Group, an Ohio business
trust (the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996 (the "Custody Agreement") is authorized
and instructed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary to deposit in the Participants Trust Company as Depository, as
defined in the Custody Agreement, all securities eligible for deposit
therein, regardless of the Series to which the same are specifically
allocated, and to utilize the Participants Trust Company to the extent
possible in connection with its performance thereunder, including,
without limitation, in connection with settlements of purchases and
sales of securities, loans of securities, and deliveries and returns of
securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ Walter B. Grimm
----------------------------
[SEAL]
-45-
<PAGE> 47
EXHIBIT C
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she
is the duly elected and acting of The Sessions Group, an Ohio business trust
(the "Fund"), and further certifies that the following resolution was adopted by
the Board of Trustees of the Fund at a meeting duly held on May 16, 1996, at
which a quorum was at all times present and that such resolution has not been
modified or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary, to accept, utilize and act with respect to Clearing Member
confirmations for Options and transaction in options, regardless of the
Series to which the same are specifically allocated, as such terms are
defined in the Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ Walter B. Grimm
----------------------------
[SEAL]
-46-
<PAGE> 48
EXHIBIT D
The undersigned, Walter B. Grimm, hereby certifies that he or
she is the duly elected and acting President of The Sessions Group, an
Ohio business trust (the "Fund"), further certifies that the following
resolutions were adopted by the Board of Trustees of the Fund at a meeting duly
held on May 16, 1996, at which a quorum was at all times present and
that such resolutions have not been modified or rescinded and are in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
the Custody Agreement between The Bank of New York and the Fund dated
as of July 9, 1996 (the "Custody Agreement") is authorized
and instructed on a continuous and ongoing basis to act in accordance
with, and to rely on Certificates (as defined in the Custody Agreement)
given by the Fund to the Custodian by a Terminal Link (as defined in
the Custody Agreement).
RESOLVED, that the Fund shall establish access codes and grant
use of such access codes only to Officers of the Fund as defined in the
Custody Agreement, shall establish internal safekeeping procedures to
safeguard and protect the confidentiality and availability of such
access codes, shall limit its use of the Terminal Link to those
purposes permitted by the Custody Agreement, shall require at least two
such officers to utilize their respective access codes in connection
with each such Certificate, shall review the safekeeping procedures of
the Intermediary to assure that all transmissions inputted by the Fund,
and only such transmissions, are forwarded by the omission by the
Intermediary, and shall use the Terminal Link only in a manner that
does not contravene the Investment Company Act of 1940, as amended, or
the rules and regulations thereunder.
RESOLVED, that Officers of the Fund shall, following the
establishment of such access codes and such internal safekeeping
procedures, advise the Custodian that the same have been established by
delivering a Certificate, as defined in the Custody Agreement, and the
Custodian shall be entitled to rely upon such advice.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ Walter B. Grimm
----------------------------
[SEAL]
-47-
<PAGE> 49
EXHIBIT E
The undersigned, Walter B. Grimm, hereby certifies that he or
she is the duly elected and acting President of The Sessions Group, an
Ohio business trust (the "Fund"), further certifies that the following
resolutions were adopted by the Board of Trustees of the Fund at a meeting duly
held on May 16, 1996, at which a quorum was at all times present and
that such resolutions have not been modified or rescinded and are in full force
and effect as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in each
country listed in Schedule I hereto be, and hereby is, approved by the
Board of Trustees as consistent with the best interests of the Fund and
its shareholders; and further
RESOLVED, that the maintenance of the Fund's assets with the
foreign branches of The Bank of New York (the "Bank") listed in
Schedule I located in the countries specified therein, and with the
foreign sub-custodians and depositories listed in Schedule I located in
the countries specified therein be, and hereby is, approved by the
Board of Trustees as consistent with the best interest of the Fund and
its shareholders; and further
RESOLVED, that the Sub-Custodian Agreements presented to this
meeting between the Bank and each of the foreign sub-custodians and
depositories listed in Schedule I providing for the maintenance of the
Fund's assets with the applicable entity, be and hereby are, approved
by the Board of Trustees as consistent with the best interests of the
Fund and its shareholders; and further
RESOLVED, that the appropriate officers of the Fund are hereby
authorized to place assets of the Fund with the aforementioned foreign
branches and foreign sub-custodians and depositories as hereinabove
provided; and further
RESOLVED, that the appropriate officers of the Fund, or any of
them, are authorized to do any and all other acts, in the name of the
Fund and on its behalf, as they, or any of them, may determine to be
necessary or desirable and proper in connection with or in furtherance
of the foregoing resolutions.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of The Sessions
Group, as of the 9th day of July, 1996.
/s/ Walter B. Grimm
----------------------------
[SEAL]
-48-
<PAGE> 50
EXHIBIT F
DOMESTIC CUSTODIAN FEE PROPOSAL
FOR THE KEYPREMIER FUNDS
(PER PORTFOLIO/PER ANNUM)
SAFEKEEPING/INCOME COLLECTION/REPORTING/DTC-ID AFFIRMATIONS
- -----------------------------------------------------------
2 basis points per annum on the first $50 million of each
portfolio's net assets.
1 basis point on the next $250 million
1/2 basis point on the excess
MINIMUM FEE
- -----------
There will be a minimum fee of $250 per month.
SECURITY TRANSACTION CHARGES/PAYDOWNS
- -------------------------------------
$ 8 Book-Entry Settlements/Paydowns DTC/FRB/PTC
$15 Physicals, options, and futures
$40 Euro C/D's
OTHER CHARGES
- -------------
$ 6 Bank official checks and money transfers in/out not
related to securities transactions.
EARNINGS CREDITS ON BALANCES/INTEREST ON OVERDRAFTS
- ---------------------------------------------------
Earnings credits are provided to each Fund on 80% of the daily balance in the
domestic custodian account computed at the 90-day T-bill rate on the day of the
balance.
Overdrafts, excluding bank errors, will cause a reduction of earnings credits
daily, computed at 1% above the Federal Funds rate on the date of the overdraft.
Credits and debits will be accumulated daily and offset monthly against the
Bank's domestic custodian fees. To the extent a net debit is accumulated, each
Fund will be billed for the expense. To the extent a net earnings credit is
generated, such excess earnings credit can be carried forward to the next
succeeding month. However, no earnings credit will be carried forward after
year-end.
OUT-OF-POCKET EXPENSES
- ----------------------
None.
-49-
<PAGE> 51
BILLING CYCLE
- -------------
The above fees are billed monthly.
THE SESSIONS GROUP
By:
--------------------------
[SEAL]
Attest:
- --------------------------- THE BANK OF NEW YORK
By:
--------------------------
Name:
Title:
[SEAL]
Attest:
- ---------------------------
-50-
<PAGE> 1
EXHIBIT (9)(x)
<PAGE> 2
MANAGEMENT AND ADMINISTRATION AGREEMENT
This Agreement is made this 9th day of July, 1996, between The
Sessions Group, an Ohio business trust (the "Trust"), 3435 Stelzer Road,
Columbus, Ohio 43219, and BISYS Fund Services Limited Partnership dba BISYS
Fund Services, an Ohio limited partnership ("Administrator"), 3435 Stelzer
Road, Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment company,
organized as an Ohio business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain Administrator to furnish
management and administration services to certain investment portfolios of the
Trust and may retain Administrator to serve in such capacity with respect to
additional investment portfolios of the Trust, all as now or hereafter may be
identified in Schedule A hereto as such Schedule may be amended from time to
time (individually referred to herein as a "Fund" and collectively referred to
herein as the "Funds"); and
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Manager and Administrator
Subject to the direction and control of the Board of Trustees of the
Trust, Administrator will assist in supervising all aspects of the operations
of the Funds except those performed by the investment adviser for the Funds
under its Investment Advisory Agreement, the custodian for the Funds under its
Custody Agreement, the transfer agent for the Funds under its Transfer Agency
Agreement and the fund accountant for the Funds under its Fund Accounting
Agreement.
