<PAGE> 1
As filed with the Securities and Exchange Commission April 24, 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. 34 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 36 /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.
<PAGE> 2
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 30, 1995, the Registrant filed its
Rule 24f-2 Notice with respect to the fiscal year ended June 30, 1995.
<PAGE> 3
CROSS REFERENCE SHEET
THE KEYPREMIER PRIME MONEY MARKET FUND
A Fund
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 Informa-
tion - Description of the Group and Its
Shares; General Information - Miscel-
laneous
7. Purchase of Securities
Being Offered............. Valuation of Shares; How to Purchase
and Redeem Shares; Management of the
Group - Distribution Plan
8. Redemption or Repurchase.... How to Purchase and Redeem Shares
9. Pending Legal Proceedings... Inapplicable
</TABLE>
<PAGE> 4
The
KeyPremier
Prime Money
Market Fund
[LOGO]
Martindale, Andres & Company, Inc.
Investment Adviser
------------------------------------
Prospectus dated July __, 1996
Begins on Page One
------------------------------------
<PAGE> 5
THE KEYPREMIER PRIME MONEY MARKET 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 Prime Money Market 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 & Co., 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.
THE FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER
SHARE, BUT THERE CAN BE NO ASSURANCE THAT NET ASSET VALUE WILL NOT VARY.
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 Fund at its address or by calling the Fund 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 July __, 1996.
<PAGE> 6
The Fund seeks current income with liquidity and stability of
principal. The Fund invests in high-quality money market instruments and other
instruments of high quality. All securities or instruments in which the Fund
invests have, or are deemed to have, remaining maturities of 397 days or less,
although instruments subject to repurchase agreements may bear longer
maturities.
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 Ohio, Inc., Columbus, Ohio, an affiliate of BISYS, acts as
the Fund's transfer agent (the "Transfer Agent") and performs certain fund
accounting services for the Fund.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PROSPECTUS SUMMARY ....................................................... 1
FEE TABLE ................................................................ 3
PERFORMANCE INFORMATION .................................................. 3
INVESTMENT OBJECTIVE AND POLICIES ........................................ 4
INVESTMENT RESTRICTIONS .................................................. 11
VALUATION OF SHARES ...................................................... 12
HOW TO PURCHASE AND REDEEM SHARES ........................................ 13
DIVIDENDS AND TAXES ...................................................... 20
MANAGEMENT OF THE GROUP .................................................. 21
GENERAL INFORMATION ...................................................... 26
</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> 8
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 which the Fund will seek to
maintain at $1.00 per Share.
Minimum Purchase............ $1,000 minimum initial investment
with $25 minimum subsequent invest-
ments. Such minimum initial invest-
ment is reduced to $250 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 Objectives...... Current income with liquidity and
stability of principal.
Investment Policies........ The Fund invests in high-quality
money market instruments and other
instruments of high quality. All
securities or instruments in which
the Fund invests have remaining
maturities of 397 days (13 months) or
less, although instruments subject to
repurchase agreements may bear longer
maturities.
Risk Factors and Special
Considerations......... An investment in the Fund is subject
to certain risks, including interest
rate risk, as set forth in detail
under "INVESTMENT OBJECTIVE AND
POLICIES -- Risk Factors and Invest-
ment Techniques." As with other
mutual funds, there can be no assur-
ance that the Fund will achieve its
investment objective. The Fund, to
the extent set forth under "INVEST-
MENT OBJECTIVE AND POLICIES," may
engage in the following practices:
the use of repurchase and reverse
repurchase agreements, lending
<PAGE> 9
portfolio securities and the purchase
of securities on a when-issued or
delayed-delivery basis.
Investment Adviser.......... Martindale Andres & Company, Inc.
(the "Adviser").
Dividends................... Dividends from net income are
declared daily and generally paid
monthly. Net realized capital gains,
if any, are distributed at least
annually.
Distributor................ BISYS Fund Services Limited Partner-
ship d/b/a BISYS Fund Services
("BISYS").
-2-
<PAGE> 10
FEE TABLE
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees .40%
12b-1 Fees .25
Other Expenses(1) .27
------
Estimated Total Fund Operating Expenses .92%
======
</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> <C>
$9 $29
</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 "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, aggregate total return, seven-day yield and
seven-day effective yield may be presented in advertisements, sales literature
and shareholder reports. SUCH PERFORMANCE FIGURES ARE BASED ON HISTORICAL
EARNINGS 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. 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
-3-
<PAGE> 11
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 seven-day yield of the Fund refers to
the income generated by an investment therein over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The Fund may also present a 30-day yield which is
calculated similarly but instead refers to a 30-day period rather than a
seven-day period. The seven-day effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The seven-day effective yield is slightly higher than the seven-day
yield because of the compounding effect of this assumed reinvestment.
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.
Yield and total return are generally functions of market conditions,
interest rates, types of investments held, and operating expenses. Consequently,
current yields and total return will fluctuate and are 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 yield and total return for the Fund will
be higher than they would otherwise be in the absence of such voluntary fee
reductions.
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The investment objective of the Fund is to seek current income with
liquidity and stability of principal. The investment objective of the Fund is a
non-fundamental policy and as such 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.
-4-
<PAGE> 12
As a money market fund, the Fund invests exclusively in United States
dollar-denominated instruments which the Trustees of the Group and the Adviser
determine present minimal credit risks and which at the time of acquisition are
rated by one or more appropriate nationally recognized statistical rating
organizations ("NRSROs") (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 or, if unrated, are determined by the Adviser to be
of comparable quality. The Fund also diversifies its investments so that, with
minor exceptions and except for United States Government securities, not more
than five percent of its total assets is invested in the securities of any one
issuer, not more than five percent of its total assets is invested in securities
of issuers rated by the NRSROs at the time of investment in the second highest
rating category for short-term debt obligations or, if unrated, deemed by the
Adviser to be of comparable quality ("Second Tier Securities") and not more than
the greater of one percent of total assets or one million dollars is invested in
the securities of one issuer that are Second Tier Securities. All securities or
instruments in which the Fund invests have remaining maturities of 397 calendar
days or less. The dollar-weighted average maturity of the securities in the Fund
will not exceed 90 days.
Subject to the foregoing general limitations, the Fund expects to
invest in the following types of securities. The Fund may invest in a variety of
U.S. Treasury obligations, differing in their interest rates, maturities, and
times of issuance, and other obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities (collectively, "Government
Obligations"). Obligations of certain agencies and instrumentalities of the U.S.
Government, such as the Government National Mortgage Association and the
Export-Import Bank of the United States, 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 or the Federal Home Loan Mortgage Corporation, 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
will invest in the obligations of such agencies or instrumentalities only when
the Adviser believes that the credit risk with respect thereto is minimal.
The Fund may invest in bankers' acceptances guaranteed by domestic and
foreign banks if at the time of investment the guarantor bank has capital,
surplus, and undivided profits in excess of $100,000,000 (as of the date of its
most recently
-5-
<PAGE> 13
published financial statements). The Fund may also invest in certificates of
deposit and time deposits of domestic and foreign banks and savings and loan
associations if (a) at the time of investment the depositor institution has
capital, surplus, and undivided profits in excess of $100,000,000 (as of the
date of their most recently published financial statements) or (b) the principal
amount of the instrument is insured in full by the Federal Deposit Insurance
Corporation.
The Fund may also invest in Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar denominated certificates of deposit issued by offices of
foreign and domestic banks located outside the United States; Eurodollar Time
Deposits ("ETDs") which are U.S. dollar denominated deposits in a foreign branch
of a U.S. bank or a foreign bank; Canadian Time Deposits ("CTDs") which are
essentially the same as ETDs except they are issued by Canadian offices of major
Canadian banks; and Yankee Certificates of Deposit ("Yankee CDs") which are
certificates of deposit issued by U.S. branch of a foreign bank denominated in
U.S. dollars and held in the United States. Under normal market conditions, the
Fund will not invest more than 20% of its total assets in such foreign
securities (including CCP and Europaper as defined below).
The Fund will not invest in excess of 10% of its net assets in time
deposits with maturities in excess of seven days which are subject to penalties
upon early withdrawal. Such time deposits include ETDs and CTDs but do not
include certificates of deposit.
The Fund may invest in short-term promissory notes issued by
corporations (including variable amount master demand notes) and in municipal
obligations rated at the time of purchase by one or more appropriate NRSROs in
one of the two highest rating categories for short-term debt obligations or, if
not rated, determined by the Adviser to be of comparable quality to instruments
that are so rated. Instruments may be purchased in reliance upon a rating only
when the rating organization is not affiliated with the issuer or guarantor of
the instrument. For a description of the rating symbols of the NRSROs, see the
Appendix to the Statement of Additional Information. The Fund may also invest in
Canadian Commercial Paper ("CCP"), which is U.S. dollar denominated commercial
paper issued by a Canadian corporation or a Canadian subsidiary of a U.S.
corporation, and in Europaper, which is U.S. dollar denominated commercial paper
of a foreign issuer which, in each case, is rated at the time of purchase by one
or more appropriate NRSROs in one of the two highest rating categories for
short-term debt obligations or, if not rated, determined by the Adviser to be of
comparable quality to instruments that are rated high quality.
The Fund may also invest in corporate debt securities with
remaining maturities of 397 days or less although at the time of
issuance such securities had maturities exceeding 397 days. The
-6-
<PAGE> 14
Fund may invest in such securities so long as comparable securities of such
issuer have been rated in the highest rating category for short-term debt
obligations by the appropriate NRSROs or are otherwise deemed to be eligible for
purchase by the Fund in accordance with the guidelines adopted by the Group's
Board of Trustees.
Variable amount master demand notes in which the Fund may invest are
unsecured demand notes that permit the indebtedness thereunder to vary and that
provide for periodic adjustments in the interest rate according to the terms of
the instrument. Because master demand notes are direct lending arrangements
between the Fund and the issuer, they are not normally traded. Although there is
no secondary market in the notes, the Fund may demand payment of principal and
accrued interest at any time. While the notes are not typically rated by NRSROs,
issuers of variable amount master demand notes (which are normally
manufacturing, retail, financial, and other business concerns) must satisfy the
same criteria as set forth above for commercial paper. The Adviser will consider
the earning power, cash flow, and other liquidity ratios of the issuers of such
notes and will continuously monitor their financial status and ability to meet
payment on demand. In determining dollar-weighted average portfolio maturity, a
variable amount master demand note will be deemed to have a maturity equal to
the period of time remaining until the principal amount can be recovered from
the issuer through demand.
The Fund may also acquire variable and floating rate notes issued by
both governmental and nongovernmental issuers, subject to the Fund's investment
objective, policies and restrictions. A variable rate note is one whose terms
provide for the adjustment of its interest rate on set dates and which, upon
such adjustment, can reasonably be expected to have a market value that
approximates its par value. However, in the event the interest rate of such a
note is established by reference to an index or an interest rate that may from
time to time lag behind other market interest rates, there is the risk that the
market value of such note, on readjustment of its interest rate, will not
approximate its par value which could adversely affect the Fund's ability to
maintain a stable net asset value. In such an instance, the Adviser will seek to
sell such note to the extent it can do so in an orderly fashion given current
market conditions.
A floating rate note is one whose terms provide for the adjustment of
its interest rate whenever a specified interest rate changes and which, at any
time, can reasonably be expected to have a market value that approximates its
par value. Such notes are frequently not rated by NRSROs; however, unrated
variable and floating rate notes purchased by the Fund will be determined by the
Adviser to be of comparable quality at the time of purchase to rated instruments
eligible for purchase under the Fund's investment policies. In making such
determinations, the Adviser will consider
-7-
<PAGE> 15
the earning power, cash flow and other liquidity ratios of the issuers of such
notes (such issuers include financial, merchandising, bank holding and other
companies) and will continuously monitor their financial condition. Although
there may be no active secondary market with respect to a particular variable or
floating rate note purchased by the Fund, the Fund may resell the note at any
time to a third party. The absence of an active secondary market, however, could
make it difficult for the Fund to dispose of a variable or floating rate note in
the event the issuer of the note defaulted on its payment obligations and the
Fund could, as a result or for other reasons, suffer a loss to the extent of the
default. Variable or floating rate notes may be secured by bank letters of
credit.
To the extent that the Fund holds a note for which the Fund is not
entitled to receive the principal amount within seven days of demand and for
which no readily available market exists, such a note will be treated as an
illiquid security for purposes of calculation of the 10% limitation on such
securities as set forth below.
RISK FACTORS AND INVESTMENT TECHNIQUES
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 member banks of the Federal
Deposit Insurance Corporation and/or from 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. For further information about repurchase
agreements and the related risks, see "INVESTMENT OBJECTIVES 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
-8-
<PAGE> 16
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.
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. Investments in foreign securities (including ECDs,
ETDs, CTDs, Yankee CDs, CCP and Europaper) 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. In addition, foreign branches of U.S. banks and foreign banks may be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks. The Fund will acquire securities issued by
foreign branches of U.S. banks, foreign banks, or other foreign issuers only
when the Adviser believes that the risks associated with such instruments are
minimal.
Securities Lending. In order to generate additional income, the Fund
may, from time to time, lend its portfolio securities to
-9-
<PAGE> 17
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
that 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.
Other Investment Policies. 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 objective and policies, not for
investment leverage, although such transactions represent a form of leveraging.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield and thereby involve a risk that the
yield obtained in the transaction will be less than those available in the
market when delivery takes place. The Fund will generally not pay for such
securities or start earning interest 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 basis
are recorded as an asset and are subject to changes in the value based upon
changes in the general level of interest rates. 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 or
yield considered to be advantageous.
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 the securities of other 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.
-10-
<PAGE> 18
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, 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,
domestic bank certificates of deposit or bankers' acceptances, and repurchase
agreements secured by bank instruments or 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)
utilities will be divided according to their services. For example, gas, gas
transmission, electric and gas, electric, and telephone will each be considered
a separate industry.
3. (a) Borrow money (not including reverse repurchase agreements or
dollar roll agreements), except that the Fund may borrow from banks for
temporary or emergency purposes and then only in amounts up to one-third of its
total assets at the time of borrowing (and provided that such bank borrowings
and reverse repurchase agreements and dollar roll agreements do not exceed in
the aggregate one-third of the Fund's total assets less liabilities other than
the obligations represented by the bank borrowings, reverse repurchase
agreements and dollar roll agreements), or mortgage, pledge or hypothecate any
assets except in connection with a bank borrowing in amounts not to exceed
one-third of the Fund's net assets at the time of borrowing; (b) enter into
reverse repurchase agreements, dollar roll agreements and other permitted
borrowings in amounts exceeding in the aggregate one-third of the Fund's total
assets less liabilities other than the obligations represented by such reverse
repurchase and dollar roll agreements;
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and (c) issue senior securities except as 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 10% 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.
Irrespective of fundamental investment restriction number 1 above, and
pursuant to Rule 2a-7 under the 1940 Act, the Fund will, with respect to 100% of
its total assets, limit its investment in the securities of any one issuer in
the manner provided by such Rule, which limitations are referred to above under
the caption "INVESTMENT OBJECTIVES AND POLICIES."
VALUATION OF SHARES
The net asset value of the Fund is determined and its Shares are priced
as of 12:00 noon (Eastern time) and 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 times at which the Shares of the Fund are priced
are hereinafter referred to as the "Valuation Time" or "Valuation Times," as the
case may be. A "Business Day" of the Fund is a day on which the Exchange is open
for trading and any other day (other than a day on which no Shares of the Fund
are tendered for redemption and no order to purchase any Shares 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 assets in the Fund are valued based upon the amortized cost method
which the Trustees of the Group believe fairly reflects the market-based net
asset value per share. Pursuant to the rules and regulations of the Commission
regarding the use of the amortized cost method, the Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less. Although the
Group
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seeks to maintain the Fund's net asset value per share at $1.00, there can be no
assurance that net asset value will not vary. For further information about
valuation of investments, see "NET ASSET VALUE" in the Statement of Additional
Information.
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"). These procedures may
include instructions under which a Customer's account is "swept" automatically
no less frequently than weekly and amounts in excess of a minimum amount agreed
upon by the Entity and the Customer are invested by the Distributor in Shares of
the Fund, depending upon the type of the Customer's account and/or the
instructions of the Customer.
Shares of the Fund sold to the Entities acting in a fiduciary,
advisory, custodial, agency, or other similar capacity on behalf of 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 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
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<PAGE> 21
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. Purchases of Shares of the Fund will be effected only on a
Business Day (as defined in "VALUATION OF SHARES").
An order to purchase Shares of the Fund will be deemed to have been
received by the Distributor only when federal funds with respect thereto are
available to the Fund's custodian for investment. Federal funds are monies
credited to a bank's account with a Federal Reserve Bank. Payment for an order
to purchase Shares of the Fund which is transmitted by federal funds wire will
be available the same day for investment by the Fund's custodian, if received
prior to the last Valuation Time (see "VALUATION OF SHARES"). Payments
transmitted by other means (such as by check drawn on a member of the Federal
Reserve System) will normally be converted into federal fund within two banking
days after receipt. The Group strongly recommends that investors of substantial
amounts use federal funds to purchase Shares. Shares of the Fund purchased
before 12:00 noon, Eastern Time, begin earning dividends on the same Business
Day. Shares of the Fund purchased after 12:00 noon, Eastern Time, begin earning
dividends on the next Business Day. All Shares of the Fund continue to earn
dividends through the day before their redemption.
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 also 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.
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<PAGE> 22
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, quarterly or semi-annual 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 on the date of such deduction. The required
minimum initial investment when opening an account using the Auto Invest Plan is
$250 ($25 for employees of the Adviser, Keystone or one of their affiliates);
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.
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 sporting events) and (3)
merchandise (such as clothing, trophies, clocks and pens). Dealers may not use
sales of the Fund's Shares to qualify for this compensation to the extent such
may be prohibited by the laws of any state or any self-
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<PAGE> 23
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.
EXCHANGE PRIVILEGE
Shareholders may exchange their Shares in the Fund for Shares of The
KeyPremier Pennsylvania Municipal Bond Fund at respective net asset values plus
a sales charge equal to the difference, if any, between the sales charge payable
upon purchase of Shares of The KeyPremier Pennsylvania Municipal Bond Fund and
the sales charge, if any, previously paid on the Fund Shares to be exchanged. In
addition, with respect to every exchange, the amount to be exchanged must meet
the applicable minimum investment requirements and the exchange must be made in
states where it is legally authorized. When Shares of the Fund are exchanged for
Shares of The KeyPremier Pennsylvania Municipal Bond 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.
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
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. Also, Shares may be
redeemed using the check-writing feature described below.
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<PAGE> 24
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
Group 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 Transfer Agent. 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 electronically to a
designated bank account. For telephone redemptions, call the Group at (800)
766-3960.
Neither the Fund nor its service providers will be liable for any loss,
damages, expense or cost arising out of any telephone redemption effected in
accordance with the Fund's telephone redemption procedures, acting upon
instructions reasonably believed
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<PAGE> 25
to be genuine. The Fund will employ procedures designed to provide reasonable
assurance that instructions by telephone are genuine; if these procedures are
not followed, such Fund or its 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 listed above under "HOW TO PURCHASE AND REDEEM SHARES -- Redemption
by Mail."
AUTO WITHDRAWAL PLAN
The Auto Withdrawal Plan enables Shareholders of the Fund, with an
account balance in such 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. 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, the Fund will attempt to honor requests from
Shareholders for same day payments upon redemption of Shares if the request for
redemption is received by the Distributor before 12:00 noon, Eastern Time, on a
Business Day or, if the request for redemption is received after 12:00 noon,
Eastern Time, to honor requests for payment on the next 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. During the period of any such delay,
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<PAGE> 26
Shares to be redeemed would continue to receive daily dividends as declared
until execution of the redemption. 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 Fund
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 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
Fund 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" and "NET ASSET
VALUE" in the Statement of Additional Information for examples of when the Group
may suspend the right of redemption or redeem shares involuntarily in light of
the Group's responsibilities under the 1940 Act.
CHECK-WRITING REDEMPTION PROCEDURE
The Transfer Agent will provide any Shareholder who so requests with a
supply of checks, imprinted with the Shareholder's name, which may be drawn
against the Fund's account maintained by The Bank of New York (the "Bank"), for
redemption of Fund Shares. These checks may be made payable to the order of any
person in any amount not less than $500. To participate in this procedure, an
investor must complete the Check-Writing Redemption Form available from the
Transfer Agent. When a check is presented to the Bank for payment, the Transfer
Agent (as the Shareholder's agent) will cause the Fund to redeem sufficient
Shares in the Shareholder's account to cover the amount of the check. Shares
continue earning daily dividends until the day on which the check is presented
to the Bank for payment. Cancelled checks will be returned to the Shareholder.
Due to the delay caused by the requirement that redemptions be priced at the
next computed net asset value, the Bank will only accept for payment checks
presented through normal bank clearing channels. Shareholders should not attempt
to withdraw the full
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<PAGE> 27
amount of an account or to close out an account by using this procedure.
No charge will be made to a Shareholder for participation in the
check-writing redemption procedure or for the clearance of any checks. However,
a Shareholder's account may be subject to charges for copies, returned checks
and/or returned items of deposit.
In order to stop payment on a check, the Shareholder must notify the
Group in writing before the check has been presented to the Bank for payment. A
charge may be deducted from the Shareholder's account for each stop payment
order.
DIVIDENDS AND TAXES
DIVIDENDS
The net income of the Fund is declared daily and such dividends are
generally paid monthly. Shareholders will automatically receive all income
dividends and capital gains distributions in additional full and fractional
Shares of the Fund 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.
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
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 100% 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
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<PAGE> 28
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 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.
Since all of the Fund's net investment income is expected to be derived from
earned interest and short-term capital gains, it is anticipated that no part of
any distribution from the Fund will be eligible for the dividends received
deduction for corporations. The Fund also does not expect to realize any
long-term capital gains and, therefore, does not foresee paying any "capital
gains dividends" as described in the Code.
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.
Additional information regarding federal taxes is contained in the
Statement of Additional Information under the heading "ADDITIONAL INFORMATION --
Additional 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 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.
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.
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 Trustees may not have been elected by the
shareholders of the Group. The Group will be managed by the Trustees in
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.
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<PAGE> 29
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 Fund Services Ohio, Inc. 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 Group for acting as Administrator
and under the Distribution Plan discussed below and may receive fees under the
Administrative Services Plan discussed below. BISYS Fund Services Ohio, 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 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. While the Adviser has not previously served as the investment
adviser to a registered open-end management investment company, it has managed
since its founding the investment portfolios of high net worth individuals,
endowments, pension and common trust funds. The Adviser currently has over $1.6
billion under management, including over $400 million of municipal securities.
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.
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 rate of forty
one-hundredths of one percent (.40%) of the 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 yield and total
return of the Fund to be higher than they 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 Ohio, Inc., are
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<PAGE> 30
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 an annual fee, calculated monthly and paid
periodically, from the Fund 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 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 yield and total return of the Fund to be higher than they
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 receives compensation under the
Distribution and Shareholder Service Plan described below.
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 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,
distribution expenses incurred pursuant to the Distribution and Shareholder
Service Plan described below and any extraordinary expenses incurred in the
fund's operation.
-23-
<PAGE> 31
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Group has adopted a
Distribution and Shareholder Service Plan (the "Plan"), under which the Fund is
authorized to pay BISYS, as Distributor, a fee in an amount not to exceed on an
annual basis 0.25% of the average daily net asset value of the Fund (the "12b-1
Fee"). Payments of the 12b-1 Fee to BISYS pursuant to the Plan will be used (i)
to compensate Participating Organizations (as defined below) for providing
distribution assistance relating to Shares of the Fund, (ii) for promotional
activities intended to result in the sale of Shares of the Fund such as to pay
for the preparation, printing and distribution of prospectuses to other than
current shareholders, and (iii) to compensate Participating Organizations for
providing shareholder services with respect to their customers who are, from
time to time, beneficial and record holders of Shares of the Fund.
Participating Organizations include banks, broker-dealers and other
financial institutions (including BISYS, Keystone, the Adviser and their
affiliates). Such fee paid to BISYS may exceed the actual costs incurred by
BISYS in providing such services and/or compensating such Participating
Organizations. In addition, from time to time, BISYS may periodically
voluntarily reduce all or a portion of its fee under the Plan with respect to
the Fund to increase the net income of the Fund available for distribution as
dividends. BISYS 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 yield and total return of the Fund to be higher than
they would otherwise be in the absence of such a fee reduction.
As authorized by the Plan, BISYS has entered into Rule 12b-1 Agreements
with Keystone Brokerage, Inc. ("Keystone Brokerage") and Keystone Investment
Services, Inc. ("Keystone Services"), each a wholly owned subsidiary of Keystone
and an affiliate of the Adviser, to provide shareholder servicing to
Shareholders of the Fund, which services include, but are not limited to,
maintaining Shareholder relations and answering questions about the Fund. In
consideration of such services, BISYS has agreed to pay each of Keystone
Brokerage and Keystone Services a monthly fee, computed at the annual rate of
.25% of the average aggregate net asset value of Shares held during the period
in accounts for which services were provided under such Agreement. BISYS will be
compensated by the Fund in an amount equal to its payments to Keystone Brokerage
and Keystone Services under the Rule 12b-1 Agreements with respect to the Fund.
Such fee may exceed the actual costs incurred by Keystone Brokerage and Keystone
Services in providing such services.
In addition, BISYS may enter into, from time to time, other Rule 12b-1
Agreements with selected dealers pursuant to which such
-24-
<PAGE> 32
dealers will provide certain services in connection with the distribution of the
Fund's Shares such as those described above.
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, its correspondent and affiliated banks, 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 of the date
hereof, no such servicing agreements have been entered into by the Group.
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. Keystone Brokerage and
Keystone Services each believes that it possesses the legal authority to perform
its shareholder services as set forth in its respective Rule 12b-1 Agreement
with BISYS, as described above, without violation of applicable banking laws and
regulations, and has so represented in such Rule 12b-1 Agreement. 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, Keystone Brokerage
-25-
<PAGE> 33
and Keystone Investor Services 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 eight 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 entitled to such dividends and distributions out of the
income earned on the assets belonging to that fund as are declared at the
discretion of the Trustees (see "Miscellaneous" below). The other funds of the
Group are The KeyPremier Pennsylvania Municipal 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 series 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 and ratification of the selection of independent accountants. 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 of the Fund's
investment advisory agreement and the Plan.
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 and may
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, the Plan 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.
-26-
<PAGE> 34
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
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 Ohio, 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 Ohio, Inc. also provides certain accounting services for the Fund
pursuant to a Fund Accounting Agreement and receives a fee 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 a fund" means the consideration received by
the 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 the 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
-27-
<PAGE> 35
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 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.
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.
-28-
<PAGE> 36
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
-29-
<PAGE> 37
CROSS REFERENCE SHEET
THE KEYPREMIER PENNSYLVANIA MUNICIPAL BOND FUND
One Fund
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 Objectives 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's Discussion
of Fund Performance....... Inapplicable
6. Capital Stock and Other
Securities................ How to Purchase and Redeem Shares;
Dividends and Taxes; General Informa-
tion - Description of the Group and Its
Shares; General Information - Miscel-
laneous
7. Purchase of Securities
Being Offered............. Valuation of Shares; How to Purchase
and Redeem Shares; Management of the
Group - Distribution Plan
8. Redemption or Repurchase.... How to Purchase and Redeem Shares
9. Pending Legal Proceedings... Inapplicable
</TABLE>
<PAGE> 38
The KeyPremier Pennsylvania
Municipal Bond Fund
[LOGO]
Martindale, Andres & Company, Inc.
Investment Adviser
--------------------------------------
Prospectus dated July __, 1996
Begins on Page One
--------------------------------------
<PAGE> 39
THE KEYPREMIER PENNSYLVANIA MUNICIPAL BOND 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 Pennsylvania Municipal Bond Fund (the
"Fund"), which is a non-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 BY 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 Fund at its address or by calling the Fund 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 July __, 1996.
<PAGE> 40
The Fund seeks (1) income, which is exempt from federal income tax and
Pennsylvania state income tax, although such income may be subject to the
federal alternative minimum tax when received by certain Shareholders, and (2)
preservation of capital. The Fund will invest, under normal market conditions,
at least 80% of its net assets in Exempt Securities (as defined below).
The Fund's net asset value per share will fluctuate as the value of its
portfolio changes in response to changing market prices, market rates of
interest 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 Ohio, Inc., Columbus, Ohio, an affiliate of BISYS, acts as
the Fund's transfer agent (the "Transfer Agent") and performs certain fund
accounting services for the Fund.
<PAGE> 41
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY ....................................................... 1
FEE TABLE ................................................................ 3
PERFORMANCE INFORMATION .................................................. 4
INVESTMENT OBJECTIVES AND POLICIES ....................................... 5
INVESTMENT RESTRICTIONS .................................................. 21
VALUATION OF SHARES ...................................................... 22
HOW TO PURCHASE AND REDEEM SHARES ........................................ 23
DIVIDENDS AND TAXES ...................................................... 32
MANAGEMENT OF THE GROUP .................................................. 35
GENERAL INFORMATION ...................................................... 39
</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> 42
PROSPECTUS SUMMARY
<TABLE>
<S> <C>
Shares Offered.............. Units of beneficial interest
("Shares") of the Fund, one
separate portfolio 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
4.5% 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 invest-
ments. 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 series of an open-end,
management investment company. The
Fund is a non-diversified fund.
Investment Objectives........ (1) Income which is exempt from
federal income tax and Pennsylvania
state income tax, although such
income may be subject to the federal
alternative minimum tax when
received by certain Shareholders,
and (2) preservation of capital.
Investment Policies.......... Under normal market conditions, the
Fund will invest at least 80% of its
net assets in municipal securities
issued by or on behalf of the
Commonwealth of Pennsylvania or any
county, political subdivision or
municipality thereof, including any
agency, board, authority or commis-
sion of any of the foregoing, and
debt obligations issued by the
Government of Puerto Rico, which
generate interest income which is
exempt from federal and Pennsylvania
state income taxes (but may be
subject to the federal alternative
</TABLE>
<PAGE> 43
<TABLE>
<S> <C>
minimum tax when received by certain
Shareholders).
Risk Factors and Special
Considerations......... An investment in the Fund is subject
to certain risks, 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 objectives. The
Fund, to the extent set forth under
"INVESTMENT OBJECTIVES AND POLI-
CIES," may engage in the following
practices: the purchase of securi-
ties from primarily one state, the
use of repurchase agreements and
reverse repurchase agreements,
entering into options and futures
transactions, the lending of port-
folio securities, and the purchase
of securities on a when-issued or
delayed-delivery basis.
Investment Adviser.......... Martindale Andres & Company, Inc.
(the "Adviser").
Dividends................... Dividends from net income are
declared and generally paid monthly.
Net realized capital gains are dis-
tributed at least annually.
Distributor.................. BISYS Fund Services Limited Partner-
ship d/b/a BISYS Fund Services
("BISYS").
</TABLE>
-2-
<PAGE> 44
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 .60%
12b-1 Fees .25
Other Expenses(1) .30
----
Estimated Total Fund Operating Expenses 1.15%
====
</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> <C>
$56 $86
</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
Shareholder transaction expenses and annual operating expenses of the Fund. As a
result of the payment of a sales load and Rule 12b- 1 Fees, long-term
Shareholders of the Fund may pay more than the maximum front-end sales charge
permitted by the Rules of the National Association of Securities Dealers, Inc.
(the "NASD"). 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 "Other Expenses" are estimated for the current fiscal year.
-3-
<PAGE> 45
PERFORMANCE INFORMATION
From time to time performance information for the Fund showing the
Fund's average annual total return, aggregate total return, yield and tax
equivalent yield may be presented in advertisements, sales literature and
shareholder reports. SUCH PERFORMANCE FIGURES ARE BASED ON HISTORICAL EARNINGS
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
and will reflect the imposition of the maximum sales charge. 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.
Yield will be computed by dividing the Fund's net investment income per share
earned during a recent one-month period by the Fund's per share maximum offering
price (reduced by any undeclared earned income expected to be paid shortly as a
dividend) on the last day of the period and annualizing the result. Tax
equivalent yield of the Fund demonstrates the taxable yield necessary to produce
an after-tax yield equivalent to the yield of the Fund. The Fund may also
present its average annual total return, aggregate total return, yield, and tax
equivalent yield excluding the effect of a sales charge.
In addition, from time to time, the Fund may present its distribution
rate in supplemental sales literature and in shareholder reports, both of which
must be accompanied or preceded by a prospectus. Distribution rates will be
computed by dividing the distribution per share made by the Fund over a
twelve-month period by the maximum offering price per share at the end of that
period. The calculation of income in the distribution rate includes both income
and capital gain dividends and does not reflect unrealized gains or losses,
although the Fund may also present a distribution rate excluding the effect of
capital gains and/or a sales charge. The distribution rate differs from the
yield, because it includes capital gain dividends which are often non-recurring
in nature, whereas yield does not include such items.