Administrator will maintain office facilities (which may be in the
offices of Administrator or an affiliate but shall be in such location as the
Trust shall reasonably determine); furnish statistical and research data,
clerical, certain bookkeeping services and stationery and office supplies;
prepare the periodic reports to the Commission on Form N-SAR or any replacement
forms therefor; compile data for, assist the Trust or its designee in the
preparation of, and file, all the Funds' federal and state tax returns and
required tax filings other than those required to be made by the Funds'
custodian and transfer agent; prepare compliance filings pursuant to state
securities laws with the advice of the Trust's counsel; assist to the extent
requested by the Trust with the Trust'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 Commission required pursuant to Rule 24f-2 under the 1940 Act;
keep and maintain the financial accounts and records of the Funds, including
calculation of daily expense accruals; in the case of money market funds,
periodic review of the amount of the
<PAGE> 3
deviation, if any, of the current net asset value per share (calculated using
available market quotations or an appropriate substitute that reflects current
market conditions) from each money market fund's amortized cost price per
share; and generally assist in all aspects of the operations of the Funds. In
compliance with the requirements of Rule 31a-3 under the 1940 Act,
Administrator hereby agrees that all records which it maintains for the Trust
are the property of the Trust and further agrees to surrender promptly to the
Trust any of such records upon the Trust's request. Administrator further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
Administrator may delegate some or all of its responsibilities under this
Agreement.
Administrator may, at its expense, subcontract with any entity or
person concerning the provision of the services contemplated hereunder;
provided, however, that Administrator shall not be relieved of any of its
obligations under this Agreement by the appointment of such subcontractor and
provided further, that Administrator shall be responsible, to the extent
provided in Section 4 hereof, for all acts of such subcontractor as if such
acts were its own.
2. Fees; Expenses; Expense Reimbursement
In consideration of services rendered and expenses assumed pursuant to
this Agreement, each of the Funds will pay Administrator on the first business
day of each month, or at such time(s) as Administrator shall request and the
parties hereto shall agree, a fee computed daily and paid as specified below
calculated at the applicable annual rate set forth on Schedule A hereto. The
fee for the period from the day of the month this Agreement is entered into
until the end of that month shall be prorated 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 fee for such part of a month shall
be prorated 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 Administrator, the
value of the net assets of a particular Fund shall be computed in the manner
described in the Trust's Declaration of Trust or in the Prospectus or Statement
of Additional Information respecting that Fund as from time to time is in
effect for the computation of the value of such net assets in connection with
the determination of the liquidating value of the shares of such Fund.
Administrator will from time to time employ or associate with itself
such person or persons as Administrator may believe to be particularly fitted
to assist it in the performance of this Agreement. Such person or persons may
be partners, officers, or employees who are employed by both Administrator and
the Trust.
- 2 -
<PAGE> 4
The compensation of such person or persons shall be paid by Administrator and
no obligation may be incurred on behalf of the Funds in such respect. Other
expenses to be incurred in the operation of the Funds including taxes,
interest, brokerage fees and commissions, if any, fees of Trustees who are not
partners, officers, directors, shareholders or employees of Administrator or
the investment adviser or distributor for the Funds, Commission fees and state
Blue Sky qualification and renewal fees and expenses, advisory fees, pricing
service fees, custodian fees, transfer and dividend disbursing agents' fees,
fund accounting fees, certain insurance premiums, outside and, to the extent
authorized by the Trust, inside auditing and legal fees and expenses, costs of
maintenance of the Trust's existence, typesetting and printing prospectuses for
regulatory purposes and for distribution to current shareholders of the Funds,
costs of shareholders' and Trustees' reports and meetings, fees incurred under
the Trust's Distribution and Shareholder Service Plan and Administrative
Services Plan and any extraordinary expenses will be borne by the Funds.
If in any fiscal year the aggregate expenses of a particular Fund (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, Administrator will
reimburse such Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees respecting such Fund otherwise payable to
Administrator hereunder to the aggregate fees respecting such Fund otherwise
payable to Administrator hereunder, to Martindale Andres & Company, Inc. under
the Investment Advisory Agreement between Martindale Andres & Company, Inc. and
the Trust and to BISYS Fund Services, Inc. under the Fund Accounting Agreement
between BISYS Fund Services, Inc. and the Trust. The expense reimbursement
obligation of Administrator is limited to the amount of its fees hereunder for
such fiscal year, provided, however, that notwithstanding the foregoing,
Administrator shall reimburse a particular Fund for such proportion 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 Trust so require. Such expense reimbursement, if any,
will be estimated daily and reconciled and paid on a monthly basis.
3. Proprietary and Confidential Information
Administrator agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and prior, present, or
potential shareholders, and not to 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 Trust, which
approval shall not be unreasonably withheld and may not be withheld
- 3 -
<PAGE> 5
where Administrator 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 Trust.
4. Limitation of Liability
Administrator shall not be liable for any loss suffered by the Funds
in connection with the matters to which this Agreement relates, except for a
loss resulting from willful misfeasance, bad faith or negligence on its part 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 a
partner, employee, or agent of Administrator, who may be or become an officer,
Trustee, employee, or agent of the Trust or the Funds shall be deemed, when
rendering services to the Trust or the Funds, or acting on any business of that
party, to be rendering such services to or acting solely for that party and not
as a partner, employee, or agent or one under the control or direction of
Administrator even though paid by it.
5. Term
This Agreement shall become effective as of the date first written
above (or, if a particular Fund is not in existence on that date, on the date
an amendment to Schedule A to this Agreement relating to that Fund is executed)
and, unless sooner terminated as provided herein, shall continue until July 9,
1999, and thereafter shall be renewed automatically for successive one-year
terms, unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term; provided that the performance of Administrator is specifically reviewed
at least annually by the Trust's Board of Trustees. Such review shall include
the review of acts of negligence, if any, by Administrator, and if such acts of
negligence are determined to be material by the Trustees, such acts shall be an
event of "cause" as used below. This Agreement is terminable with respect to a
particular Fund through a failure to renew at the end of a one-year term; upon
mutual agreement of the parties hereto; upon 180 days' written notice by the
Trust after the initial term hereof but only in connection with the
reorganization of the Funds into another registered management investment
company; or for "cause" (as defined below) by the party alleging "cause," on
not less than 60 days' notice by the Trust's Board of Trustees or by
Administrator. Written notice not to renew may be given for any reason, with
or without "cause."
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, acts of negligence by Administrator
determined by the Trustees to be material, or reckless disregard on the part of
the party to be terminated with respect to its obligations and duties set forth
herein; (b) a
- 4 -
<PAGE> 6
final, unappealable judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of criminal or unethical
behavior in the conduct of its business; (c) the dissolution or liquidation of
either party or other cessation of business other than a reorganization or
recapitalization of such party as an ongoing business; (d) financial
difficulties on the part of the party to be terminated which is evidenced by
the authorization or commencement of, or involvement by way of pleading,
answer, consent, or acquiescence in, a voluntary or involuntary case under
Title 11 of the United States Code, as from time to time in effect, or any
applicable law, other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or alteration
of the rights of creditors; or (e) any circumstance which substantially impairs
the performance of the obligations and duties of the party to be terminated, or
the ability to perform those obligations and duties as contemplated herein.
Notwithstanding the foregoing, the absence of an annual review of this
Agreement by the Board of Trustees shall not, in and of itself, constitute
"cause" as used herein.