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.
-4-
<PAGE> 46
Yield and total return are generally functions of market conditions,
interest rates, types of investments held, and operating expenses. Consequently,
current yields and total return will fluctuate and are 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 yield and total return for the Fund will
be higher than they would otherwise be in the absence of such voluntary fee
reductions.
INVESTMENT OBJECTIVES AND POLICIES
IN GENERAL
The investment objectives of the Fund are to seek (1) income which is
exempt from federal income tax and Pennsylvania state income tax, although such
income may be subject to the federal alternative minimum tax when received by
certain Shareholders, and (2) preservation of capital.
The investment objectives with respect to the Fund are non- fundamental
policies and as such 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
objectives of the Fund will be achieved.
Under normal market conditions, at least 80% of the net assets of the
Fund will be invested in a portfolio of obligations consisting of bonds, notes,
commercial paper and certificates of indebtedness, issued by or on behalf of the
Commonwealth of Pennsylvania, or any county, political subdivision or
municipality thereof (including any agency, board, authority or commission of
any of the foregoing), the interest on which, in the opinion of bond counsel to
the issuer, is exempt from federal and Pennsylvania income taxes (but may be
treated as a preference item for individuals for purposes of the federal
alternative minimum tax) ("Pennsylvania Exempt Securities") and in debt
obligations issued by the Government of Puerto Rico and such other governmental
entities whose debt obligations, either by law or treaty, generate interest
income which is exempt from federal and Pennsylvania state income taxes (but may
be treated as a preference item for individuals for purposes of the federal
alternative minimum tax) (together, with Pennsylvania Exempt Securities, called
"Exempt Securities"). In addition, under normal market conditions, at least 65%
of the Fund's net assets will be invested in Pennsylvania Exempt Securities. As
a matter of fundamental policy, under normal market conditions, at least 80% of
the net assets of the Fund will be invested in securities, the interest on which
is exempt from
-5-
<PAGE> 47
federal income tax but may be subject to the federal alternative minimum tax
when received by certain Shareholders. To the extent such securities are not
Pennsylvania Exempt Securities, the income therefrom may be subject to
Pennsylvania income taxes.
The two principal classifications of Exempt Securities which may be
held by the Fund are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from proceeds of a special
excise tax or other specific revenue source such as the user of the facility
being financed. Private activity bonds held by the Fund are in most cases
revenue securities and are not payable from the unrestricted revenues of the
issuer. Consequently, the credit quality of private activity bonds is usually
directly related to the credit standing of the corporate user of the facility
involved.
The Fund may also invest in "moral obligation" securities, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation securities is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
The Fund invests in Exempt Securities which are rated at the time of
purchase within the four highest rating groups assigned by one or more
appropriate nationally recognized statistical rating organizations ("NRSROs")
(e.g., Standard & Poor's Corporation or Moody's Investor Services, Inc.) for
bonds and within the two highest rating groups for notes, tax-exempt commercial
paper, or variable rate demand obligations, as the case may be. The Fund may
also purchase Exempt Securities which are unrated at the time of purchase but
are determined to be of comparable quality by the Adviser. The applicable Exempt
Securities ratings are described in the Appendix to the Statement of Additional
Information. For a discussion of debt securities rated within the fourth highest
rating group assigned by an NRSRO, see "Risk Factors and Investment Techniques -
Medium Grade Securities" below.
The Fund may invest up to 20% of the value of its net assets in Exempt
Securities which, in the case of bonds, are rated lower than the fourth highest
rating group by an appropriate NRSRO and as low as "B" by an appropriate NRSRO.
Investments rated Ba or lower by Moody's Investors Services, Inc. ("Moody's")
and BB or lower by Standard & Poor's Corporation ("S&P") ordinarily provide
higher yields by involve greater risk because of their speculative
characteristics. Debt rated B by S&P is regarded, on balance, as predominately
speculative with respect to the capacity to pay
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interest and repay principal in accordance with the terms of the obligation.
The Fund expects to maintain a dollar-weighted average portfolio
maturity of three to ten years. Within this range, the Adviser may vary the
average maturity substantially in anticipation of a change in the interest rate
environment. There is no limit as to the maturity of any individual security.
The Fund may hold uninvested cash reserves pending investment during
temporary defensive periods or if, in the opinion of the Adviser, suitable
Exempt Securities are unavailable. There is no percentage limitation on the
amount of assets which may be held uninvested. Uninvested cash reserves will not
earn income.
Under normal market conditions, at least 80% of the net assets of the
Fund will be invested in Exempt Securities. However, up to 20% of the net assets
of the Fund may be invested in taxable obligations if, for example, suitable
tax-exempt obligations are unavailable or for cash management purposes. In
addition, the Fund may invest up to 100% of its assets in such taxable
securities when deemed appropriate for temporary defensive purposes as
determined by the Adviser to be warranted due to market conditions. Such taxable
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),
certificates of deposit and bankers' acceptances of selected banks, securities
of other investment companies, and commercial paper meeting the Fund's quality
standards (as described above) for tax-exempt commercial paper, and such taxable
obligations which may be subject to repurchase agreements. These obligations are
described further in the Statement of Additional Information. Under such
circumstances and during the period of such investment, the Fund may not achieve
its stated investment objectives.
The Fund has no limit to the extent that it may invest its net assets
in Exempt Securities, the interest income from which may be treated as a
preference item for purposes of the federal alternative minimum tax. To the
extent the Fund invests in these securities, individual Shareholders, depending
on their own tax status, may be subject to alternative minimum tax on that part
of the Fund's distributions derived from these bonds. For further information
relating to the types of Exempt Securities which will be included in income
subject to alternative minimum tax, see "ADDITIONAL INFORMATION -- Additional
Tax Information With Respect to the Pennsylvania Bond Fund" in the Statement of
Additional Information.
Opinions relating to the validity of Exempt Securities and to the
exemption of interest thereon from federal and Pennsylvania state income taxes
are normally rendered by bond counsel to the
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<PAGE> 49
respective issuers at the time of issuance. Neither the Fund nor the Adviser
will review the proceedings relating to the issuance of Exempt Securities or the
basis for such opinions.
Exempt Securities purchased by the Fund may include rated and unrated
variable and floating rate notes the interest on which is tax-exempt. A variable
rate note is one whose terms provide for the adjustment of its interest rate on
set dates. A floating rate note is one whose terms provide for the adjustment of
its interest rate whenever a specified interest rate changes and which, at any
time, can reasonably be expected to have a market value that approximates its
par value. Such notes are frequently not rated by credit rating agencies;
however, unrated variable and floating rate notes purchased by the Fund will be
determined by the Adviser [under guidelines established by the Group's Board of
Trustees] to be of comparable quality at the time of purchase to rated
instruments eligible for purchase under the Fund's investment policies. In
making such determinations, the Adviser will consider the earning power, cash
flow and other liquidity ratios of the issuers of such notes and will
continuously monitor their financial condition. Variable and floating rate notes
for which no readily available market exists will be purchased in an amount
which, together with other illiquid securities, exceeds 15% of the Fund's net
assets only if such notes are subject to a demand feature that will permit the
Fund to receive payment of the principal within seven days after demand by the
Fund.
The Fund may also purchase floating and variable rate demand notes and
bonds, which are tax exempt obligations ordinarily having stated maturities in
excess of one year, but which permit the holder to demand payment of principal
at any time, or at specified intervals. Variable rate demand notes include
master demand notes which are obligations that permit the Fund to invest
fluctuating amounts, at varying rates of interest, pursuant to direct
arrangements between the Fund, as lender, and the borrower. These obligations
permit daily changes in the amount borrowed. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Use of letters of credit or other credit support arrangements will not
adversely affect the tax-exempt status of these obligations. Because these
obligations are direct lending arrangements between the lender and borrower, it
is not contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations, although
they are redeemable at face value, plus accrued interest. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Each obligation purchased by
the Fund will meet the quality criteria established for the purchase of Exempt
Securities. The Adviser will consider on an ongoing basis the
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<PAGE> 50
creditworthiness of the issuers of the floating and variable rate demand
obligations in the Fund's portfolio.
The Fund may purchase from financial institutions participation
interests in Exempt Securities (such as industrial development bonds and
municipal lease/purchase agreements). A participation interest gives the Fund an
undivided interest in the Exempt Security in the proportion that the Fund's
participation interest bears to the total principal amount of the Exempt
Security. These instruments may have fixed, floating or variable rates of
interest. If the participation interest is unrated, it will be backed by an
irrevocable letter of credit or guarantee of a bank that the Board of Trustees
has determined meets the prescribed quality standards for banks in whose
securities the Fund may invest, or the payment obligation otherwise will be
collateralized by U.S. Government securities. For certain participation
interests, the Fund will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Fund's participation interest in
the Exempt Security, plus accrued interest. As to these instruments, the Fund
intends to exercise its right to demand payment only upon a default under the
terms of the Exempt Security, as needed to provide liquidity to meet
redemptions, or to maintain or improve the quality of its investment portfolio.
The Fund may purchase custodial receipts representing the right to
receive certain future principal and interest payments on Exempt Securities
which underlie the custodial receipts. A number of different arrangements are
possible. In a typical custodial receipt arrangement, an issuer or a third party
owner of Exempt Securities deposits such obligations with a custodian in
exchange for two classes of custodial receipts. The two classes have different
characteristics, but, in each case, payments on the two classes are based on
payments received on the underlying Exempt Securities. One class has the
characteristics of a typical auction rate security, where at specified intervals
its interest rate is adjusted, and ownership changes, based on an auction
mechanism. This class' interest rate generally is expected to be below the
coupon rate of the underlying Exempt Securities and generally is at a level
comparable to that of an Exempt Security of similar quality and having a
maturity equal to the period between interest rate adjustments. The second class
bears interest at a rate that exceeds the interest rate typically borne by a
security of comparable quality and maturity; this rate also is adjusted, but in
this case inversely to changes in the rate of interest of the first class. If
the interest rate on the first class exceeds the coupon rate of the underlying
Exempt Securities, its interest rate will exceed the rate paid on the second
class. In no event will the aggregate interest paid with respect to the two
classes exceed the interest paid by the underlying Exempt Securities. The value
of the second class and similar securities should be expected to fluctuate more
than the value of an Exempt Security of comparable
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<PAGE> 51
quality and maturity and their purchase by the Fund should increase the
volatility of its net asset value and, thus, its price per share. These
custodial receipts are sold in private placements. The Fund also may purchase
directly from issuers, and not in a private placement, Exempt Securities having
characteristics similar to custodial receipts. These securities may be issued as
part of a multi-class offering and the interest rate on certain classes may be
subject to a cap or a floor.
The Fund may invest in zero coupon securities which are debt securities
issued or sold at a discount from their face value which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
redemption date (or cash payment date). The amount of the discount varies
depending on the time remaining until maturity or cash payment date, prevailing
interest rates, liquidity of the security and perceived credit quality of the
issuer. Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons themselves
and receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities generally
are more volatile than the market prices of interest-bearing securities and are
likely to respond to a greater degree to changes in interest rates than
interest-bearing securities having similar maturities and credit qualities. For
further information regarding zero coupon securities, see "Additional Tax
Information With Respect to the Pennsylvania Bond Fund" in the Statement of
Additional Information.
An increase in interest rates will generally reduce the value of the
investments in the Fund, and a decline in interest rates will generally increase
the value of those investments. Depending upon the prevailing market conditions,
the Adviser may purchase debt securities at a discount from face value, which
produces a yield greater than the coupon rate. Conversely, if debt securities
are purchased at a premium over face value, the yield will be lower than the
coupon rate. In making investment decisions, the Adviser will consider many
factors other than current yield, including the preservation of capital,
maturity, and yield to maturity.
The Fund may use one or more of the investment techniques described
below. Use of such techniques may cause the Fund to earn income which would be
taxable to its Shareholders.
RISK FACTORS AND INVESTMENT TECHNIQUES
Even though interest-bearing securities are investments which promise a
stable stream of income, the prices of such securities are inversely affected by
changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. Certain securities that may be purchased by the Fund, such
as those with interest rates that fluctuate directly or indirectly based on
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<PAGE> 52
multiples of a stated index, are designed to be highly sensitive to changes in
interest rates and can subject the holders thereof to extreme reductions of
yield and possibly loss of principal. The values of fixed-income securities also
may be affected by changes in the credit rating or financial condition of the
issuing entities. The Fund's net asset value generally will not be stable and
should fluctuate based upon changes in the value of the Fund's portfolio
securities. Securities in which the Fund invests may earn a higher level of
current income than certain shorter-term or higher quality securities which
generally have greater liquidity, less market risk and less fluctuation in
market value.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure might
prove difficult. In evaluating the credit quality of a municipal lease/purchase
obligation that is unrated, the Adviser will consider, on an ongoing basis, a
number of factors including the likelihood that the issuing municipality will
discontinue appropriating funding for the leased property.
The Fund may employ, among others, the investment techniques described
below. Use of these techniques may give rise to taxable income. Options and
futures transactions and certain variable and floating rate securities involve
so-called "derivative securities." A derivative is generally defined as an
instrument whose value is based upon or derived from some underlying index,
reference rate (e.g., interest rates), security, commodity or other asset.
Zero Coupon Securities. Federal income tax law requires the holder of a
zero coupon security or of certain pay-in-kind bonds to accrue income with
respect to these securities prior to the receipt of cash payments. To maintain
its qualification as a regulated investment company and avoid liability for
Federal income taxes, the Fund may be required to distribute such income accrued
with respect to these securities and may have to dispose of portfolio securities
under disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements.
Risks of Non-Diversification. Potential Shareholders should consider
the fact that the Fund's portfolio consists primarily of securities issued by
the Commonwealth of Pennsylvania (the "Commonwealth"), its municipalities and
authorities and should realize that the Fund's performance is closely tied to
general economic conditions within the Commonwealth as a whole and to economic
conditions within particular industries and geographic areas located within the
Commonwealth.
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<PAGE> 53
Although the General Fund of the Commonwealth (the principal operating
fund of the Commonwealth) experienced deficits in fiscal 1990 and 1991, tax
increases and spending decreases have resulted in surpluses the last four years;
as of June 30, 1994, the General Fund had a surplus of $892.9 million. The
deficit in the Commonwealth's unreserved/undesignated funds also has been
eliminated, and there was a surplus of $79.2 million as of June 30, 1994.
Pennsylvania's economy historically has been dependent upon heavy
industry, but has diversified recently into various services, particularly into
medical and health services, education and financial services. Agricultural
industries continue to be an important part of the economy, including not only
the production of diversified food and livestock products, but substantial
economic activity in agribusiness and food-related industries. Service
industries currently employ the greatest share of nonagricultural workers,
followed by the categories of trade and manufacturing. Future economic
difficulties in any of these industries could have an adverse impact on the
finances of the Commonwealth or its municipalities, and could adversely affect
the market value of the Pennsylvania Exempt Securities in the Fund or the
ability of the respective obligors to make payments of interest and principal
due on such Securities.
Certain litigation is pending against the Commonwealth that could
adversely affect the ability of the Commonwealth to pay debt service on its
obligations including suits relating to the following matters: (i) the ACLU has
filed suit in federal court demanding additional funding for child welfare
services; the Commonwealth settled a similar suit in the Commonwealth Court of
Pennsylvania and is seeking the dismissal of the federal suit, inter alia
because of that settlement. After its earlier denial of class certification was
reversed by the Third Circuit Court of Appeals, the district court granted class
certification to the ACLU and the parties are proceeding with discovery. (No
available estimate of potential liability); (ii) in 1987, the Supreme Court of
Pennsylvania held the statutory scheme for county funding of the judicial system
to be in conflict with the constitution of the Commonwealth, but stayed judgment
pending enactment by the legislature of funding consistent with the opinion, and
the legislature has yet to consider legislation implementing the judgment. In
1992, a new action in mandamus was filed seeking to compel the Commonwealth to
comply with the original decision; (iii) litigation has been filed in both state
and federal court by an association of rural and small schools and several
individual school districts and parents challenging the constitutionality of the
Commonwealth's system for funding local school districts -- the federal case has
been stayed pending the resolution of the state case, and the state case is in
the pre-trail stage (no available estimate of potential liability); and (iv)
Envirotest/Synterra Partners ("Envirotest") has filed suit against the
Commonwealth
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<PAGE> 54
asserting that it sustained damages in excess of $350 million, as a result of
investments it made in reliance on a contract to conduct emissions testing
before the emission testing program was suspended. Envirotest has entered into a
Standstill Agreement with the Commonwealth pursuant to which the parties will
attempt to resolve Envirotest's claims (no available estimates of potential
liability).
Although there can be no assurance that such conditions will continue,
the Commonwealth's general obligation bonds are currently rated AA- by Standard
& Poor's and A1 by Moody's and Philadelphia's and Pittsburgh's general
obligation bonds are currently rated BBB- and BBB+ respectively by Standard &
Poor's and Baa and Baa1 respectively by Moody's.
The City of Philadelphia (the "City") experienced a series of General
Fund deficits for Fiscal Years 1988 through 1992 and, while its general
financial situation has improved, the City is still seeking a long-term solution
for its economic difficulties. The audited balance of the City's General Fund as
of June 30, 1994 was a surplus of $15.4 million and preliminary unaudited
financial statements as of June 30, 1995 project a surplus of approximately
$59.6 million.
In recent years an authority of the Commonwealth, the Pennsylvania
Intergovernmental Cooperation Authority ("PICA"), has issued approximately $1.4
billion of Special Revenue Bonds on behalf of the City to cover budget
shortfalls, to eliminate projected deficits and to fund capital spending. As one
of the conditions of issuing bonds on behalf of the City, PICA exercises
oversight of the City's finances. The City is currently operating under a five
year plan approved by PICA in 1995. PICA's power to issue further bonds to
finance capital projects expired on December 31, 1994. PICA may continue to
issue bonds to finance cash flow deficits until December 31, 1996, and its
authority to refund existing debt will not expire.
The Fund's classification as "non-diversified" investment companies
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940 (the "1940 Act"). However, the Fund intends to conduct its operations so as
to qualify as a "regulated investment company" for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"), which requires the Fund generally
to invest as of the end of each fiscal quarter, with respect to 50% of its total
assets, not more than 5% of such assets in the obligations of a single issuer;
as to the remaining 50% of its total assets, the Fund is not so restricted. In
no event, however, may the Fund invest more than 25% of its total assets in the
obligations of any one issuer as of the end of each fiscal quarter. Since a
relatively high percentage of the Fund's assets may be invested in the
obligations of a limited number of issuers,
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<PAGE> 55
some of which may be within the same economic sector, the Fund's portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified investment
company.
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 member banks of the Federal
Deposit Insurance Corporation and/or from 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. For further information about repurchase
agreements and the related risks, see "INVESTMENT OBJECTIVES 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 OBJECTIVES AND POLICIES - Additional
Information on Portfolio Instruments - Reverse Repurchase Agreements" in the
Statement of Additional Information.
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<PAGE> 56
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.
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 securities are securities purchased for delivery
beyond the normal settlement date at a stated price and yield and thereby
involve a risk that the yield obtained in the transaction will be less than
those available in the market when delivery takes place. The Fund will generally
not pay for such securities or start earning interest 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 basis are recorded as an asset and are subject to
changes in the value based upon changes in the general level of interest rates.
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 or yield considered to be advantageous.
Medium-Grade Securities. As described above, the Fund may invest in
debt securities within the fourth highest rating group assigned by an NRSRO
(e.g. BBB or Baa by S&P and Moody's, respectively) and comparable unrated
securities. These types of debt securities are considered by Moody's to have
some speculative characteristics, and while interest payments and principal
security appears adequate for the present, such securities lack certain
protective elements or may be characteristically unreliable over any great
period of time.
Should subsequent events cause the rating of a debt security purchased
by the Fund to fall below BBB or Baa, as the case may be, the Adviser will
consider such an event in determining whether the Fund should continue to hold
that security. In no event, however, would the Fund be required to liquidate any
such portfolio security where the Fund would suffer a loss on the sale of such
security.
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<PAGE> 57
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. 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. The Fund may write covered call options as a
means of seeking to enhance its taxable 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 taxable income through the receipt of
premiums by writing put options. Covered call options give the purchaser the
right, for a stated period, to buy the underlying securities from the Fund at a
stated price, while put options give the purchaser the right, for a stated
period, to sell the underlying securities to the Fund at a stated price. 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.
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.
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<PAGE> 58
The Fund also may acquire "puts" with respect to Exempt Securities held
in its portfolio. A put is a right to sell a specified security (or securities)
within a specified period of time at a specified exercise price. The Fund may
sell, transfer, or assign a put only in conjunction with the sale, transfer, or
assignment of the underlying security or securities.
The amount payable to the Fund upon its exercise of a "put" is normally
(i) the Fund's acquisition cost of the Exempt Securities (excluding any accrued
interest which the Fund paid on the acquisition), less any amortized market
premium or plus any amortized market or original issue discount during the
period the Tax-Free Fund owned the securities, plus (ii) all interest accrued on
the securities since the last interest payment date during that period.
Puts may be acquired by the Fund to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of the
Fund's assets at a rate of return more favorable than that of the underlying
security. Puts may, under certain circumstances, also be used to shorten the
maturity of underlying variable rate or floating rate securities for purposes of
calculating the remaining maturity of those securities.
The Fund expects that it will generally acquire puts only where the
puts are available without the payment of any direct or indirect consideration.
However, if necessary or advisable, the Fund may pay for puts either separately
in cash or by paying a higher price for portfolio securities which are acquired
subject to the puts (thus reducing the yield to maturity otherwise available for
the same securities).
The Fund intends to enter into puts only with dealers, banks, and
broker-dealers which, in the Adviser's opinion, present minimal credit risks.
Purchasing Options. In addition, the Fund may purchase put and call
options written by third parties covering those types of financial instruments
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.
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
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<PAGE> 59
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, 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 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. Alternatively, the Fund may purchase or sell futures contracts to
hedge against changes in market interest rates which may result in the premature
call at par value of certain securities which the Fund has purchased at a
premium.
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
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<PAGE> 60
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.
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 municipal bond index figures to protect against
changes in the market value of the Exempt Securities in its portfolio or which
it intends to acquire. Municipal bond index futures contracts are based on an
index of long-term municipal obligations. The index assigns relative values to
the municipal obligations included in an index, and fluctuates with changes in
the market value of such municipal obligations. 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 a municipal bond index
figures contract enables the Fund to protect its assets from fluctuations in
rates on tax exempt securities without actually buying or selling such
securities.
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<PAGE> 61
Interest Rate Futures Contracts and Options on Interest Rate Futures
Contracts. The Fund may purchase and sell interest rate futures contracts and
options on interest rate futures contracts as a substitute for a comparable
market position or to hedge against adverse movements in interest rates.
To the extent the Fund has invested in interest rate futures contracts
or options on interest rate futures contracts as a substitute for a comparable
market position, the Fund will be subject to the investment risks of having
purchased the securities underlying the contract.
The Fund may purchase call options on interest rate futures contracts
to hedge against a decline in interest rates and may purchase put options on
interest rate futures contracts to hedge its portfolio securities against the
risk of rising interest rates.
If the Fund has hedged against the possibility of an increase in
interest rates adversely affecting the value of securities held in the Fund's
portfolio and rates decrease instead, the Fund will lose part or all of the
benefit of the increased value of the securities which it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements at a time when it may be
disadvantageous to do so. These sales of securities may, but will not
necessarily, be at increased prices which reflect the decline in interest rates.
The Fund may sell call options on interest rate futures contracts to
partially hedge against declining prices of its portfolio securities. If the
futures price at expiration of the option is below the exercise price, the Fund
will retain the full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's portfolio holdings. The
Fund may sell put options on interest rate futures contracts to hedge against
increasing prices of the securities which are deliverable upon exercise of the
futures contracts. If the futures price at expiration of the option is higher
than the exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call option sold by a
Fund is exercised, the Fund will incur a loss which will be reduced by the
amount of the premium it receives. Depending on the degree of correlation
between changes in the value of its portfolio securities and changes in the
value of its futures positions, the Fund's losses from existing options on
futures may to some extent be reduced or increased by changes in the value of
its portfolio securities.
The Fund also may sell options on interest rate futures contracts as
part of closing purchase transactions to terminate its
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<PAGE> 62
options positions. No assurance can be given that such closing transactions can
be effected or that there will be a correlation between price movements in the
options on interest rate futures and price movements in the Fund's portfolio
securities which are the subject of the hedge. In addition, the Fund's purchase
of such options will be based upon predictions as to anticipated interest rate
trends, which could prove to be inaccurate.
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 meets 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.
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 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 at
the end of each fiscal quarter, (a) more than 5% of the Fund's total assets
(taken at current value) would be invested in such issuer (except that up to 50%
of the Fund's total assets may be invested without regard to such 5%
limitation), and (b) more than 25% of its total assets (taken at current value)
would be invested in securities of a
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<PAGE> 63
single issuer. 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. For
purposes of this limitation, a security is considered to be issued by the
governmental entity (or entities) whose assets and revenues back the security,
or, with respect to a private activity bond that is backed only by the assets
and revenues of a non-governmental user, such non-governmental user.
2. (a) Borrow money (not including reverse repurchase agreements or
dollar roll agreements), except that the Fund may borrow from banks for
temporary or emergency purposes and then only in amounts up to one-third of its
total assets at the time of borrowing (and provided that such bank borrowings
and reverse repurchase agreements and dollar roll agreements do not exceed in
the aggregate one-third of the Fund's total assets less liabilities other than
the obligations represented by the bank borrowings, reverse repurchase
agreements and dollar roll agreements), or mortgage, pledge or hypothecate any
assets except in connection with a bank borrowing in amounts not to exceed
one-third of the Fund's net assets at the time of borrowing; (b) enter into
reverse repurchase agreements, dollar roll agreements and other permitted
borrowings in amounts exceeding in the aggregate one-third of the Fund's total
assets less liabilities other than the obligations represented by such reverse
repurchase and dollar roll agreements; and (c) issue senior securities except as
permitted by the 1940 Act or any rule, order or interpretation thereunder.
3. Make loans, except that the Fund may purchase or hold debt
instruments and lend portfolio securities in accordance with its investment
objectives 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 will 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 is priced is hereinafter referred to as
the "Valuation Time." A "Business Day" of the Fund is a day on which the
Exchange is open for trading and any other day (other than a day on which no
Shares of the Fund are tendered for redemption and no order to purchase
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<PAGE> 64
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 in the Fund 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"). These procedures may
include instructions under which a Customer's account is "swept" automatically
no less frequently than weekly and amounts in excess of a minimum amount agreed
upon by the Entity and the Customer are invested by the Distributor in Shares of
the Fund, depending upon
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<PAGE> 65
the type of the Customer's account and/or the instructions of the Customer.
Shares of the Fund sold to the Entities acting in a fiduciary,
advisory, custodial, agency, or other similar capacity on behalf of 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 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 day.
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<PAGE> 66
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 also 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.
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, quarterly or semi-annual 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 on the date of such deduction. 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.
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<PAGE> 67
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 and
Amount of Sales Charge Brokerage
Transaction at as % of Net Sales Charge as Commissions as
Public Offering Amount % of Public % of Public
Price Invested Offering Price Offering Price
- --------------- ------------ --------------- --------------
<S> <C> <C> <C>
Less than 4.71% 4.50% 4.05%
$100,000
$100,000 but 3.63 3.50 3.15
less than
$250,000
$250,000 but 2.56 2.50 2.25
less than
$500,000
$500,000 but 1.52 1.50 1.35
less than
$1,000,000
$1,000,000 or 0 0 0
more
</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 sporting events) and (3) merchandise (such
as clothing, trophies, clocks and pens). Dealers may not use sales of the Fund's
Shares to qualify for this compensation to the extent such may be
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prohibited by the laws of any state or any self-regulatory agency,
such as the NASD. 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. 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.
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.
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<PAGE> 69
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.
RIGHT OF ACCUMULATION
Pursuant to the right of accumulation, investors are permitted to
purchase Shares of the Fund at the pubic offering price applicable to the total
of (a) the total public offering price of the Shares of the Fund plus (b) an
amount equal to the then current net asset value of the purchaser's combined
holdings of the Shares of the Fund. The "purchaser's 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 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, 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
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<PAGE> 70
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
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"
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<PAGE> 71
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
Group 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 Transfer Agent. 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 electronically to a
designated bank account. For telephone redemptions, call the Group at (800)
766-3960.
Neither the Fund nor its service providers will be liable for any loss,
damages, expense or cost arising out of any telephone redemption effected in
accordance with the Fund's telephone redemption procedures, acting upon
instructions reasonably believed to be genuine. The Fund will employ procedures
designed to provide reasonable assurance that instructions by telephone are
genuine; if these procedures are not followed, the Fund or its 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 listed above under "HOW TO
PURCHASE AND REDEEM SHARES -- Redemption by Mail."
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<PAGE> 72
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, the 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 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 Fund
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
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$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
Fund 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 $1,000 ($250 if the Shareholder is an employee of
the Adviser or one of its affiliates).
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION" and "NET ASSET
VALUE" in the Statement of Additional Information for examples of when the Group
may suspend the right of redemption or redeem shares involuntarily in light of
the Group's responsibilities under the 1940 Act.
DIVIDENDS AND TAXES
DIVIDENDS
A dividend for the Fund is declared monthly 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 monthly. Shareholders
will automatically receive all income dividends and capital gains distributions
in additional full and fractional Shares of the Fund 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 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.
FEDERAL TAXES
General. The Fund is treated as a separate entity for federal income
tax purposes and intends to qualify as a "regulated investment company" under
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
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<PAGE> 74
distribute to its shareholders at least 90% of its investment company taxable
income. The Fund contemplates declaring as dividends 100% of the Fund's
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, that Fund would be subject
to a nondeductible 4% excise tax on the deficiency.
It is expected that the Fund will distribute annually substantially all
of its net investment income and net capital gains to its Shareholders.
Dividends derived from interest earned on Exempt Securities constitute
"exempt-interest dividends" when designated as such by the Fund and will be
excludable from gross income for federal income tax purposes. However,
exempt-interest dividends attributable to certain municipal obligations issued
on or after August 8, 1986, to finance certain private activities will be
treated as a tax preference item in computing the alternative minimum tax. Also,
a portion of all other interest excluded from gross income for federal income
tax purposes earned by a corporation may be subject to the alternative minimum
tax as a result of the inclusion in alternative minimum taxable income of 75% of
the excess of adjusted current earnings over alternative minimum taxable income.
Distributions, if any, derived from capital gains will generally be
taxable to Shareholders as capital gains for federal income tax purposes to the
extent so designated by the Fund. Dividends, if any, derived from sources other
than interest excluded from gross income for federal income tax purposes and
capital gains will be taxable to Shareholders as ordinary income for federal
income tax purposes whether or not reinvested in additional Shares. Shareholders
not subject to federal income tax on their income will not, of course, be
required to pay federal income tax on any amounts distributed to them. The Fund
anticipates that substantially all of its dividends will be excluded from gross
income for federal income tax purposes. The Fund will notify each Shareholder
annually of the tax status of all distributions.
If a Shareholder receives an exempt-interest dividend with respect to
any Share and such Share is held by the Shareholder for six months or less, any
loss on the sale or exchange of such Share will be disallowed to the extent of
the amount of such exempt- interest dividend. In certain limited instances, the
portion of Social Security benefits that may be subject to federal income
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taxation, may be affected by the amount of tax-exempt interest income, including
exempt-interest dividends, received by a Shareholder.
Interest on indebtedness incurred or continued by a Shareholder to
purchase or carry Shares of the Fund is not deductible for federal income taxes
assuming the Fund distributes exempt-interest dividends during the Shareholder's
taxable year. It is anticipated that distributions from the Fund will not be
eligible for the dividends received deduction for corporations.
Proposals that may restrict or eliminate the income tax exemption for
interest on Exempt Securities may be introduced in the future. If any such
proposal were enacted that would reduce the availability of Exempt Securities
for investment by the Fund so as to adversely affect Fund Shareholders, the Fund
would reevaluate its investment objective and policies and submit possible
changes in the Fund's structure to Shareholders for their consideration. If
legislation were enacted that would treat a type of Exempt Securities as
taxable, the Fund would treat such security as a permissible taxable investment
within the applicable limits set forth herein.
Additional information regarding federal taxes is contained in the
Statement of Additional Information under the heading "ADDITIONAL INFORMATION --
Additional 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 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 and
state income tax consequences of distributions made to them during the year.
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.
PENNSYLVANIA TAXES
Under current Pennsylvania law, Shareholders will not be subject to
Pennsylvania Personal Income Tax on distributions from the Fund attributable to
interest income from Pennsylvania Exempt Securities or from obligations of the
United States, its territories and certain of its agencies and instrumentalities
("Federal Exempt Securities"). However, Pennsylvania Personal Income Tax will
apply to distributions from the Fund attributable to gain realized on the
disposition of any investment, including Exempt Securities, or to interest
income from investments other than Exempt Securities. Shareholders also will be
subject to the Pennsylvania Personal Income tax on any gain they realize on the
disposition of Shares in the Fund.