6. Governing Law and Matters Relating to the Trust as an Ohio
Business Trust
This Agreement shall be governed by the law of the State of Ohio. The
Sessions Group is a business trust organized under Chapter 1746, Ohio Revised
Code and under a Declaration of Trust, to which reference is hereby made and a
copy of which is on file at the office of the Secretary of State of Ohio as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The Sessions Group" entered into in the name or on
behalf thereof by any of the Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or shareholders of the Trust personally,
but bind only the assets of the Trust, as set forth in Section 1746.13(A), Ohio
Revised Code, and all persons dealing with any of the Funds of the Trust must
look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner By /s/ Walter B. Grimm
----------------------------------
Walter B. Grimm, President
By /s/ J. David Huber
----------------------------------
(name) (title)
- 5 -
<PAGE> 7
Dated: January __, 1997
Schedule A to the
Management and Administration Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
dated July 9, 1996
Name of Fund Compensation* Date
- ------------ ------------ ----
The KeyPremier Annual rate of eleven July 9, 1996
Prime Money and one-half
Market Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven July 9, 1996
Pennsylvania and one-half
Municipal Bond one-hundredths of
Fund one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven October __, 1996
Established and one-half
Growth Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven October __, 1996
Intermediate and one-half
Term Income Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
__________________________________
*All fees are computed daily and paid periodically.
A-1
<PAGE> 8
The KeyPremier Annual rate of eleven January __, 1997
Aggressive Growth and one-half
Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc. By
--------------------------
General Partner Walter B. Grimm, President
By
-------------------------
J. David Huber, President
A-2
<PAGE> 1
EXHIBIT (9)(y)
<PAGE> 2
FUND ACCOUNTING AGREEMENT
This Agreement is made as of July 9, 1996 between The Sessions Group
(the "Trust"), an Ohio business trust having its principal place of business at
3435 Stelzer Road, Columbus, Ohio 43219, and BISYS Fund Services, Inc.
("BISYS"), a Delaware corporation having its principal place of business at
3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain fund accounting
services for each of The KeyPremier Prime Money Market Fund and The KeyPremier
Pennsylvania Municipal Bond Fund and such other investment portfolios of the
Trust identified on Schedule A hereto, as such Schedule may be amended from
time to time (individually referred to herein as a "Fund" and collectively as
the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
Section 1. Services as Fund Accountant.
(a) Maintenance of Books and Records. BISYS will
keep and maintain the following books and records of each Fund
pursuant to Rule 31a-1 under the Investment Company Act of
1940 (the "Rule"):
(i) Journals containing an itemized daily
record in detail of all purchases and sales of
securities, all receipts and disbursements of cash
and all other debits and credits, as required by
subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers
reflecting all asset, liability, reserve, capital,
income and expense accounts, including interest
accrued and interest received, as required by
subsection (b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule; and
(iv) A monthly trial balance of all ledger
accounts (except shareholder accounts) as required by
subsection (b)(8) of the Rule.
(b) Performance of Daily Accounting Services. In
addition to the maintenance of the books and records specified
above, BISYS shall perform the following accounting services
daily for each Fund:
<PAGE> 3
(i) Calculate the net asset value per
share utilizing prices obtained from the sources
described in subsection 1(b)(ii) below;
(ii) Obtain security prices from
independent pricing services, or if such quotes are
unavailable, then obtain such prices from each Fund's
investment adviser or its designee, as approved by
the Trust's Board of Trustees;
(iii) Verify and reconcile with the Funds'
custodian all daily trade activity;
(iv) Compute, as appropriate, each Fund's
net income and capital gains, dividend payables,
dividend factors, 7-day yields, 7-day effective
yields, 30-day yields, and weighted average portfolio
maturity;
(v) Review daily the net asset value
calculation and dividend factor (if any) for each
Fund prior to release to shareholders, check and
confirm the net asset values and dividend factors for
reasonableness and deviations, and distribute net
asset values and yields to NASDAQ;
(vi) Report to the Trust the daily market
pricing of securities in any money market Funds,
with the comparison to the amortized cost basis;
(vii) Determine unrealized appreciation and
depreciation on securities held in variable net asset
value Funds;
(viii) Amortize premiums and accrete
discounts on securities purchased at a price other
than face value, if requested by the Trust;
(ix) Update fund accounting system to
reflect rate changes, as received from a Fund's
investment adviser, on variable interest rate
instruments;
(x) Post Fund transactions to appropriate
categories;
(xi) Accrue expenses of each Fund
according to instructions received from the Trust's
Administrator;
(xii) Determine the outstanding receivables
and payables for all (1) security trades, (2) Fund
share transactions and (3) income and expense
accounts;
-2-
<PAGE> 4
(xiii) Provide accounting reports in
connection with the Trust's regular annual audit and
other audits and examinations by regulatory agencies;
and
(xiv) Provide such periodic reports as the
parties shall agree upon, as set forth in a separate
schedule.
(c) Special Reports and Services
(i) BISYS may provide additional special
reports upon the request of the Trust or a Fund's
investment adviser, which may result in an additional
charge, the amount of which shall be agreed upon
between the parties.
(ii) BISYS may provide such other similar
services with respect to a Fund as may be reasonably
requested by the Trust, which may result in an
additional charge, the amount of which shall be
agreed upon between the parties.
(d) Additional Accounting Services. BISYS shall
also perform the following additional accounting services for
each Fund:
(i) Provide monthly a download (and hard
copy thereof) of the financial statements described
below, upon request of the Trust. The download will
include the following items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the
following:
(A) federal and state income tax
returns and federal excise tax returns;
(B) the Trust's semi-annual
reports with the Securities and Exchange
Commission ("SEC") on Form N-SAR;
(C) the Trust's annual,
semi-annual and quarterly (if any)
shareholder reports;
(D) registration statements on
Form-N1A and other filings relating to the
registration of shares;
(E) the Administrator's
monitoring of the Trust's status as a
regulated investment company
-3-
<PAGE> 5
under Subchapter M of the Internal Revenue
Code, as amended;
(F) annual audit by the Trust's
auditors; and
(G) examinations performed by
the SEC.
Section 2. Subcontracting.
BISYS may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder; provided,
however, that BISYS shall not be relieved of any of its obligations under this
Agreement by the appointment of such subcontractor and provided further, that
BISYS shall be responsible, to the extent provided in Section 7 hereof, for all
acts of such subcontractor as if such acts were its own.
Section 3. Compensation.
The Trust shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in,
Schedule A hereto, as such Schedule may be amended from time to time.
If in any fiscal year the aggregate expenses of a particular Fund (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, BISYS will
reimburse such Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees respecting such Fund otherwise payable to BISYS
hereunder to the aggregate fees respecting such Fund otherwise payable to BISYS
hereunder, to Martindale Andres & Company, Inc. under the Investment Advisory
Agreement between Martindale Andres & Company, Inc. and the Trust and to BISYS
Fund Services Limited Partnership under the Management and Administration
Agreement between BISYS Fund Services Limited Partnership and the Trust. The
expense reimbursement obligation of BISYS is limited to the amount of its fees
hereunder for such fiscal year, provided, however, that notwithstanding the
foregoing, BISYS shall reimburse a particular Fund for such proportion 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 Trust so require. Such expense reimbursement, if any,
will be estimated daily and reconciled and paid on a monthly basis.
Section 4. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section 3 hereof,
the Trust agrees to reimburse BISYS for BISYS's out-of-pocket expenses in
providing services hereunder, including without limitation the following:
-4-
<PAGE> 6
(1) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Trust;
(2) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Trust, the Trust's investment adviser
or custodian, dealers or others as required for BISYS to
perform the services to be provided hereunder;
(3) The cost of obtaining security market quotes pursuant to
Section 1(b)(ii) above;
(4) The cost of microfilm or microfiche of records or other
materials;
(5) Any expenses BISYS shall incur at the written direction of an
officer of the Trust thereunto duly authorized by the Trust's
Board of Trustees; and
(6) Any additional out-of-pocket expenses reasonably incurred by
BISYS in the performance of its duties and obligations under
this Agreement.
Section 5. Effective Date. This Agreement shall become
effective with respect to a Fund as of the date first written above (or, if a
particular Fund is not in existence on that date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed) (the "Effective
Date").