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<PAGE> 76
Distributions attributable to interest from Exempt Securities is not
subject to the Philadelphia School District Net Income Tax. However,
distributions attributable to gain from the disposition of Exempt Securities are
subject to the Philadelphia School District Net Income Tax, except that
distributions attributable to gain on any investment held for more than six
months are exempt. A shareholder's gain on the disposition of Shares in the Fund
that he or she has held for more than six months will not be subject to the
Philadelphia School District Net Income Tax.
Shareholders are not subject to the county personal property tax
imposed on residents of Pennsylvania by the Act of June 17, 1913, P.L. 507, as
amended to the extent that the Fund is comprised of Exempt Securities.
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 Trustees may not have been elected by the
shareholders of the Group. The Group will be managed by the Trustees in
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 Fund Services Ohio, Inc. 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 Group for acting as Administrator
and under the Distribution Plan discussed below, 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 Ohio, 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. While the Adviser has not previously
served as the investment adviser to a registered open-end management investment
company, it has managed since its founding the investment portfolios of high net
worth individuals, endowments, pension and common trust funds. The Adviser
currently has over $1.6 billion under management, including over $400 million
of municipal securities.
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<PAGE> 77
Subject to the general supervision of the Board of Trustees of the
Group and in accordance with the investment objectives 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.
Mr. Robert Andres is primarily responsible for the day-to-day
management of the Fund's portfolio. Mr. Andres co-founded the Adviser in 1989
and serves as its President and Chief Operating Officer. Prior thereto, he
served as President of Merrill Lynch Mortgage Capital Corporation and manager
of Merrill Lynch's secondary corporate bond trading division. He has had more
than 30 years of broad based experience with respect to fixed-income
securities, including more than 20 years in trading, sales and investment
management of municipal securities.
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 rate of sixty
one-hundredths of one percent (.60%) of the 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 yield and total
return of the Fund to be higher than they 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 Ohio, 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 yield and total return of the
Fund to be higher than they would otherwise be in the absence of such a fee
reduction.
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<PAGE> 78
While the combined fees of the Adviser and the Administrator with
respect to the Fund are higher than similar fees paid by most mutual funds, the
Board of Trustees believes such fees to be fair and reasonable and to be
comparable to the fees paid by many funds having similar investment objectives
and policies.
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 receives compensation under the
Distribution and Shareholder Service Plan described below and 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."
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 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,
distribution expenses incurred pursuant to the Distribution and Shareholder
Service Plan described below and any extraordinary expenses incurred in the
Fund's operation.
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Group has adopted a
Distribution and Shareholder Service Plan (the "Plan"), under which the Fund is
authorized to pay or reimburse BISYS, as Distributor, a fee in an amount not to
exceed on an annual basis 0.25% of the average daily net asset value of the Fund
(the "12b-1 Fee"). Payments of the 12b-1 Fee to BISYS pursuant to the Plan will
be used (i) to compensate Participating Organizations (as defined below) for
providing distribution assistance relating to Shares of the Fund, (ii) for
promotional activities intended to result in the sale of Shares of the Fund such
as to pay for the preparation, printing and distribution of prospectuses to
other than current shareholders, and (iii) to compensate Participating
Organizations for providing shareholder services with respect to
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<PAGE> 79
their customers who are, from time to time, beneficial and record holders of
Shares of the Fund.
Participating Organizations include banks, broker-dealers and other
financial institutions (including BISYS, Keystone, the Adviser and their
affiliates). Such fee paid to BISYS may exceed the actual costs incurred by
BISYS in providing such services and/or compensating such Participating
Organizations. In addition, from time to time, BISYS may periodically
voluntarily reduce all or a portion of its fee under the Plan with respect to
the Fund to increase the net income of the Fund available for distribution as
dividends. BISYS 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 yield and total return of the Fund to be higher than
they would otherwise be in the absence of such a fee reduction.
As authorized by the Plan, BISYS has entered into Rule 12b-1 Agreements
with Keystone Brokerage, Inc. ("Keystone Brokerage") and Keystone Investment
Services, Inc. ("Keystone Services"), each a wholly owned subsidiary of Keystone
and an affiliate of the Adviser, to provide shareholder servicing to
Shareholders of the Fund including, but not limited to, maintaining Shareholder
relations and answering questions about the Fund. In consideration of such
services BISYS has agreed to pay each of Keystone Brokerage and Keystone
Services a monthly fee, computed at the annual rate of up to .25% of the average
aggregate net asset value of Shares held during the period in accounts for which
services were provided under such Agreement. BISYS will be compensated by the
Fund in an amount equal to its payments to Keystone Brokerage and Keystone
Services under the Rule 12b-1 Agreement with respect to the Fund. Such fee may
exceed the actual costs incurred by Keystone Brokerage and Keystone Services in
providing such services.
In addition, BISYS may enter into, from time to time, other Rule 12b-1
Agreements with selected dealers pursuant to which such dealers will provide
certain services in connection with the distribution of the Fund's Shares such
as those described above.
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, its correspondent and affiliated banks, 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
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<PAGE> 80
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 of the date
hereof, no such servicing agreements have been entered into by the Group.
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. Keystone Brokerage and
Keystone Services each believes that it possesses the legal authority to perform
its shareholder services as set forth in its respective Rule 12b-1 Agreement
with BISYS, as described above, without violation of applicable banking laws and
regulations, and has so represented in such Rule 12b-1 Agreement. 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, Keystone Brokerage and Keystone Services 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 eight 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 entitled to such dividends and distributions out of the
income earned on the assets belonging to that 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, Riverside Capital Money Market
Fund, Riverside Capital Value Equity Fund, Riverside
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<PAGE> 81
Capital Fixed Income Fund, Riverside Capital Growth Fund, Riverside Capital
Tennessee Municipal Obligations Fund and Riverside Capital Low Duration
Government Securities Fund.
The Fund will initially be funded by the transfer of all of the assets
of a corresponding common trust fund managed by the Adviser in exchange for
Shares of the Fund equal in aggregate net asset value to the assets so received.
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 series 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 and ratification of the selection of independent accountants. 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 of the Fund's
investment advisory agreement and the Plan.
Overall responsibility for the management of the Funds 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 and may
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, the Plan 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.
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
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 holdings of Shares of the Fund will be reduced below 5%.
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<PAGE> 82
CUSTODIAN
The Bank of New York serves as the custodian for the Fund.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS Fund Services Ohio, 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 Ohio, Inc. also provides certain accounting services for the Fund
pursuant to the Fund Accounting Agreement and receives a fee 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 $35,000. 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 a fund" means the consideration received by
the fund upon the issuance or sale of shares in that 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 the 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 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.
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) 766-3690.
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<PAGE> 83
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
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<PAGE> 84
The KeyPremier Prime Money Market Fund
The KeyPremier Pennsylvania Municipal Bond Fund
Two Investment Portfolios of
THE SESSIONS GROUP
Statement of Additional Information
July __, 1996
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the prospectuses (the "Prospectuses") of The KeyPremier
Prime Money Market Fund (the "Money Market Fund") and The KeyPremier
Pennsylvania Municipal Bond Fund (the "Pennsylvania Bond Fund"), each dated the
date hereof. The Money Market Fund and the Pennsylvania Bond Fund are hereafter
collectively referred to as the "Funds" and individually as a "Fund." The Funds
are two of eight funds of The Sessions Group, an Ohio business trust (the
"Group"). This Statement of Additional Information is incorporated in its
entirety into the Prospectuses. Copies of the Prospectuses may be obtained by
writing the Group at 3435 Stelzer Road, Columbus, Ohio 43219, or by telephoning
toll free (800) 766-3960.
<PAGE> 85
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE SESSIONS GROUP .................................................. B-1
INVESTMENT OBJECTIVES AND POLICIES .................................. B-1
Additional Information on Portfolio Instruments ............ B-1
Investment Restrictions .................................... B-14
Portfolio Turnover ......................................... B-15
NET ASSET VALUE ..................................................... B-16
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION ...................... B-16
MANAGEMENT OF THE GROUP ............................................. B-17
Trustees and Officers ...................................... B-17
Investment Adviser ......................................... B-20
Portfolio Transactions ..................................... B-21
Glass-Steagall Act ......................................... B-23
Administrator .............................................. B-24
Expenses ................................................... B-25
Distributor ................................................ B-26
Administrative Services Plan ............................... B-28
Custodian .................................................. B-29
Transfer Agency and Fund Accounting Services ............... B-29
Auditors ................................................... B-30
Legal Counsel .............................................. B-30
ADDITIONAL INFORMATION .............................................. B-31
Description of Shares ...................................... B-31
Vote of a Majority of the Outstanding Shares ............... B-32
Additional General Tax Information ......................... B-32
Additional Tax Information With Respect to the
Pennsylvania Bond Fund ............................ B-35
Seven-Day Yield of the Money Market Fund ................... B-39
Tax-Free vs. Taxable Income ................................ B-40
Calculation of Total Return ................................ B-40
Distribution Rates ......................................... B-41
Performance Comparisons .................................... B-41
Miscellaneous .............................................. B-42
APPENDIX ............................................................ A-1
</TABLE>
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<PAGE> 86
STATEMENT OF ADDITIONAL INFORMATION
THE SESSIONS GROUP
The Sessions Group (the "Group") is an open-end management investment
company which currently offers eight separate investment portfolios. This
Statement of Additional Information deals with two of those portfolios, the
Money Market Fund, which is considered to be a diversified portfolio, and the
Pennsylvania Bond Fund, which is considered to be a non-diversified portfolio.
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectuses of the Funds.
Capitalized terms not defined herein are defined in the Prospectuses. No
investment in Shares of either Fund should be made without first reading the
Prospectus of that Fund.
INVESTMENT OBJECTIVES AND POLICIES
Additional Information on Portfolio Instruments
The following policies supplement the investment objectives and
policies of the Funds as set forth in the respective Prospectus.
Bank Obligations. Each 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 Fund 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.
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The Money Market Fund may also invest in Eurodollar Certificates of
Deposit, which are U.S. dollar denominated certificates of deposit issued by
offices of foreign and domestic banks located outside the United States; Yankee
Certificates of Deposit, which are certificates of deposit issued by a U.S.
branch of a foreign bank denominated in U.S. dollars and held in the United
States; Eurodollar Time Deposits ("ETDs"), which are U.S. dollar denominated
deposits in a foreign branch of a U.S. bank or a foreign bank; and Canadian Time
Deposits, which are basically the same as ETDs except they are issued by
Canadian offices of major Canadian banks.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have maturities
of less than nine months and fixed rates of return.
The Funds 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. Each 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 rated high quality 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. The Money Market Fund may also invest, subject to the foregoing
quality criteria, in Canadian Commercial Paper, which is commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation ("CCP"), and in Europaper, which is U.S. dollar denominated
commercial paper of a foreign issuer.
Variable Amount Master Demand Notes. Variable amount master demand
notes, in which the Funds may invest, are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, the
Fund may demand payment of principal and accrued interest at any time within 30
days. While such notes are not typically rated by credit rating agencies,
issuers of variable amount master demand notes (which are normally
manufacturing, retail, financial and other business concerns), must satisfy, for
purchase by the Fund, the same criteria as set forth above for commercial paper.
The Adviser will consider the earning power,
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cash flow, and other liquidity ratios of the issuers of such notes and will
continuously monitor their financial status and ability to meet payment on
demand. In determining average weighted portfolio maturity, a variable amount
master demand note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next interest rate adjustment or the period
of time remaining until the principal amount can be recovered from the issuer
through demand.
Foreign Investment. Investments in securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers, may subject the
Money Market Fund to investment risks that differ in some respects from those
related to investment in obligations of U.S. domestic issuers or in U.S.
securities markets. 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 Money Market Fund will acquire such securities
only when the Adviser believes the risks associated with such investments are
minimal.
U.S. Government Obligations. Each 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.
Each 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-entry system
called "Separate Trading of Registered Interest and
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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.
Exempt Securities. As stated in its Prospectus, the assets of the
Pennsylvania Bond Fund will be primarily invested in Exempt Securities. Under
normal market conditions, at least 80% of the net assets of the Fund will be
invested in Exempt Securities and 65% of the Fund's net assets will be invested
in Pennsylvania Exempt Securities.
Exempt Securities include debt obligations issued by governmental
entities to obtain funds for various public purposes, such as the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses, and the extension of loans to other
public institutions and facilities. Private activity bonds that are issued by or
on behalf of public authorities to finance various privately-operated facilities
are included within the term Exempt Securities, only if the interest paid
thereon is exempt from both Pennsylvania income taxes and federal taxes and is
not treated as a preference item for purposes of the federal alternative minimum
tax.
Among other types of Exempt Securities, the Pennsylvania Bond Fund may
purchase short-term General Obligation Notes, Tax Anticipation Notes, Bond
Anticipation Notes, Revenue Anticipation Notes, Project Notes, Tax-Exempt
Commercial Paper, Construction Loan Notes and other forms of short-term
tax-exempt loans. Such instruments are issued with a short-term maturity in
anticipation of the receipt of tax funds, the proceeds of bond placements or
other revenues. In addition, the Pennsylvania Bond Fund may invest in other
types of tax-exempt instruments, such as municipal bonds, private activity
bonds, and pollution control bonds.
Project Notes are issued by a state or local housing agency and are
sold by the Department of Housing and Urban Development. While the issuing
agency has the primary obligation with respect to its Project Notes, they are
also secured by the full faith and credit of the United States through
agreements with the issuing authority which provide that, if required, the
federal government will lend the issuer an amount equal to the principal of and
interest on the Project Notes.
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As described in the Prospectus of the Pennsylvania Bond Fund, the two
principal classifications of Exempt Securities consist of "general obligation"
and "revenue" issues. The Pennsylvania Bond Fund may also acquire "moral
obligation" issues, which are normally issued by special purpose authorities.
There are, of course, variations in the quality of Exempt Securities, both
within a particular classification and between classifications, and the yields
on Exempt Securities depend upon a variety of factors, including the financial
condition of the issuer, general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating of
the issue. Ratings represent the opinions of an NRSRO as to the quality of
Exempt Securities. It should be emphasized, however, that ratings are general
and are not absolute standards of quality, and Exempt Securities with the same
maturity, interest rate and rating may have different yields, while Exempt
Securities of the same maturity and interest rate with different ratings may
have the same yield. Subsequent to purchase, an issue of Exempt Securities may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase. The Adviser will consider such an event in determining whether the
Pennsylvania Bond Fund should continue to hold the obligation.
An issuer's obligations under its Exempt Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the federal bankruptcy code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Exempt Securities may be materially
adversely affected by litigation or other conditions.
Variable and Floating Rate Notes. Each Fund may acquire variable and
floating rate notes, subject to such Fund's investment objective, policies and
restrictions. A variable rate note is one whose terms provide for the
adjustment of its interest rate on set dates and which, upon such adjustment,
can reasonably be expected to have a market value that approximates its par
value. A floating rate note is one whose terms provide for the adjustment of
its interest rate whenever a specified interest rate changes and which, at any
time, can reasonably be expected to have a market value that approximates its
par value. Such notes are frequently not rated by credit rating agencies;
however, unrated variable and floating rate notes purchased by a Fund will be
determined by the Adviser to be of comparable quality at the time of purchase
to rated instruments eligible for purchase under that Fund's investment
policies. In making such determinations, the Adviser will consider the earning
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power, cash flow and other liquidity ratios of the issuers of such notes (such
issuers include financial, merchandising, bank holding and other companies) and
will continuously monitor their financial condition. Although there may be no
active secondary market with respect to a particular variable or floating rate
note purchased by a Fund, the Fund may resell the note at any time to a third
party. The absence of an active secondary market, however, could make it
difficult for the Fund to dispose of a variable or floating rate note in the
event the issuer of the note defaulted on its payment obligations and the Fund
could, as a result or for other reasons, suffer a loss to the extent of the
default. To the extent that there exists no readily available market for such
note and the Fund is not entitled to receive the principal amount of a note
within seven days, such a note will be treated as an illiquid security for
purposes of calculation of that Fund's limitation on investments in illiquid
securities, as set forth in its investment restrictions. Variable or floating
rate notes may be secured by bank letters of credit.
Variable or floating rate notes invested in by the Money Market Fund
may have maturities of more than 397 days, as follows:
1. An instrument that is issued or guaranteed by the United States
Government or any agency thereof which has a variable rate of interest
readjusted no less frequently than every 762 days will be deemed by the Money
Market Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
2. A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in 397 calendar days or less, will be
deemed by the Money Market Fund to have a maturity equal to the period remaining
until the next readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature will be
deemed by the Money Market Fund to have a maturity equal to the longer of the
period remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by the Money Market Fund to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Money
Market Fund is entitled to receive the principal amount of the note either at
any time on no more than thirty days' notice or at specific intervals not
exceeding 397 days and upon no more than 30 days' notice.
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Municipal Lease Obligations. Municipal lease obligations or installment
purchase contract obligations (collectively, "lease obligations") have special
risks not ordinarily associated with Exempt Securities. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation ordinarily is
based by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
The staff of the Commission currently considers certain lease obligations to be
illiquid. Determination as to the liquidity of such securities is made in
accordance with guidelines established by the Group's Board of Trustees.
Pursuant to such guidelines, the Board of Trustees has directed the Adviser to
monitor carefully the Pennsylvania Bond Fund's investment in such securities
with particular regard to (1) the frequency of trades and quotes for the lease
obligation; (2) the number of dealers willing to purchase or sell the lease
obligations and the number of other potential buyers; (3) the willingness of
dealers to undertake to make a market in the lease obligation; (4) the nature of
the marketplace trades including the time needed to dispose of the lease
obligation, the method of soliciting offers and the mechanics of transfer; and
(5) such other factors concerning the trading market for the lease obligation as
the Adviser may deem relevant. In addition, in evaluating the liquidity and
credit quality of a lease obligation that is unrated, the Group's Board of
Trustees has directed the Adviser to consider (a) whether the lease can be
cancelled; (b) what assurance there is that the assets represented by the lease
can be sold; (c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic and financial characteristics); (d) the likelihood that
the municipality will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to the operations of the
municipality (e.g., the potential for an event of "non-appropriation"); (e) the
legal recourse in the event of failure to appropriate; and (f) such other
factors concerning credit quality as the Adviser may deem relevant. The Fund
will not invest more than 15% of the value of its net assets in lease
obligations that are illiquid and in other illiquid securities.
When-Issued Securities. As discussed in the Prospectuses, each 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 a 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
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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
that Fund's commitment. It may be expected that a Fund's net assets will
fluctuate to a greater degree when it sets aside portfolio securities to cover
such purchase commitments than when it sets aside cash. In addition, because a
Fund will set aside cash or liquid portfolio securities to satisfy its purchase
commitments in the manner described above, such 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, each Fund's commitment to purchase
"when-issued" or "delayed-delivery" securities will not exceed 25% of its total
assets.
When a 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. Each Fund will engage in "when-issued" delivery transactions
only for the purpose of acquiring portfolio securities consistent with such
Fund's investment objective and policies and not for investment leverage. If the
Pennsylvania Bond Fund sells a "when-issued" or "delayed-delivery" security
before delivery, any gain would not be tax-exempt.
Repurchase Agreements. Securities held by each Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, a Fund would
acquire securities from member banks of the Federal Deposit Insurance
Corporation 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 such Fund were delayed pending court action. Additionally,
there is no controlling legal precedent confirming that a Fund would be
entitled, as against a claim by such seller or its receiver or trustee in
bankruptcy, to
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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. Repurchase agreements are considered
to be loans by a Fund under the 1940 Act.
Reverse Repurchase Agreements. As discussed in the Prospectuses, each
Fund may borrow funds by entering into reverse repurchase agreements in
accordance with its investment restrictions. Pursuant to such agreements, a Fund
would sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase the securities at a mutually agreed-upon
date and price. The Funds intend to enter into reverse repurchase agreements
only to avoid otherwise selling securities during unfavorable market conditions
to meet redemptions. At the time a 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 that 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 a Fund may decline below the price at which that Fund is
obligated to repurchase the securities. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act and therefore a form of
leveraging.
Lower Rate Bonds. The Pennsylvania Bond Fund is permitted to invest in
securities rated Ba and B by Moody's or BB and B by another appropriate NRSRO.
Such bonds, though higher yielding, are characterized by risk. See Appendix A
hereto for a general description of NRSRO ratings of municipal obligations.
Although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these bonds.
The Pennsylvania Bond Fund will rely on the Adviser's judgment, analysis and
experience in evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these bonds
tend to be more sensitive to economic conditions than are higher rated
securities. These bonds generally are considered by S&P and Moody's to be, on
balance, predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation and generally
will involve more credit risk than securities in the higher rating categories.
Because there is no established retail secondary market for many of
these securities, the Pennsylvania Bond Fund anticipates that such securities
could be sold only to a limited number of
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dealers or institutional investors. To the extent a secondary trading market for
these bonds does exist, it generally is not as liquid as the secondary market
for higher rated securities. The lack of a liquid secondary market may have an
adverse impact on market price and yield and the Pennsylvania Bond Fund's
ability to dispose of particular issues when necessary to meet its liquidity
needs or in response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for the Pennsylvania Bond
Fund to obtain accurate market quotations for purposes of valuing the
Pennsylvania Bond Fund's portfolio and calculating its net asset value. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of these securities. In such
cases, judgment may play a greater role in valuation because less reliable
objective data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could severely disrupt the market for such
securities and may have an adverse impact on the value of such securities. In
addition, it is likely that any such economic downturn could adversely affect
the ability of the issuers of such securities to repay principal and pay
interest thereon and increase the incidence of default of such securities.
The Pennsylvania Bond Fund may acquire these bonds during an initial
offering. Such securities may involve special risks because they are new issues.
The Pennsylvania Bond Fund has no arrangement with any persons concerning the
acquisition of such securities, and the Adviser will review carefully the credit
and other characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also apply
to lower rated zero coupon securities in which the Pennsylvania Bond Fund may
invest. Zero coupon bonds carry an additional risk in that, unlike bonds which
pay interest through the period to maturity, the Pennsylvania Bond Fund will
realize no cash until the cash payment date unless a portion of such securities
are sold and, if the issuer defaults, the Pennsylvania Bond Fund may obtain no
return at all on its investment.
Hedging Transactions. Hedging transactions, including the use of
options and futures, in which the Pennsylvania Bond Fund is authorized to
engage, as described in its 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.
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Use of put and call options may result in losses to the Pennsylvania
Bond 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 Pennsylvania Bond Fund can realize on its investments or cause
the Pennsylvania Bond Fund to hold a security it might otherwise sell. The use
of currency transactions can result in the Pennsylvania Bond Fund incurring
losses as a result of a number of factors including the imposition of exchange
controls, suspension of settlements, or the inability to deliver or receive a
specified currency. 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 Pennsylvania Bond Fund create the possibility that losses on the
hedging instrument may be greater than gains in the value of such Fund's
position. In addition, futures and options markets may not be liquid at all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Pennsylvania Bond 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.
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 discusses in greater detail below. In addition, many hedging
transactions involving options require segregation of the Pennsylvania Bond
Fund's assets in special accounts, as described further below.
With certain exception, 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
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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 Pennsylvania
Bond Fund's ability to close out its position as a purchase of 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 option 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 Pennsylvania
Bond 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 Pennsylvania Bond Fund must be "covered"
(i.e., the Pennsylvania Bond 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 Pennsylvania Bond Fund will
receive the option premium to help protect it against loss, a call option
written by the Pennsylvania Bond Fund exposes such 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 otherwise have sold. With respect to put
options written by the Pennsylvania Bond Fund, such 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 of the Pennsylvania
Bond Fund, such 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 or
foreign exchange rates which otherwise might adversely affect the value of
securities which such the Pennsylvania Bond Fund holds or intends to purchase.
For example, when interest rates are expected to rise or market values of
portfolio securities are expected to fall, the
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Pennsylvania Bond Fund can seek through the sale of futures contracts to offset
a decline in the value of its portfolio securities. When interest rates are
expected to fall or market values are expected to rise, the Pennsylvania Bond
Fund, through the purchase of such contracts, can attempt to secure better rates
or 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 Pennsylvania Bond 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
Pennsylvania Bond 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 Pennsylvania Bond Fund may lose the expected benefit
of futures transactions if interest rates, 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 Pennsylvania Bond Fund's
futures positions may not prove to be perfectly or even highly correlated with
the value of its portfolio securities and foreign currencies, limiting the
Fund's ability to hedge effectively against interest rate, foreign exchange rate
and/or 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 Pennsylvania Bond 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 Pennsylvania Bond Fund will not enter into a futures
contract or purchase an option thereon if immediately thereafter the initial
margin deposits for futures contracts held by such Fund plus premiums paid by it
for open options on futures would exceed 5% of the liquidation value of such
Fund's total assets after taking into account unrealized profits and unrealized
losses on any contracts entered into. The Pennsylvania Bond 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 such Fund holds or intends to purchase. When
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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.
Investment Restrictions
The Funds' investment objectives are non-fundamental policies and may
be changed without a vote of the shareholders of the applicable Fund. In
addition to the fundamental investment policies listed in the Prospectuses, the
following investment restrictions may be changed only by a vote of the majority
of the outstanding Shares of a 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,
each 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;
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 such Fund.
The following additional investment restrictions may be changed without
the vote of a majority of the outstanding Shares of the Funds. Each 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
B-14
<PAGE> 100
outstanding securities of such issuer, together own beneficially more than 5% of
such securities; and
4. Invest in excess of 10% of the then market value of the Fund in the
securities of any one issuer, except that this limitation does not apply to
investments in direct obligations of the United States or other obligations
fully guaranteed by the United States as to principal and interest.
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 a Fund's investments in illiquid
securities, repurchase agreements with maturities in excess of seven days and
other instruments in such Fund which are not readily marketable to exceed the
limit set forth in that Fund's Prospectus for its investment in illiquid
securities, such 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, no Fund would be required to liquidate any portfolio securities where
such Fund would suffer a loss on the sale of such securities.
Portfolio Turnover
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of a 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.
Because the Money Market Fund intends to invest substantially all of
its assets in securities with maturities of less than one year and because the
Commission requires such securities to be excluded from the calculation of
portfolio turnover rate, the portfolio turnover with respect to the Money Market
Fund is expected to be no greater than 10%.
The portfolio turnover rate for the Pennsylvania Bond Fund for its
first fiscal period ending June 30, 1997, is estimated to be less than 100%. The
portfolio turnover rate for the Pennsylvania Bond 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 Pennsylvania Bond Fund and may result in additional tax consequences to
the Pennsylvania Bond Fund's Shareholders. Portfolio turnover will not be a
limiting factor in making investment decisions.
B-15
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NET ASSET VALUE
The Money Market Fund has elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the 1940 Act. This involves valuing an
instrument at its cost initially and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. This method may result in
periods during which value, as determined by amortized cost, is higher or lower
than the price the Money Market Fund would receive if it sold the instrument.
The value of securities in the Money Market Fund can be expected to vary
inversely with changes in prevailing interest rates.
Pursuant to Rule 2a-7, the Money Market Fund will maintain a
dollar-weighted average portfolio maturity appropriate to the Money Market
Fund's objective of maintaining a stable net asset value per share, provided
that the Money Market Fund will not purchase any security with a remaining
maturity of more than 397 days (thirteen months) (securities subject to
repurchase agreements may bear longer maturities) nor maintain a dollar-weighted
average portfolio maturity which exceeds 90 days. The Group's Board of Trustees
has also undertaken to establish procedures reasonably designed, taking into
account current market conditions and the investment objective of the Money
Market Fund, to stabilize the net asset value per share of the Money Market Fund
for purposes of sales and redemptions at $1.00. These procedures include review
by the Trustees, at such intervals as they deem appropriate, to determine the
extent, if any, to which the net asset value per share of the Money Market Fund
calculated by using available market quotations deviates from $1.00 per Share.
In the event such deviation exceeds one-half of one percent, Rule 2a-7 requires
that the Board of Trustees promptly consider what action, if any, should be
initiated. If the Trustees believe that the extent of any deviation from the
Money Market Fund's $1.00 amortized cost price per Share may result in material
dilution or other unfair results to new or existing investors, they will take
such steps as they consider appropriate to eliminate or reduce, to the extent
reasonably practicable, any such dilution or unfair results. These steps may
include selling portfolio instruments prior to maturity, shortening the average
portfolio maturity, withholding or reducing dividends, reducing the number of
the Money Market Fund's outstanding Shares without monetary consideration, or
utilizing a net asset value per share determined by using available market
quotations.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds are sold on a continuous basis by BISYS,
and BISYS has agreed to use appropriate efforts to solicit all
B-16
<PAGE> 102
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 Funds 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, which is elected by the shareholders of the Group's funds. The
Trustees elect the officers of the Group to supervise actively its day-to-day
operations.
The names of the Trustees and officers of the Group, their addresses,
and principal occupations during the past five years are as follows:
Position(s) Held Principal Occupation
Name and Address With the Group During Past 5 Years
- ---------------- ---------------- --------------------
Walter B. Grimm* Chairman, From June, 1992 to present,
3435 Stelzer Road President and employee of BISYS Fund
Columbus, Ohio 43219 Trustee Services Limited Partnership
Age: 50 (formerly The Winsbury
Company); from July, 1981 to
present, President of Leigh
Investments Consulting
(investment firm).
B-17
<PAGE> 103
Roy E. Rogers Trustee Until February, 1996,
3205 Riley Road, N.W. employee of BISYS Fund
Johnstown, Ohio 43031 Services Limited Partnership
Age: 33 (formerly The Winsbury
Company).
Maurice G. Stark Trustee Vice President-Finance and
505 King Avenue Treasurer, Battelle Memorial
Columbus, Ohio 43201 Institute (scientific
Age: 59 research and development
service corporation).
Michael M. VanBuskirk Trustee From June, 1991 to present,
17 South High Street Executive Vice President of
Suite 670 The Ohio Bankers'
Columbus, Ohio 43235 Association (trade
Age: 48 association); from
September, 1987 to June,
1991, Vice President
- Communications, TRW
Information Systems Group
(electronic and space
engineering).
Chalmers P. Wylie Trustee From April, 1993 to present,
754 Stonewood Court of Counsel with Emens,
Columbus, Ohio 43235 Kegler, Brown, Hill & Ritter
Age: 74 (law firm); from January,
1993 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,
3435 Stelzer Road President of the BISYS Fund
Columbus, Ohio 43219 Services Limited
Age: 49 Partnership (formerly The
Winsbury Company); from
June, 1987 to December,
1995, employee of BISYS Fund
Services Limited Partnership
(formerly The Winsbury
Company); from September,
1988 to present, Vice
President of The BISYS Fund
Services Ohio, Inc.
(formerly The Winsbury
Service Corporation).
William J. Tomko Vice President From April, 1987 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services Limited Partnership
Age: 36 (formerly The Winsbury
Company).
Stephen G. Mintos Treasurer From January, 1987 to
3435 Stelzer Road present, employee of BISYS
Columbus, Ohio 43219 Fund Services Limited
Age: 41 Partnership (formerly The
Winsbury Company).
B-18
<PAGE> 104
Nancy E. Converse Secretary From July, 1990 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services or BISYS Fund
Age: 46 Services Ohio, Inc.
R. Jeffrey Young Assistant From October 1993 to
3435 Stelzer Road Secretary present, employee of BISYS
Columbus, Ohio 43219 Fund Services or BISYS Fund
Age: 30 Services Ohio, Inc.; from
April 1989 to October 1993,
employee of The Heebink
Group.
Alaina V. Metz Assistant From June, 1995 to present,
3435 Stelzer Road Secretary employee of BISYS Fund
Columbus, Ohio 43219 Services Limited
Age: 28 Partnership; prior to June,
1995, Supervisor at Alliance
Capital Management, L.P.
(investment firm).
- -------------------
*Mr. Grimm is 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 either Fund's Shares.
No officer or employee of BISYS or BISYS Fund Services Ohio, 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 each Fund for
acting as Administrator and pursuant to the Distribution and Shareholder Service
Plan described below and may receive fees pursuant to the Administrative
Services Plan described below. BISYS Fund Services Ohio, Inc. receives fees from
the Funds for acting as transfer agent and for providing certain fund accounting
services. Messrs. Grimm, Huber, Mintos, Tomko and Young 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, 1995. The Group has no pension or retirement plans.
B-19
<PAGE> 105
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
President and Trustee
Roy E. Rogers $0 $0
Trustee
Maurice G. Stark $7,871 $7,871
Trustee
Michael M. VanBuskirk $7,871 $7,871
Trustee
Chalmers P. Wylie $7,871 $7,871
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.