Section 6. Term. This Agreement shall continue in effect with
respect to a Fund, unless earlier terminated by either party hereto as provided
hereunder, until July 9, 1999, and thereafter shall be renewed automatically
for successive one-year terms unless written notice not to renew is given by
the non-renewing party to the other party at least 60 days prior to the
expiration of the then-current term; provided, however, that after such
termination, for so long as BISYS, with the written consent of the Trust, in
fact continues to perform any one or more of the services contemplated by this
Agreement or any schedule or exhibit hereto, the provisions of this Agreement,
including without limitation the provisions dealing with indemnification, shall
continue in full force and effect. Compensation due BISYS and unpaid by the
Trust upon such termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to collect from the
Trust, in addition to the compensation described under Section 3 hereof, the
amount of all of BISYS' reasonable cash disbursements for services in
connection with BISYS' activities in effecting such termination, including
without limitation, the delivery to the Trust and/or its designees of the
Trust's property, records, instruments and documents, or any copies thereof.
To the extent
-5-
<PAGE> 7
that BISYS may retain in its possession copies of any Trust documents or
records subsequent to such termination, which copies had not been requested by
or on behalf of the Trust in connection with the termination process described
above, for a reasonable fee, BISYS will provide the Trust with reasonable
access to such copies. The performance of BISYS under this Agreement shall be
reviewed at least annually by the Trust's Board of Trustees. Such review shall
include the review of acts of negligence, if any, by BISYS, and if such acts of
negligence are determined to be material by the Trustees, such acts shall be an
event of "cause" as used below. This Agreement is terminable with respect to a
particular Fund only upon mutual agreement of the parties hereto; upon 180
days' written notice by the Trust after the initial term hereof but only in
connection with the reorganization of the Funds into another registered
management investment company; or for "cause" (as defined below) by the party
alleging "cause," on not less than 60 days' notice by the Trust's Board of
Trustees or by BISYS.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, acts of negligence by BISYS as
determined by the Trustees to be material or reckless disregard on the part of
either party with respect to its obligations and duties set forth herein; (b) a
final, unappealable judicial, regulatory or administrative ruling or order in
which either party has been found guilty of criminal or unethical behavior in
the conduct of its business; (c) the dissolution or liquidation of either party
or other cessation of business other than a reorganization or recapitalization
of such party as an ongoing business; (d) financial difficulties on the part of
either party which is evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent, or acquiescence in, a
voluntary or involuntary case under Title 11 of the United States Code, as from
time to time is in effect, or any applicable law, other than said Title 11, of
any jurisdiction relating to the liquidation or reorganization of debtors or to
the modification or alteration of the rights of creditors; or (e) any
circumstance which substantially impairs the performance of either party's
obligations and duties as contemplated herein.
Section 7. Standard of Care; Reliance on Records and
Instructions; Indemnification. BISYS shall use its best efforts to ensure the
accuracy of all services performed under this Agreement, but shall not be
liable to the Trust for any action taken or omitted by BISYS in the absence of
bad faith, willful misfeasance, negligence or from reckless disregard by it of
its obligations and duties. A Fund agrees to indemnify and hold harmless
BISYS, its employees, agents, directors, officers and nominees from and against
any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to BISYS' actions taken or
nonactions with respect to the performance
-6-
<PAGE> 8
of services under this Agreement with respect to such Fund or based, if
applicable, upon reasonable reliance on information, records, instructions or
requests with respect to such Fund given or made to BISYS by a duly authorized
representative of the Trust; provided that this indemnification shall not apply
to actions or omissions of BISYS in cases of its own bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties, and further provided that prior to confessing any claim against it
which may be the subject of this indemnification, BISYS shall give the Trust
written notice of and reasonable opportunity to defend against said claim in
its own name or in the name of BISYS.
Section 8. Record Retention and Confidentiality. BISYS shall
keep and maintain on behalf of the Trust all books and records which the Trust
or BISYS is, or may be, required to keep and maintain pursuant to any
applicable statutes, rules and regulations, including without limitation Rules
31a-1 and 31a-2 under the Investment Company Act of 1940, as amended (the "1940
Act") relating to the maintenance of books and records in connection with the
services to be provided hereunder. BISYS further agrees that all such books
and records shall be the property of the Trust and to make such books and
records available for inspection by the Trust or by the Securities and Exchange
Commission at reasonable times and otherwise to keep confidential all books and
records and other information relative to the Trust and its shareholders;
except when requested to divulge such information by duly-constituted
authorities or court process.
Section 9. Uncontrollable Events. BISYS assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of
data, delay or any other loss whatsoever caused by events beyond its reasonable
control.
Section 10. Reports. BISYS will furnish to the Trust and to its
properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Trust in writing, such reports and at such times as are prescribed pursuant
to the terms and the conditions of this Agreement to be provided or completed
by BISYS, or as subsequently agreed upon by the parties pursuant to an
amendment hereto. The Trust agrees to examine each such report or copy
promptly and will report or cause to be reported any errors or discrepancies
therein no later than three business days from the receipt thereof. In the
event that errors or discrepancies, except such errors and discrepancies as may
not reasonably be expected to be discovered by the recipient within ten days
after conducting a diligent examination, are not so reported within the
aforesaid period of time, a report will for all purposes be accepted by and
binding upon the Trust and any other recipient, and except as provided in
Section 7 hereof, BISYS shall have no liability for errors or discrepancies
therein and shall have no further
-7-
<PAGE> 9
responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Trust.
Section 11. Rights of Ownership. All computer programs and
procedures developed to perform services required to be provided by BISYS under
this Agreement are the property of BISYS. All records and other data except
such computer programs and procedures are the exclusive property of the Trust
and all such other records and data will be furnished to the Trust in
appropriate form as soon as practicable after termination of this Agreement for
any reason.
Section 12. Return of Records. BISYS may at its option at any
time, and shall promptly upon the Trust's demand, turn over to the Trust and
cease to retain BISYS' files, records and documents created and maintained by
BISYS pursuant to this Agreement; provided, however, that to the extent needed
by BISYS in the performance of its services or for its legal protection, BISYS
may retain copies of such files, records and documents at BISYS' own expense.
If not so turned over to the Trust, such documents and records will be retained
by BISYS for six years from the year of creation. At the end of such six-year
period, such records and documents will be turned over to the Trust unless the
Trust authorizes in writing the destruction of such records and documents.
Section 13. Representations of the Trust. The Trust certifies to
BISYS that: (1) as of the close of business on the Effective Date, each Fund
which is in existence as of the Effective Date has authorized unlimited shares,
and (2) this Agreement has been duly authorized by the Trust and, when executed
and delivered by the Trust, will constitute a legal, valid and binding
obligation of the Trust, enforceable against the Trust in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
secured parties.
Section 14. Representations of BISYS. BISYS represents and
warrants that: (1) the various procedures and systems which BISYS has
implemented with regard to safeguarding from loss or damage attributable to
fire, theft, or any other cause of the blank checks, records, and other data of
the Trust and BISYS' records, data, equipment facilities and other property
used in the performance of its obligations hereunder are adequate and that it
will make such changes therein from time to time as are required for the secure
performance of its obligations hereunder, and (2) this Agreement has been duly
authorized by BISYS and, when executed and delivered by BISYS, will constitute
a legal, valid and binding obligation of BISYS, enforceable against BISYS in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.
-8-
<PAGE> 10
Section 15. Insurance. BISYS shall notify the Trust should any
of its insurance coverage be cancelled or reduced. Such notification shall
include the date of change and the reasons therefor. BISYS shall notify the
Trust of any material claims against it with respect to services performed
under this Agreement, whether or not they may be covered by insurance, and
shall notify the Trust from time to time as may be appropriate of the total
outstanding claims made by BISYS under its insurance coverage.
Section 16. Information to be Furnished by the Trust and Funds.
The Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the
state in which such Declaration has been filed.
(b) Copies of the following documents:
(i) The Trust's By-Laws and any amendments thereto; and
(ii) Certified copies of resolutions of the Board of
Trustees covering the approval of this Agreement,
authorization of a specified officer of the Trust to
execute and deliver this Agreement and authorization
for specified officers of the Trust to instruct BISYS
thereunder.
(c) A list of all the officers of the Trust, together with
specimen signatures of those officers who are authorized to
instruct BISYS in all matters.