Investment Adviser
Investment advisory and management services are provided to the Funds
by Martindale, Andres & Company, Inc. (the "Adviser"), pursuant to an Investment
Advisory Agreement dated as of July __, 1996. Under the Investment Advisory
Agreement, the Adviser has agreed to provide investment advisory services as
described in the Prospectuses. For the services provided and expenses assumed
pursuant to the Investment Advisory Agreement, the Money Market Fund pays the
Adviser a fee, computed daily and paid monthly, at the annual rate of
forty one-hundredths of one percent (.40%) of the average daily net
assets of the Money Market Fund, and the Pennsylvania Bond Fund pays 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 the
Pennsylvania Bond 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 since neither Fund had yet commenced
operations.
B-20
<PAGE> 106
Unless sooner terminated, the Investment Advisory Agreement will
continue in effect with respect to a Fund until July __, 1998, and from
year to year thereafter, for successive annual periods ending on July __,
if, as to that 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
that Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in such Fund's
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 a Fund at any time on 60 days' written notice without penalty by the
Trustees, by vote of a majority of the outstanding Shares of that 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 a 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 licensed the name "KeyPremier" to the Funds 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 Funds to cease using the name "KeyPremier."
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 Funds' investment objectives and restrictions, which
securities are to be purchased and sold by each Fund, and which brokers and
dealers are to be eligible to execute the Funds' portfolio transactions.
Purchases and sales of portfolio securities with respect to a Fund usually are
principal transactions in which portfolio securities are normally purchased
directly from the issuer or from an underwriter or market maker for the
securities. Purchases from underwriters of portfolio securities generally
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market makers may include the spread between
the bid and asked price. Transactions in the over-the-counter market are
B-21
<PAGE> 107
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 Funds. 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 a 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 a Fund.
Except as otherwise disclosed to the Shareholders of the Funds and as
permitted by applicable laws, rules and regulations, the Group will not, on
behalf of a 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 each 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 a Fund. When a purchase
or sale of the same security is made at substantially the same time on behalf of
a 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 a
Fund or the size of the position obtained by a Fund. To the extent permitted by
law, the Adviser may aggregate the securities to be sold or purchased for a 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
Funds, the
B-22
<PAGE> 108
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 Funds or any other fund of the Group.
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 Funds contemplated by the Prospectuses, this Statement of
Additional Information and the Investment Advisory Agreement without violation
of applicable statutes and regulations. Keystone Brokerage and Keystone Services
each believes that it possesses the legal authority to perform the services for
the Funds as set forth in the Rule 12b-1 Agreements with BISYS, as described
below, 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
B-23
<PAGE> 109
statutes and regulations, could prevent or restrict the Adviser, Keystone
Brokerage or Keystone Services 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, Keystone
Brokerage or Keystone Services, the Board of Trustees of the Group would review
the Group's relationship with the Adviser, Keystone Brokerage or Keystone
Services, as the case may be, and consider taking all action necessary in the
circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of the Adviser, Keystone Brokerage, Keystone
Services and/or the Adviser's affiliated and correspondent banks in connection
with Customer purchases of Shares of a 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 Funds
pursuant to a Management and Administration Agreement dated July __, 1996 (the
"Administration Agreement"). The Administrator assists in supervising all
operations of the Funds (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 Ohio, 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 Funds and file all of
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
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
B-24
<PAGE> 110
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; determine the
actual variance from $1.00 of the Money Market Fund's net asset value per share;
and generally assist in all aspects of the Funds' 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 Ohio, 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 each Fund for its services as
Administrator and expenses assumed pursuant to the Administration Agreement,
equal to a fee, calculated daily and paid periodically, at the annual rate equal
to eleven and one-half one-hundredths of one percent (.115%) of that 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 since neither of
the Funds had yet commenced operations.
Unless sooner terminated as provided therein, the Administration
Agreement has an initial term expiring on July ___, 1999, and thereafter
shall be renewed automatically for successive three-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 a Fund only upon mutual
agreement of the parties to the Administration Agreement 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 a
Fund in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
the Administrator of its obligations and duties thereunder.
Expenses
If total expenses borne by a Fund in any fiscal year exceed expense
limitations imposed by applicable state securities regulations, the Adviser and
the Administrator will reimburse such Fund by the amount of such excess in
proportion to their respective fees. As of the date of this Statement of
Additional Information, the most restrictive expense limitation applicable to
the Funds
B-25
<PAGE> 111
limits each Fund's aggregate annual expenses, including management and advisory
fees but excluding interest, taxes, brokerage commissions and certain other
expenses, to 2 1/2% of the first $30 million of the Fund's average net assets,
2% of the next $70 million of the Fund's average net assets, and 1/2% of the
Fund's remaining average net assets. Any expense reimbursements will be
estimated daily and reconciled and paid on a monthly basis. Fees imposed upon
customer accounts by the Adviser or its affiliated or correspondent banks for
cash management services would not be included within Fund expenses for purposes
of any such expense limitation.
Distributor
BISYS serves as agent for each Fund in the distribution of its Shares
pursuant to a Distribution Agreement dated July __, 1996 (the "Distribution
Agreement"). Unless otherwise terminated, the Distribution Agreement has an
initial term expiring on July ___, 1998, and thereafter shall be renewed
automatically for successive annual periods ending July __ 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 Funds, 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 may be terminated in the event of any
assignment, as defined in the 1940 Act.
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 may receive compensation pursuant to
the Plan described below.
As described in the Prospectuses, the Group has adopted a Distribution
and Shareholder Service Plan (the "Plan") with respect to the Funds pursuant to
Rule 12b-1 under the 1940 Act under which each Fund is authorized to pay BISYS
in an amount not in excess, on an annual basis, of 0.25% of the average daily
net asset value of the Shares of that Fund (the "12b-1 Fee"). Payments of the
12b-1 Fee to BISYS will be used (i) to compensate Participating Organizations
(as defined below) for providing distribution assistance relating to the Fund's
Shares, (ii) for promotional activities intended to result in the sale of Shares
and distribution of prospectuses to other than current shareholders, and (iii)
to compensate Participating Organizations for providing shareholder services
with respect to their customers who are, from time to time, beneficial and
record holders of Shares. Participating Organizations include banks (including
affiliates of
B-26
<PAGE> 112
the Adviser), broker-dealers, the Adviser, BISYS and other institutions.
Payments to such Participating Organizations may be made pursuant to agreements
entered into with BISYS.
As required by Rule 12b-1, the Plan was approved by the initial sole
shareholder of each Fund and by the Board of Trustees, including a majority of
the Trustees who are not interested persons of the Funds and who have no direct
or indirect financial interest in the operation of the Plan (the "Independent
Trustees"). The Plan may be terminated as to a Fund by vote of a majority of the
Independent Trustees, or by vote of majority of the outstanding Shares of that
Fund. Any change in the Plan that would materially increase the distribution
cost to a Fund requires Shareholder approval. The Trustees review quarterly a
written report of such costs and the purposes for which such costs have been
incurred. The Plan may be amended by vote of the Trustees including a majority
of the Independent Trustees, cast in person at a meeting called for that
purpose. For so long as the Plan is in effect, selection and nomination of those
Trustees who are not interested persons of the Group shall be committed to the
discretion of such disinterested persons. All agreements with any person
relating to the implementation of the Plan with respect to a Fund may be
terminated at any time on 60 days' written notice without payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of the
majority of the outstanding Shares of that Fund. The Plan will continue in
effect for successive one-year periods, provided that each such continuance is
specifically approved (i) by the vote of a majority of the Independent Trustees,
and (ii) by a vote of a majority of the entire Board of Trustees cast in person
at a meeting called for that purpose. The Board of Trustees has a duty to
request and evaluate such information as may be reasonably necessary for them to
make an informed determination of whether the Plan should be implemented or
continued. In addition the Trustees in approving the Plan must determine that
there is a reasonable likelihood that the Plan will benefit each Fund and its
Shareholders.
The Board of Trustees of the Group believes that the Plan is in the
best interests of each Fund since it encourages Fund growth and maintenance of
Fund assets. As a Fund grows in size, certain expenses, and therefore total
expenses per Share, may be reduced and overall performance per Share may be
improved.
As authorized by the Plan, BISYS has entered into Rule 12b-1 Agreements
with Keystone Brokerage and Keystone Services, each an affiliate of the Adviser,
to provide certain shareholder services to the Shareholders of the Funds
including, but not limited to, maintaining Shareholder relations and answering
questions about the Funds. In consideration of such services BISYS has agreed to
pay each of Keystone Brokerage and Keystone Services a monthly fee, computed at
the annual rate of .25% of the average aggregate net
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asset value of Shares held during the period in accounts for which services were
provided under such agreement. BISYS will be compensated by each Fund in an
amount equal to its payments to Keystone Brokerage and Keystone Services under
the Rule 12b-1 Agreement with respect to that Fund.
In addition, BISYS may enter into, from time to time, other Rule 12b-1
Agreements with selected dealers pursuant to which such dealers will provide
certain services in connection with the distribution of the Funds' Shares
including, but not limited to, those discussed above.
For the fiscal year ended June 30, 1996, the Group, on behalf of the
Funds, had incurred no fees on behalf of either Fund under the Plan since
neither Fund had yet commenced operations.
Administrative Services Plan
As described in the Prospectuses, the Group has also adopted an
Administrative Services Plan (the "Services Plan") under which each Fund is
authorized to pay certain financial institutions, including the Adviser, its
correspondent and affiliated 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 Funds.
Payments to such Service Organizations are made pursuant to Servicing Agreements
between the Group and the Service Organization. The Services Plan authorizes
each 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 that 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 a 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
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majority of the Disinterested Trustees. As of the date hereof, there are no
Servicing Agreements in place.
Custodian
The Bank of New York, 48 Wall Street, New York, New York, 10286, serves
as custodian (the "Custodian") to the Funds pursuant to the Custody Agreement
dated as of July __, 1996. The Custodian's responsibilities include safeguarding
and controlling each Fund's cash and securities, handling the receipt and
delivery of securities, and collecting interest and dividends on each Fund's
investments.
Transfer Agency and Fund Accounting Services
BISYS Fund Services Ohio, Inc. serves as transfer agent and dividend
disbursing agent (the "Transfer Agent") for the Funds pursuant to the Transfer
Agency Agreement dated July __, 1996. Pursuant to such Agreement, the Transfer
Agent, among other things, performs the following services in connection with
the Funds' shareholders of record: maintenance of shareholder records for each
of the Funds' shareholders of record; processing shareholder purchase and
redemption orders; processing transfers and exchanges of shares of the Funds 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 Funds since the Funds had not yet commenced
operations.
In addition, BISYS Fund Services Ohio, Inc. provides certain fund
accounting services to each of the Funds pursuant to a Fund Accounting Agreement
dated July __, 1996. BISYS Fund Services Ohio, Inc. receives a fee from each
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 that Fund's average daily
net assets, or (b) the annual fee of $30,000 for the Money Market Fund and
$35,000 for the Pennsylvania Bond Fund. Under such Agreement, BISYS Fund
Services Ohio, Inc. maintains the accounting books and records for the Funds,
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 Funds, 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 Funds' custodian,
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affirmation to the Funds' custodian of all portfolio trades and cash
settlements, verification and reconciliation with the Funds' 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 Funds.
Unless sooner terminated as provided therein, the Fund Accounting
Agreement has an initial term expiring on July ___, 1999, and thereafter shall
be renewed automatically for successive three-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 a Fund only upon mutual agreement of
the parties to the Fund Accounting Agreement 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, Ohio
Inc.
The Fund Accounting Agreement provides that BISYS Fund Services Ohio,
Inc. shall not be liable for any error of judgment or mistake of law or any loss
suffered by a Fund in connection with the matters to which the Fund Accounting
Agreement relates, except a loss resulting from willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or from the reckless
disregard by BISYS Fund Services Ohio, Inc. of its obligations and duties
thereunder.
For the fiscal year ended June 30, 1996, BISYS Fund Services Ohio, Inc.
earned no fees with respect to its fund accounting services to the Funds since
the Funds 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 Funds and as such will audit
the financial statements of the Funds.
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.
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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 eight series of
shares, one of which represents interests in the Money Market Fund and one of
which represents interests in the Pennsylvania Bond Fund. The other six 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 and
Riverside Capital Growth 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 Prospectuses 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 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 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
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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 Funds'
Shares, BISYS Fund Services Ohio, Inc. owned all of the issued and outstanding
Shares of each of the Funds. It is anticipated that upon commencement of the
public offering of the Funds' Shares that BISYS Fund Services Ohio, Inc.'s
holdings of Shares in each Fund will be reduced below 5%.
Vote of a Majority of the Outstanding Shares
As used in the Prospectuses and this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of a 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 that 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 that Fund.
Additional General Tax Information
Each of the eight 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, a Fund
must, among other things: derive at least 90% of its gross income 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, a 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
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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 each 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, a Fund
may be subject to the tax laws of such states or localities. In addition, if for
any taxable year a 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 each Fund will distribute annually to Shareholders
all or substantially all of that 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 that Fund and not in cash.
Distribution by a 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.
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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 Funds'
net investment income is expected to be derived from earned interest, it is
anticipated that no distributions from either Fund will qualify for the 70%
dividends received deduction.
Foreign taxes may be imposed on the Money Market Fund by foreign
countries with respect to its income from foreign securities. Since less than
50% in value of the Money Market Fund's total assets at the end of its fiscal
year are expected to be invested in stocks or securities of foreign
corporations, the Money Market Fund will not be entitled under the Code to pass
through to its Shareholders their pro rata share of the foreign taxes paid by
the Money Market Fund. These taxes will be taken as a deduction by the Money
Market Fund.
Each 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 Prospectuses and this Statement of
Additional Information which relates to Federal taxation is only a summary of
some of the important Federal tax considerations generally affecting purchasers
of Shares of the Funds. No attempt has been made to present a detailed
explanation of the Federal income tax treatment of the Funds or their
Shareholders and this discussion is not intended as a substitute for careful tax
planning. Accordingly, potential purchasers of Shares of a Fund
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are urged to consult their tax advisers with specific reference to their own tax
situation. In addition, the tax discussion in the Prospectuses and this
Statement of Additional Information is based on tax laws and regulations which
are in effect on the date of the Prospectuses 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.
Additional Tax Information With Respect to the Pennsylvania Bond Fund Bond Fund
The Pennsylvania Bond Fund is not intended to constitute a balanced
investment program and is not designed for investors seeking capital
appreciation or maximum tax-exempt income irrespective of fluctuations in
principal. Shares of the Pennsylvania Bond Fund would not be suitable for
tax-exempt institutions and may not be suitable for retirement plans qualified
under Section 401 of the Code, H.R. 10 plans, and individual retirement
accounts, since such plans and accounts are generally tax-exempt and, therefore,
would not gain any additional benefit from all or a portion of the Pennsylvania
Bond Fund's dividends being tax-exempt and such dividends would be ultimately
taxable to the beneficiaries when distributed to them. In addition, the
Pennsylvania Bond Fund may not be appropriate investments for entities which are
"substantial users," or "related persons" thereof, of facilities financed by
private activity bonds held by the Pennsylvania Bond Fund.
The Code permits a regulated investment company which invests in Exempt
Securities to pay to its Shareholders "exempt-interest dividends," which are
excluded from gross income for federal income tax purposes, if at the close of
each quarter of its taxable year at least 50% of its total assets consist of
Exempt Securities.
An exempt-interest dividend is any dividend or part thereof (other than
a capital gain dividend) paid by the Pennsylvania Bond Fund that is derived from
interest received by the Pennsylvania Bond Fund that is excluded from gross
income for federal income tax purposes, net of certain deductions, provided the
dividend is designated as an exempt-interest dividend in a written notice mailed
to Shareholders not later than sixty days after the close of the Pennsylvania
Bond Fund's taxable year. The percentage of the total dividends paid by the
Pennsylvania Bond Fund during any
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taxable year that qualifies as exempt-interest dividends will be the same for
all Shareholders of the Pennsylvania Bond Fund receiving dividends during such
year. Exempt-interest dividends shall be treated by the Pennsylvania Bond Fund's
Shareholders as items of interest excludable from their gross income for Federal
income tax purposes under Section 103(a) of the Code. However, a Shareholder is
advised to consult his tax adviser with respect to whether exempt-interest
dividends retain the exclusion under Section 103(a) of the Code if such
Shareholder is a "substantial user" or a "related person" to such user under
Section 147(a) of the Code with respect to any of the Exempt Securities held by
the Pennsylvania Bond Fund. If a Shareholder receives an exempt- interest
dividend with respect to any Share and such Share is held by the Shareholder for
six months or less, any loss on the sale or exchange of such Share shall be
disallowed to the extent of the amount of such exempt-interest dividend.