(d) Two copies of the Prospectus and Statement of Additional
Information for each Fund.
Section 17. Information Furnished by BISYS.
(a) BISYS has furnished to the Trust the following:
(i) BISYS's Articles of Incorporation; and
(ii) BISYS's Bylaws and any amendments thereto.
(b) BISYS shall, upon request, furnish certified copies of actions
of BISYS covering the following matters:
(i) Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver
this Agreement; and
(ii) Authorization of BISYS to act as fund accountant for
the Trust and to provide accounting services for the
Trust.
-9-
<PAGE> 11
Section 18. Amendments to Documents. The Trust shall furnish
BISYS written copies of any amendments to, or changes in, any of the items
referred to in Section 16 hereof forthwith upon such amendments or changes
becoming effective. In addition, the Trust agrees that no amendments will be
made to the Prospectuses or Statements of Additional Information of the Trust
which might have the effect of changing the procedures employed by BISYS in
providing the services agreed to hereunder or which amendment might affect the
duties of BISYS hereunder unless the Trust first obtains BISYS' approval of
such amendments or changes.
Section 19. Compliance with Law. Except for the obligations of
BISYS set forth in Section 8 hereof, the Trust assumes full responsibility for
the preparation, contents and distribution of each prospectus of the Trust as
to compliance with all applicable requirements of the Securities Act of 1933,
as amended, the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. BISYS shall have no obligation
to take cognizance of any laws relating to the sale of the Trust's shares. The
Trust represents and warrants that no shares of the Trust will be offered to
the public until the Trust's registration statement under the Securities Act of
1933 and the 1940 Act has been declared or becomes effective.
Section 20. Notices. Any notice provided hereunder shall be
sufficiently given when sent by registered or certified mail to the party
required to be served with such notice, at the following address: 3435 Stelzer
Road, Columbus, Ohio 43219, or at such other address as such party may from
time to time specify in writing to the other party pursuant to this Section.
Section 21. Headings. Paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
Section 22. Assignment. This Agreement and the rights and duties
hereunder shall not be assignable with respect to a Fund by either of the
parties hereto except by the specific written consent of the other party.
Section 23. Governing Law. This Agreement shall be governed by
and provisions shall be construed in accordance with the laws of the State of
Ohio.
Section 24. Limitation of Liability of the Trustees and
Shareholders. The Sessions Group is a business trust organized under Chapter
1746, Ohio Revised Code and under a Declaration of Trust, to which reference is
hereby made and a copy of which is on file at the office of the Secretary of
State of Ohio as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "The Sessions Group" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
-10-
<PAGE> 12
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in
Section 1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Funds of the Trust must look solely to the assets of the Trust belonging to
such Fund for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
THE SESSIONS GROUP
By /s/ Walter B. Grimm
-------------------------------------
Walter B. Grimm, President
BISYS FUND SERVICES, INC.
By /s/ J. David Huber
-------------------------------------
(name) (title)
-11-
<PAGE> 13
Dated: January __, 1997
SCHEDULE A
TO THE
FUND ACCOUNTING AGREEMENT
BETWEEN
THE SESSIONS GROUP
AND
BISYS FUND SERVICES, INC.
JULY 9, 1996
<TABLE>
<CAPTION>
Name of Fund Compensation* Date
- ------------ ------------ ----
<S> <C> <C>
The KeyPremier Prime The greater of (i) the July 9, 1996
Money Market Fund annual rate of .03% of
and The KeyPremier such Fund's average
Pennsylvania daily net assets or (ii)
Municipal Bond Fund the applicable annual
minimum fee of $30,000
per fund ($35,000 for a
municipal or tax-exempt
fund).
The KeyPremier The greater of (i) the October __, 1996
Established Equity annual rate of .03% of
Fund and The such Fund's average
KeyPremier daily net assets or (ii)
Intermediate Term the applicable annual
Income Fund minimum fee of $30,000
per fund ($35,000 for a
municipal or tax-exempt
fund).
The KeyPremier The greater of (i) the January __, 1997
Aggressive Growth annual rate of .03% of
Fund such Fund's average
daily net assets or (ii)
the applicable annual
minimum fee of $30,000
per fund ($35,000 for a
municipal or tax-exempt
fund).
</TABLE>
BISYS FUND SERVICES, INC. THE SESSIONS GROUP
By By
------------------------- -----------------------
J. David Huber, President Walter B. Grimm, President
- -------------------------
* All fees are computed daily and paid periodically.
<PAGE> 1
EXHIBIT (9)(z)
<PAGE> 2
TRANSFER AGENCY AGREEMENT
This Agreement is made as of July 9, 1996, between The Sessions Group
(the "Trust"), an Ohio business trust having its principal place of business at
3435 Stelzer Road, Columbus, Ohio 43219, and BISYS Fund Services, Inc.
("BISYS"), a Delaware corporation having its principal place of business at
3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain services for
those series of the Trust set forth in the Schedule A attached hereto, as such
Schedule may be amended from time to time (individually referred to herein as a
"Fund" and collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
Section 1. SERVICES. BISYS shall perform for the Trust the
transfer agent services set forth in Schedule B hereto.
BISYS also agrees to perform for the Trust such special
services incidental to the performance of the services enumerated herein as
agreed to by the parties from time to time. BISYS shall perform such
additional services as are provided on an amendment to Schedule B hereof, in
consideration of such fees as the parties hereto may agree.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the
Trust (individually, a "Subtransfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided,
however, that the Sub-transfer Agent shall be the agent of BISYS and not the
agent of the Trust or such Fund, and that BISYS shall be fully responsible for
the acts of such Sub-transfer Agent and shall not be relieved of any of its
responsibilities hereunder by the appointment of such Sub-transfer Agent.
Section 2. FEES. The Trust shall pay BISYS for the services to
be provided by BISYS under this Agreement in accordance with, and in the manner
set forth in, Schedule C hereto. Fees for any additional services to be
provided by BISYS pursuant to an amendment to Schedule B hereto shall be
subject to mutual agreement at the time such amendment to Schedule C is
proposed.
Section 3. REIMBURSEMENT OF EXPENSES. In addition to paying
BISYS the fees described in Section 2 hereof, the Trust agrees to reimburse
BISYS for BISYS' out-of-pocket expenses in providing services hereunder,
including without limitation the following:
<PAGE> 3
A. All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Trust and in
delivering all materials to shareholders;
B. All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Trust, the Trust's investment adviser
or custodian, dealers, shareholders or others as required for
BISYS to perform the services to be provided hereunder;
C. Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms,
proxies, notices or other form of printed material which shall
be required by BISYS for the performance of the services to be
provided hereunder;
D. The cost of microfilm or microfiche of records or other
materials; and
E. Any expenses BISYS shall incur at the written direction of an
officer of the Trust thereunto duly authorized by the Trust's
Board of Trustees.
Section 4. EFFECTIVE DATE. This Agreement shall become
effective as of the date first written above (the "Effective Date").
Section 5. TERM. This Agreement shall continue in effect,
unless earlier terminated by either party hereto as provided hereunder, until
July 9, 1999. Thereafter, this Agreement shall be renewed automatically for
successive one-year terms unless written notice not to renew is given by the
non-renewing party to the other party at least 60 days prior to the expiration
of the then-current term; provided, however, that after such termination, for
so long as BISYS, with the written consent of the Trust, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
Schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due BISYS and unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Trust, in addition to
the fees and disbursements provided by Sections 2 and 3 hereof, the amount of
all of BISYS' reasonable cash disbursements for services in connection with
BISYS' activities in effecting such termination, including without limitation,
the delivery to the Trust and/or its distributor or investment advisers and/or
other parties, of the Trust's property, records, instruments and documents, or
any copies thereof. To the extent that BISYS may retain in its possession
copies of any Trust documents or records subsequent to such termination which
copies had not been requested by or on behalf of the Trust in connection
- 3 -
<PAGE> 4
with the termination process described above, BISYS, for a reasonable fee, will
provide the Trust with reasonable access to such copies. The performance of
BISYS under this Agreement shall be reviewed at least annually by the Trust's
Board of Trustees. Such review shall include the review of acts of negligence,
if any, by BISYS, and if such acts of negligence are determined to be material
by the Trustees, such acts shall be an event of "cause" as used below.
Further, this Agreement is terminable with respect to a particular Fund only
upon mutual agreement of the parties hereto; upon 180 days' written notice by
the Trust after the initial term hereof but only in connection with the
reorganization of the Funds into another registered management investment
company; or for "cause" (as defined below) by the party alleging "cause," on
not less than 60 days' notice by the Trust's Board of Trustees or by BISYS.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, acts of negligence by BISYS
determined by the Trustees to be material, or reckless disregard on the part of
the party to be terminated with respect to its obligations and duties set forth
herein; (b) a final, unappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated has been found guilty of criminal
or unethical behavior in the conduct of its business; (c) financial
difficulties on the part of the party to be terminated which are evidenced by
the authorization or commencement of, or involvement by way of pleading,
answer, consent, or acquiescence in, a voluntary or involuntary case under
Title 11 of the United States Code, as from time to time is in effect, or any
applicable law, other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or alteration
of the rights of creditors; or (d) any circumstance which substantially impairs
the performance of the obligations and duties as contemplated herein of the
party to be terminated.
Section 6. UNCONTROLLABLE EVENTS. BISYS assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of
data, delay or any other loss whatsoever caused by events beyond its reasonable
control.
Section 7. LEGAL ADVICE. BISYS shall notify the Trust at any
time BISYS believes that it is in need of the advice of counsel (other than
counsel in the regular employ of BISYS or any affiliated companies) with regard
to BISYS' responsibilities and duties pursuant to this Agreement; and after so
notifying the Trust, BISYS, at its discretion, shall be entitled to seek,
receive and act upon advice of legal counsel of its choosing, such advice to be
at the expense of the Trust or Funds unless relating to a matter involving
BISYS' willful misfeasance, bad faith, negligence or reckless disregard with
respect to BISYS' responsibilities and duties hereunder and BISYS shall in no
event be liable to the Trust
- 4 -
<PAGE> 5
or any Fund or any shareholder or beneficial owner of the Trust for any action
reasonably taken pursuant to such advice.
Section 8. INSTRUCTIONS. Whenever BISYS is requested or
authorized to take action hereunder pursuant to instructions from a shareholder
or a properly authorized agent of a shareholder ("shareholder's agent"),
concerning an account in a Fund, BISYS shall be entitled to rely upon any
certificate, letter or other instrument or communication, whether in writing,
by electronic or telephone transmission, believed by BISYS to be genuine and to
have been properly made, signed or authorized by an officer or other authorized
agent of the Trust or by the shareholder or shareholder's agent, as the case
may be, and shall be entitled to receive as conclusive proof of any fact or
matter required to be ascertained by it hereunder a certificate signed by an
officer of the Trust or any other person authorized by the Trust's Board of
Trustees or by the shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statements of Additional
Information of the Trust relating to the Funds to the extent that such services
are described therein unless BISYS receives written instructions to the
contrary in a timely manner from the Trust.
Section 9. STANDARD OF CARE; RELIANCE ON RECORDS AND
INSTRUCTIONS; INDEMNIFICATION. BISYS shall use its best efforts to ensure the
accuracy of all services performed under this Agreement, but shall not be
liable to the Trust for any action taken or omitted by BISYS in the absence of
bad faith, willful misfeasance, negligence or from reckless disregard by it of
its obligations and duties. The Trust agrees to indemnify and hold harmless
BISYS, its employees, agents, directors, officers and nominees from and against
any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to BISYS' actions taken or
nonactions with respect to the performance of services under this Agreement or
based, if applicable, upon reasonable reliance on information, records,
instructions or requests given or made to BISYS by the Trust, the investment
adviser and on any records provided by any fund accountant or custodian
thereof; provided that this indemnification shall not apply to actions or
omissions of BISYS in cases of its own bad faith, willful misfeasance,
negligence or from reckless disregard by it of its obligations and duties; and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, BISYS shall give the Trust written notice of
and reasonable opportunity to defend against said claim in its own name or in
the name of BISYS.
- 5 -
<PAGE> 6
Section 10. RECORD RETENTION AND CONFIDENTIALITY. BISYS shall
keep and maintain on behalf of the Trust all books and records which the Trust
or BISYS is, or may be, required to keep and maintain pursuant to any
applicable statutes, rules and regulations, including without limitation Rules
31a-1 and 31a-2 under the Investment Company Act of 1940, as amended (the "1940
Act"), relating to the maintenance of books and records in connection with the
services to be provided hereunder. BISYS further agrees that all such books
and records shall be the property of the Trust and to make such books and
records available for inspection by the Trust or by the Securities and Exchange
Commission (the "Commission") at reasonable times and otherwise to keep
confidential all books and records and other information relative to the Trust
and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process, or requested by a shareholder,
or shareholder's agent, with respect to information concerning an account as to
which such shareholder has either a legal or beneficial interest or when
requested by the Trust, the shareholder, or shareholder's agent, or the dealer
of record as to such account.
Section 11. REPORTS. BISYS will furnish to the Trust and to its
properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Trust in writing, such reports at such times as are prescribed in Schedule
D attached hereto, or as subsequently agreed upon by the parties pursuant to an
amendment to Schedule D. The Trust agrees to examine each such report or copy
promptly and will report or cause to be reported any errors or discrepancies
therein no later than three business days from the receipt thereof. In the
event that errors or discrepancies, except such errors and discrepancies as may
not reasonably be expected to be discovered by the recipient within ten days
after conducting a diligent examination, are not so reported within the
aforesaid period of time, a report will for all purposes be accepted by and
binding upon the Trust and any other recipient, and, except as provided in
Section 9 hereof, BISYS shall have no liability for errors or discrepancies
therein and shall have no further responsibility with respect to such report
except to perform reasonable corrections of such errors and discrepancies
within a reasonable time after requested to do so by the Trust.
Section 12. RIGHTS OF OWNERSHIP. All computer programs and
procedures developed to perform services required to be provided by BISYS under
this Agreement are the property of BISYS. All records and other data except
such computer programs and procedures are the exclusive property of the Trust
and all such other records and data will be furnished to the Trust in
appropriate form as soon as practicable after termination of this Agreement for
any reason.
Section 13. RETURN OF RECORDS. BISYS may at its option at any
time, and shall promptly upon the Trust's demand, turn over to the Trust
- 6 -
<PAGE> 7
and cease to retain BISYS' files, records and documents created and maintained
by BISYS pursuant to this Agreement; provided, however, that to the extent
needed by BISYS in the performance of its services or for its legal protection,
BISYS may retain copies of such files, records and documents at BISYS' own
expense. If not so turned over to the Trust, such documents and records will
be retained by BISYS for six years from the year of creation. At the end of
such six-year period, such records and documents will be turned over to the
Trust unless the Trust authorizes in writing the destruction of such records
and documents.
Section 14. BANK ACCOUNTS. The Trust and the Funds shall
establish and maintain such bank accounts with such bank or banks as are
selected by the Trust, as are necessary in order that BISYS may perform the
services required to be performed hereunder. To the extent that the
performance of such services shall require BISYS directly to disburse amounts
for payment of dividends, redemption proceeds or other purposes, the Trust and
Funds shall provide such bank or banks with all instructions and authorizations
necessary for BISYS to effect such disbursements.
Section 15. REPRESENTATIONS OF THE TRUST. The Trust certifies to
BISYS that: (a) as of the close of business on the Effective Date, each Fund
which is in existence as of the Effective Date has authorized unlimited shares,
and (b) by virtue of its Declaration of Trust, shares of each Fund which are
redeemed by the Trust may be sold by the Trust from its treasury, and (c) this
Agreement has been duly authorized by the Trust and, when executed and
delivered by the Trust, will constitute a legal, valid and binding obligation
of the Trust, enforceable against the Trust in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and secured
parties.
Section 16. REPRESENTATIONS OF BISYS. BISYS represents and
warrants that: (a) BISYS has been in, and shall continue to be in, substantial
compliance with all provisions of law, including Section 17A(c) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), required in
connection with the performance of its duties under this Agreement; and (b) the
various procedures and systems which BISYS has implemented with regard to
safekeeping from loss or damage attributable to fire, theft, or any other cause
of the blank checks, records, and other data of the Trust and BISYS' records,
data, equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder.
Section 17. INSURANCE. BISYS shall notify the Trust should its
insurance coverage with respect to professional liability or errors and
omissions coverage be cancelled or reduced. Such notification shall include
the date of change and the reasons therefor. BISYS shall notify the Trust of
any material claims against it with
- 7 -
<PAGE> 8
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Trust from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
Section 18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the
state in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments thereto;
2. Certified copies of resolutions of the Board of
Trustees covering the following matters:
a. Approval of this Agreement and authorization
of a specified officer of the Trust to
execute and deliver this Agreement and
authorization of specified officers of the
Trust to instruct BISYS hereunder; and
b. Authorization of BISYS to act as Transfer
Agent for the Trust on behalf of the Funds.
(c) A list of all officers of the Trust, together with specimen
signatures of those officers, who are authorized to instruct
BISYS in all matters.
(d) Two copies of the following (if such documents are employed by
the Trust):
1. Prospectuses and Statements of Additional
Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the Trust
authorized, issued, and outstanding as of the Effective Date
of BISYS' appointment as Transfer Agent (or as of the date on
which BISYS' services are commenced, whichever is the later
date) and as to receipt of full consideration by the Trust for
all shares outstanding, such statement to be certified by the
Treasurer of the Trust.
- 8 -
<PAGE> 9
Section 19. INFORMATION FURNISHED BY BISYS. BISYS has furnished
to the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following
matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver
this Agreement;
2. Authorization of BISYS to act as Transfer Agent for
the Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with
the Commission pursuant to Rule 17Ad-13 of the Exchange Act.
Section 20. AMENDMENTS TO DOCUMENTS. The Trust shall furnish
BISYS written copies of any amendments to, or changes in, any of the items
referred to in Section 18 hereof forthwith upon such amendments or changes
becoming effective. In addition, the Trust agrees that no amendments will be
made to the Prospectuses or Statement of Additional Information of the Trust
which might have the effect of changing the procedures employed by BISYS in
providing the services agreed to hereunder or which amendment might affect the
duties of BISYS hereunder unless the Trust first obtains BISYS' approval of
such amendments or changes.
Section 21. RELIANCE ON AMENDMENTS. BISYS may rely on any
amendments to or changes in any of the documents and other items to be provided
by the Trust pursuant to Sections 18 and 20 of this Agreement and the Trust
hereby indemnifies and holds harmless BISYS from and against any and all
claims, demands, actions, suits, judgments, liabilities, losses, damages,
costs, charges, counsel fees and other expenses of every nature and character
which may result from actions or omissions on the part of BISYS in reasonable
reliance upon such amendments and/or changes. Although BISYS is authorized to
rely on the above-mentioned amendments to and changes in the documents and
other items to be provided pursuant to Sections 18 and 20 hereof, BISYS shall
be under no duty to comply with or take any action as a result of any of such
amendments or changes unless the Trust first obtains BISYS' written consent to
and approval of such amendments or changes.
Section 22. COMPLIANCE WITH LAW. Except for the obligations of
BISYS set forth in Section 10 hereof, the Trust assumes full responsibility for
the preparation, contents and distribution of each prospectus of the Trust as
to compliance with all applicable requirements of the Securities Act of 1933,
as amended (the "1933 Act"), the 1940 Act and any other laws, rules and
regulations of
- 9 -
<PAGE> 10
governmental authorities having jurisdiction. BISYS shall have no obligation
to take cognizance of any laws relating to the sale of the Trust's shares. The
Trust represents and warrants that no shares of the Trust will be offered to
the public until the Trust's registration statement under the 1933 Act and the
1940 Act has been declared or becomes effective.
Section 23. NOTICES. Any notice provided hereunder shall be
sufficiently given when sent by registered or certified mail to the party
required to be served with such notice, at the following address: 3435 Stelzer
Road, Columbus, Ohio 43219, or at such other address as such party may from
time to time specify in writing to the other party pursuant to this Section.
Section 24. HEADINGS. Paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
Section 25. ASSIGNMENT. This Agreement and the rights and duties
hereunder shall not be assignable by either of the parties hereto except by the
specific written consent of the other party. This Section 25 shall not limit
or in any way affect BISYS' right to appoint a Sub-transfer Agent pursuant to
Section 1 hereof.
Section 26. GOVERNING LAW. This Agreement shall be governed by
and provisions shall be construed in accordance with the laws of the State of
Ohio.
Section 27. LIMITATION OF LIABILITY OF THE TRUSTEES AND
SHAREHOLDERS. The Sessions Group is a business trust organized under Chapter
1746, Ohio Revised Code and under a Declaration of Trust, to which reference is
hereby made and a copy of which is on file at the Office of the Secretary of
State of Ohio as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "The Sessions Group" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in
Section 1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Funds of the Trust must look solely to the assets of the Trust belonging to
such Fund for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
BISYS FUND SERVICES, INC. THE SESSIONS GROUP
By /s/ J. David Huber By /s/ Walter B. Grimm
-------------------------- --------------------------
(name) (title) Walter B. Grimm, President
- 10 -
<PAGE> 11
Dated: January __, 1997
SCHEDULE A
TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN
THE SESSIONS GROUP
AND
BISYS FUND SERVICES, INC.
JULY 9, 1996
<TABLE>
<CAPTION>
Name of Fund Date
------------ ----
<S> <C>
The KeyPremier Prime Money Market Fund July 9, 1996
and The KeyPremier Pennsylvania Municipal
Bond Fund
The KeyPremier Established Growth Fund October __, 1996
and The KeyPremier Intermediate Term
Income Fund
The KeyPremier Aggressive Growth Fund January __, 1997
</TABLE>
THE SESSIONS GROUP
By
--------------------------------
Walter B. Grimm, President
BISYS FUND SERVICES, INC.
By
--------------------------------
J. David Huber, President
- 11 -
<PAGE> 12
SCHEDULE B
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identifications numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10 under the
Exchange Act.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares through dividend reinvestment.
2. Shareholder Information Services
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements, or marketing material to
current shareholders.
3. Compliance Reporting
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and
capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
- 12 -
<PAGE> 13
4. Dealer/Load Processing (if applicable)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchases of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide
for payment of commissions on direct shareholder purchases in
a load Fund.
5. Shareholder Account Maintenance
a. Maintain all shareholder records for each account in the
Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
- 13 -
<PAGE> 14
Date: July 9, 1996
SCHEDULE C
Fees
Transfer Agent:
Annual fees per fund:
Daily dividend fund base fee $ 25 per shareholder
Variable NAV fund fee $ 23 per shareholder
Annual Minimums per fund: $20,000
Multiple classes of shares:
Classes of shares which have different net asset values or pay different daily
dividends will be treated as separate classes, and the fee schedule above,
including the appropriate minimums, will be charged for each separate class.
Additional services:
Additional services such as IRA processing are subject to additional fees which
will be quoted upon request. Programming costs or data base management fees
for special reports or specialized processing will be quoted upon request.
Out of pocket charges:
Out-of-pocket costs, including postage, Tymnet charges, statement/confirm paper
and forms, and microfiche, will be added to the transfer agent fees.
THE SESSIONS GROUP
By /s/ Walter B. Grimm
-----------------------------
Walter B. Grimm, President
BISYS FUND SERVICES, INC.
By /s/ J. David Huber
-----------------------------
(name) (title)
- 14 -
<PAGE> 15
SCHEDULE D
REPORTS
I. Daily Shareholder Activity Journal
II. Daily Fund Activity Summary Report
A. Beginning Balance
B. Dealer Transactions
C. Shareholder Transactions
D. Reinvested Dividends
E. Exchanges
F. Adjustments
G. Ending Balance
III. Daily Wire and Check Registers
IV. Monthly Dealer Processing Reports
V. Monthly Dividend Reports
VI. Sales Data Reports for Blue Sky Registration
VII. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13
of the Exchange Act.
- 15 -
<PAGE> 1
EXHIBIT (10)(a)
<PAGE> 2
____________________
BAKER
&
HOSTETLER
COUNSELLORS AT LAW
- -------------------------------------------------------------------------------
Capitol Square, Suite 2100 . 65 East State Street . Columbus, Ohio 43215-4260 .
(614) 228-1541
November 15, 1996
The Sessions Group
3435 Stelzer Road
Columbus, Ohio 43219
Subject: The Sessions Group -- Post-Effective Amendment No. 38
to Registration Statement on Form N-1A, File No.
33-21489, filed under the Securities Act of 1933, as
amended, and Amendment No. 40 to Registration
Statement on Form N-1A, File No. 811-5545, filed
under the Investment Company Act of 1940, as amended
(the "Amendment")
Ladies and Gentlemen:
In connection with the filing of the Amendment, it is our opinion
that, upon the effectiveness of the Amendment, the indefinite number of units
of beneficial interest of The KeyPremier Aggressive Growth Fund, one separate
investment portfolio of The Sessions Group, when issued for the consideration
described in the Amendment, will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Amendment.
Very truly yours,
BAKER & HOSTETLER
<PAGE> 1
EXHIBIT (11)(A)
<PAGE> 2
AUDITORS' CONSENT
The Board of Trustees
The Sessions Group -- The KeyPremier Funds:
We consent to the reference to our firm under the heading "Auditors" in the
Statement of Additional Information.
KPMG PEAT MARWICK LLP
Columbus, Ohio
November 15, 1996
<PAGE> 1
THE SESSIONS
Key Premier Funds
EXHIBIT 16i
TOTAL RETURN
AGGRESSIVE GROWTH FUND
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
WITH SALES CHARGE OF: 4.00%
-----------------------------------
T = (ERV/P) to the power of 1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
N = NUMBER OF DAYS
EXAMPLE:
SINCE INCEPTION: ( 07/01/94 TO 09/30/96 ):
( 1,414.29 /1,000 to the power of (1/( 823 /365))-1) = 16.62%
ONE YEAR: ( 10/01/95 TO 09/30/96 ):
( 1,037.09 /1,000) - 1 = 3.71%
TWO YEAR: ( 10/01/94 TO 09/30/96 ):
( 1,305.31 /1,000 to the power of (1/( 730 /365))-1) = 14.25%
AGGREGATE TOTAL RETURN
WITH SALES CHARGE OF: 4.00%
-----------------------------------
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: ( 01/01/96 TO 09/30/96 ):
1,057.17 /1,000) - 1 = 5.72%
QUARTERLY: ( 07/01/96 TO 09/30/96 ):
938.66 /1,000) - 1 = -6.13%
MONTHLY: ( 09/01/96 TO 09/30/96 ):
986.41 /1,000) - 1 = -1.36%
SIX MONTH: ( 04/01/96 TO 09/30/96 ):
1,002.51 /1,000) - 1 = 0.25%
SINCE INCEPTION: ( 07/01/94 TO 09/30/96 ):
1,414.28 /1,000) - 1= 41.43%
</TABLE>
<PAGE> 2
THE SESSIONS
Key Premier Funds
EXHIBIT 16i
TOTAL RETURN
ESTABLISHED GROWTH FUND
<TABLE>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
WITH SALES CHARGE OF: 4.00%
- -------------------------------------
T = (ERV/P) to the power of 1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
N = NUMBER OF DAYS
EXAMPLE:
SINCE INCEPTION: (01/01/95 TO 09/30/96 ):
959.82 /1,000 to the power of (1/( 638 /365))-1)= -2.32%
ONE YEAR: (10/01/95 TO 09/30/96 ):
1,126.92 /1,000) - 1 = 12.69%
AGGREGATE TOTAL RETURN
WITH SALES CHARGE OF: 4.00%
- -------------------------------------
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: (01/01/96 TO 09/30/96 ):
1,087.66 /1,000) - 1 = 8.79%
QUARTERLY: (07/01/96 TO 09/30/96 ):
997.72 /1,000) - 1 = -0.23%
MONTHLY: (09/01/96 TO 09/30/96 ):
1,017.37 /1,000) - = 1.74%
SIX MONTH: (04/01/96 TO 09/30/96 ):
1,023.89 /1,000) - 1 = 2.39%
SINCE INCEPTION: (01/01/95 TO 09/30/96 ):
959.82 /1,000) - = -4.02%
</TABLE>
<PAGE> 3
THE SESSIONS
KEY PREMIER FUNDS
EXHIBIT 16
TOTAL RETURN
AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
WITH SALES CHARGE OF: 0.00%
- -----------------------------------
<TABLE>
<CAPTION>
<S> <C>
T = (ERV/P) to the power of 1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT
OF $1,000.
N = NUMBER OF DAYS
EXAMPLE:
SINCE INCEPTION: ( 07/01/94 TO 09/30/96):
( 1,473.70/1,000 to the power of (1/( 823 /365))-1) = 18.77%
ONE YEAR: ( 10/01/95 TO 09/30/96):
( 1,080.43/1,000) - 1 = 8.04%
TWO YEAR: ( 10/01/94 TO 9/30/96):
( 1,359.25/1,000 to the power of (1/( 730 /365))-1) = 16.59%
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE TOTAL RETURN
WITH SALES CHARGE OF: 0.00%
- ------------------------------------
<S> <C>
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: ( 01/01/96 TO 09/30/96):
1,101.00 /1,000) - 1 = 10.10%
QUARTERLY: ( 07/01/96 TO 09/30/96):
1,022.00 /1,000) - 1 = 2.20%
MONTHLY: ( 08/01/96 TO 09/30/96):
1,027.60 /1,000) - 1 = 2.75%
SIX MONTH: ( 04/01/96 TO 09/30/96):
1,044.50 /1,000) - 1 = 4.45%
SINCE INCEPTION: ( 07/01/94 TO 09/30/96):
1,473.70 /1,000) - 1 = 47.37%
</TABLE>
<PAGE> 4
THE SESSIONS
Key Premier Funds
EXHIBIT 16i
TOTAL RETURN
ESTABLISHED GROWTH FUND
<TABLE>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
WITH SALES CHARGE OF: 0.00%
- --------------------------------------
T = (ERV/P) to the power of 1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
N = NUMBER OF DAYS
EXAMPLE:
SINCE INCEPTION: (01/01/95 TO 09/30/96 ):
( 1,601.4 /1,000 to the power of (1/( 639 /365))-1) = 30.86%
ONE YEAR: (10/01/95 TO 09/30/96 ):
(1,174.30 /1,000) - 1 = 17.43%
AGGREGATE TOTAL RETURN
WITH SALES CHARGE OF: 0.00%
- --------------------------------------
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: (01/01/96 TO 09/30/96 ):
1,133.40 /1,000) - 1 = 13.34%
QUARTERLY: (07/01/96 TO 09/30/96 ):
1,039.00 /1,000) - 1 = 3.90%
MONTHLY: (09/01/96 TO 09/30/96 ):
1,060.00 /1,000) - 1 = 6.00%
SIX MONTH: (04/01/96 TO 09/30/96 ):
1,066.80 /1,000) - 1 = 6.68%
SINCE INCEPTION: (01/01/95 TO 09/30/96 ):
1,601.00 /1,000) - 1 = 60.10%
</TABLE>
<PAGE> 1
EXHIBIT (19)(b)
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the caption of "Legal Counsel" included in or made a part of the
Registration Statement on Form N-1A, File No. 33-21489, filed under the
Securities Act of 1933, as amended, of The Sessions Group.
BAKER & HOSTETLER
Columbus, Ohio
August 16, 1996