In general, interest on indebtedness incurred or continued by a
Shareholder to purchase or carry Shares is not deductible for federal income tax
purposes if the Pennsylvania Bond Fund distributes exempt-interest dividends
during the Shareholder's taxable year. A Shareholder of the Pennsylvania Bond
Fund that is a financial institution may not deduct interest expense
attributable to indebtedness incurred or continued to purchase or carry Shares
of the Pennsylvania Bond Fund if the Pennsylvania Bond Fund distributes
exempt-interest dividends during the Shareholder's taxable year. Certain federal
income tax deductions of property and casualty insurance companies holding
Shares of the Pennsylvania Bond Fund and receiving exempt-interest dividends may
also be adversely affected. In certain limited instances, the portion of Social
Security benefits received by a Shareholder which may be subject to federal
income tax may be affected by the amount of tax-exempt interest income,
including exempt-interest dividends received by Shareholders of the Pennsylvania
Bond Fund.
In the event the Pennsylvania Bond Fund realizes long-term capital
gains, the Pennsylvania Bond Fund intends to distribute any realized net
long-term capital gains annually. If the Pennsylvania Bond Fund distributes such
gains, the Pennsylvania Bond Fund will have no tax liability with respect to
such gains, and the distributions will be taxable to Shareholders as long-term
capital gains regardless of how long the Shareholders have held their Shares.
Any such distributions will be designated as a capital gain dividend in a
written notice mailed by the Pennsylvania Bond Fund to the Shareholders not
later than sixty days after the close of the Pennsylvania Bond Fund's taxable
year. It should be noted, however, that capital gains are taxed like ordinary
income except that net capital gains of individuals are subject to a maximum
federal income tax rate of 28%. Net capital gains are the excess of net
long-term capital gains over net short-term capital losses. Any net short-term
capital gains are taxed at ordinary income tax
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rates. If a Shareholder receives a capital gain dividend with respect to any
Share and then sells the Share before he has held it for more than six months,
any loss on the sale of the Share is treated as long-term capital loss to the
extent of the capital gain dividend received.
Interest earned on certain municipal obligations issued on or after
August 8, 1986, to finance certain private activities will be treated as a tax
preference item in computing the alternative minimum tax. Since the Pennsylvania
Bond Fund may invest up to 20% of its net assets in municipal securities the
interest on which may be treated as a tax preference item, a portion of the
exempt-interest dividends received by Shareholders from the Pennsylvania Bond
Fund may be treated as tax preference items in computing the alternative minimum
tax to the extent that distributions by the Pennsylvania Bond Fund are
attributable to such obligations. Also, a portion of all other interest excluded
from gross income for federal income tax purposes earned by a corporation may be
subject to the alternative minimum tax as a result of the inclusion in
alternative minimum taxable income of 75% of the excess of adjusted current
earnings and profits over pre-book alternative minimum taxable income. Adjusted
current earnings and profits would include exempt-interest dividends distributed
by the Pennsylvania Bond Fund to corporate Shareholders. For individuals the
alternative minimum tax rate is 26% on alternative minimum taxable income up to
$175,000 and 28% on the excess of $175,000; for corporations the alternative
minimum tax rate is 20%.
For taxable years of corporations beginning before 1996, the Superfund
Revenue Act of 1986 imposes an additional tax (which is deductible for federal
income tax purposes) on a corporation at a rate of 0.12 of one percent on the
excess over $2,000,000 of such corporation's "modified alternative minimum
taxable income", which would include a portion of the exempt-interest dividends
distributed by the Pennsylvania Bond Fund to such corporation. In addition,
exempt-interest dividends distributed to certain foreign corporations doing
business in the United States could be subject to a branch profits tax imposed
by Section 884 of the Code.
Distributions of exempt-interest dividends by the Pennsylvania Bond
Fund may be subject to state and local taxes even though a substantial portion
of such distributions may be derived from interest on obligations which, if
received directly, would be exempt from such taxes. The Pennsylvania Bond Fund
will report to its Shareholders annually after the close of its taxable year the
percentage and source, on a state-by-state basis, of interest income earned on
municipal obligations held by the Pennsylvania Bond Fund during the preceding
year. Shareholders are advised to consult their tax advisers concerning the
application of state and local taxes.
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As indicated in the Prospectus, the Pennsylvania Bond Fund may acquire
rights regarding specified portfolio securities under puts. See "INVESTMENT
OBJECTIVES AND POLICIES -- Additional Information on Portfolio Instruments -
Puts" in this Statement of Additional Information. The policy of the
Pennsylvania Bond Fund is to limit its acquisition of puts to those under which
it will be treated for federal income tax purposes as the owner of the Exempt
Securities acquired subject to the put and the interest on the Exempt Securities
will be tax-exempt to it. Although the Internal Revenue Service has issued a
published ruling that provides some guidance regarding the tax consequences of
the purchase of puts, there is currently no guidance available from the Internal
Revenue Service that definitively establishes the tax consequences of many of
the types of puts that the Pennsylvania Bond Fund could acquire under the 1940
Act. Therefore, although the Pennsylvania Bond Fund will only acquire a put
after concluding that it will have the tax consequences described above, the
Internal Revenue Service could reach a different conclusion.
Under Section 1256 of the Code, gain or loss realized by the
Pennsylvania Bond 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 Pennsylvania Bond Fund's taxable
year will be treated as sold for their then fair market value, resulting in
additional gain or loss to the Pennsylvania Bond Fund characterized in the
manner described above.
Offsetting positions held by the Pennsylvania Bond 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 Pennsylvania Bond 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
Pennsylvania Bond 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 Pennsylvania Bond Fund, losses realized by the
Pennsylvania Bond Fund will be deferred to the extent of unrealized gain in any
offsetting
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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.
Investment by the Pennsylvania Bond Fund in securities issued at a
discount or providing for deferred interest or for payment of interest in the
form of additional obligations could, under special tax rules, affect the
amount, timing and character of distributions to shareholders. For example, the
Pennsylvania Bond Fund could be required to take into account annually a portion
of the discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a regulated
investment company. In that case, the Pennsylvania Bond Fund may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
Income itself exempt from Federal income taxation may be considered in
addition to taxable income when determining whether Social Security payments
received by a Shareholder are subject to federal income taxation.
Seven-Day Yield of the Money Market Fund
The standardized seven-day yield for the Money Market Fund is computed
by determining the net change, exclusive of capital changes, in the value of a
hypothetical preexisting account in the Money Market Fund having a balance of
one Share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Shareholder accounts, and dividing the difference by
the value of the account at the beginning of the base period to obtain the base
period return, and then multiplying the base period return by (365/7). The net
change in the account value of the Money Market Fund includes the value of
additional Shares purchased with dividends from the original Share, dividends
declared on both the original Share and any such additional Shares, and all
fees, other than nonrecurring account or sales charges, that are charged to all
Shareholder accounts in proportion to the length of the base period and assuming
the Money Market Fund's average account size. The capital changes to be excluded
from the calculation of the net change in account value are realized gains and
losses from the sale of securities and unrealized appreciation and depreciation.
The 30-day yield is calculated as described above except that the base period is
30 days rather than seven days.
The effective yield for the Money Market Fund is computed by
compounding the base period return, as calculated above, by adding 1 to the base
period return raising the sum to a power equal to 365 divided by seven and
subtracting 1 from the result.
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Yield of the Pennsylvania Bond Fund
As summarized in the Prospectus under the heading "PERFORMANCE
INFORMATION," the yield of the Pennsylvania Bond Fund will be computed by
annualizing net investment income per share for a recent 30-day period and
dividing that amount by the Pennsylvania Bond Fund Share's maximum offering
price (reduced by any undeclared earned income expected to be paid shortly as a
dividend) on the last trading day of that period. Net investment income will
reflect amortization of any market value premium or discount of fixed income
securities (except for obligations backed by mortgages or other assets) and may
include recognition of a pro rata portion of the stated dividend rate of
dividend paying portfolio securities. The yield of the Pennsylvania Bond Fund
will vary from time to time depending upon market conditions, the composition of
the Pennsylvania Bond Fund's portfolio and operating expenses of the Group
allocated to the Pennsylvania Bond Fund. These factors and possible differences
in the methods used in calculating yield should be considered when comparing the
Pennsylvania Bond Fund's yield to yields published for other investment
companies and other investment vehicles. Yield should also be considered
relative to changes in the value of the Pennsylvania Bond Fund's Shares and to
the relative risks associated with the investment objectives and policies of the
Pennsylvania Bond Fund.
In addition, tax equivalent yields will be computed by dividing that
portion of the Pennsylvania Bond Fund's yield (as computed above) which is
tax-exempt by one minus a stated income tax rate and adding that result to that
portion, if any, of the yield of the Pennsylvania Bond Fund which is not
tax-exempt.
Tax-Free vs. Taxable Income
The table below show the effect, as of the date hereof, of the tax
status of bonds on the tax equivalent yield received by their holders under the
regular Federal income tax and the Pennsylvania Personal Income Tax laws. They
give the approximate yield a taxable security must earn for residents of
Pennsylvania, at various income brackets to produce after-tax yields equivalent
to those of tax exempt bonds yielding varying rates from 4% to 10%. This table,
however, does not reflect the phase out of itemized deductions for certain high
income taxpayers.
<TABLE>
<S> <C> <C> <C> <C> <C>
Single Return $0 - $24,000 $24,000 - $ 58,150 - $121,300 - $263,750 -
58,150 121,800 263,750
- ------------------------------------------------------------------------------------------------------
Joint Return $0 - $40,100 $40,100 - $ 96,900 - $147,700 - $263,750 -
96,900 147,700 263,750
- ------------------------------------------------------------------------------------------------------
If your combined
federal and state
tax bracket is..... 17.38% 30.02% 32.99% 37.79% 41.29%
- ------------------------------------------------------------------------------------------------------
And you have a Then you'll be earning the
tax-exempt invest- equivalent of a taxable
ment yielding..... investment yielding.....
- ------------------------------------------------------------------------------------------------------
4.00% 4.84% 5.72% 5.97% 6.43% 6.81%
4.50% 5.45% 6.43% 6.72% 7.23% 7.66%
5.00% 6.05% 7.14% 7.46% 8.04% 8.52%
5.50% 6.66% 7.86% 8.21% 8.84% 9.37%
6.00% 7.26% 8.57% 8.95% 9.64% 10.22%
6.50% 7.87% 9.29% 9.70% 10.45% 11.07%
7.00% 8.47% 10.00% 10.45% 11.25% 11.92%
7.50% 9.08% 10.72% 11.19% 12.06% 12.77%
8.00% 9.68% 11.43% 11.94% 12.86% 13.63%
8.50% 10.29% 12.15% 12.68% 13.66% 14.48%
9.00% 10.89% 12.86% 13.43% 14.47% 15.33%
9.50% 11.50% 13.58% 14.18% 15.27% 16.18%
10.00% 12.10% 14.29% 14.92% 16.07% 17.03%
</TABLE>
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 a Fund over the period covered, which assumes any dividends or
capital gains distributions are reinvested in that Fund immediately rather than
paid to the
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<PAGE> 126
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 a
Fund (less the maximum sales charge, if any) 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. A 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 a Fund over
the relevant period and is calculated similarly to average annual total return
except that the result is not annualized.
Distribution Rates
The Pennsylvania Bond Fund may from time to time advertise current
distribution rates which are calculated in accordance with the method disclosed
in that Fund's Prospectus.
Performance Comparisons
Investors may judge the performance of the Funds by comparing them 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 Funds that appears in a publication such as those
mentioned above may be included in advertisements, sales literature and reports
to shareholders. The Funds 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)
B-41
<PAGE> 127
discussions of general economic trends; (3) presentations of statistical data to
supplement such discussions; (4) descriptions of past or anticipated portfolio
holdings for the Funds; (5) descriptions of investment strategies for the Funds;
(6) descriptions or comparisons of various investment products, which may or may
not include the Funds; (7) comparisons of investment products (including the
Funds) 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
a 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 a Fund.
Current yields or total return will fluctuate from time to time and are
not necessarily representative of future results. Accordingly, a Fund's yield or
total return may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and total
return are functions of a Fund's quality, composition and maturity, as well as
expenses allocated to that Fund. Fees imposed upon Customer accounts by the
Adviser, its affiliates or its affiliated or correspondent banks for cash
management services or other services will reduce a Fund's effective yield and
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 Prospectuses and this Statement of Additional Information omit
certain of the information contained in the Registration
B-42
<PAGE> 128
Statement filed with the Commission. Copies of such information may be obtained
from the Commission upon payment of the prescribed fee.
The Prospectuses 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 Prospectuses and this Statement of Additional Information.
B-43
<PAGE> 129
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> 130
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.
Corporate Debt Ratings. A S&P corporate debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong. Debt rated AA has a very
strong capacity to pay interest and to repay principal and differs from the
highest rated issues only in small degree. Debt rated A has a strong capacity to
pay interest and repay principal although it is somewhat more susceptible to
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.
The following summarizes the four highest ratings used by Moody's for
corporate debt. Bonds that are rated Aaa by Moody's are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues. Bonds
that are rated Aa are judged to be of high quality by all standards. Together
with the Aaa
A-2
<PAGE> 131
group, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities. Bonds that are
rated A by Moody's possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future. Bonds that
are rated Baa by Moody's are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's applies numerical modifiers (1, 2, and 3) with respect to bonds
rated Aa through Baa. The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.
The following summarizes the four highest long-term debt ratings by
Duff. Debt rated AAA has the highest credit quality. The risk factors are
negligible being only slightly more than for risk-free U.S. Treasury debt. Debt
rated AA has a high credit quality and protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
Debt rated A has protection factors that are average but adequate. However, risk
factors are more variable and greater in periods of economic stress. Debt rated
BBB has below average protection factors but is still considered sufficient for
prudent investment. However, there is considerable variability in risk during
economic cycles.
To provide more detailed indications of credit quality, the ratings AA
to BBB may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.
The following summarizes the four highest long-term debt ratings by
Fitch (except for AAA ratings, plus or minus signs are used with a rating symbol
to indicate the relative position of the credit within the rating category).
Bonds rated AAA are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events. Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA"
A-3
<PAGE> 132
and "AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issues is generally rated "F-1+." Bonds
rated as A are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings. Bonds rated BBB are considered to
be investment grade and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore, impair timely payment. The
likelihood that the ratings for these bonds will fall below investment grade is
higher than for bonds with higher ratings.
The following summarizes IBCA's four highest long-term debt ratings.
Obligations rated AAA are those for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk significantly. Obligations
rated AA are those for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic, or financial conditions may increase investment
risk albeit not very significantly. Obligations rated A are those for which
there is a low expectation of investment risk. Capacity for timely repayment of
principal and interest is strong, although adverse changes in business, economic
or financial conditions may lead to increased investment risk. Obligations rated
BBB are those for which there is currently a low expectation of investment risk.
Capacity for timely repayment of principal and interest is adequate, although
adverse changes in business, economic, or financial conditions are more likely
to lead to increased investment risk than for obligations in other categories.
The following summarizes Thomson's description of its four highest
long-term debt ratings (Thomson may include a plus (+) or minus (-) designation
to indicate where within the respective category the issue is placed). AAA is
the highest category and indicates that the ability to repay principal and
interest on a timely basis is very high. AA is the second highest category and
indicates a superior ability to repay principal and interest on a timely basis
with limited incremental risk versus issues rated in the highest category. A is
the third highest category and indicates the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
BBB is the lowest investment grade category and indicates an acceptable capacity
to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.
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<PAGE> 133
Municipal Obligations Ratings
The following summarizes the three highest ratings used by Moody's for
state and municipal short-term obligations. Obligations bearing MIG-1 or VMIG-1
designations are of the best quality, enjoying strong protection by established
cash flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing. Obligations rated MIG-2 or VMIG-2 denote high quality
with ample margins of protection although not so large as in the preceding
rating group. Obligations bearing MIG-3 or VMIG-3 denote favorable quality. All
security elements are accounted for but there is lacking the undeniable strength
of the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
S&P SP-1, SP-2, and SP-3 municipal note ratings (the three highest
ratings assigned) are described as follows:
"SP-1": Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
"SP-2": Satisfactory capacity to pay principal and interest.
"SP-3": Speculative capacity to pay principal and interest.
The following summarizes the six highest ratings used by Moody's for
state and municipal bonds:
"Aaa": Bonds judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
"Aa": Bonds judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
"A": Bonds which possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors
giving security to principal and
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<PAGE> 134
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
"Baa": Bonds which are considered as medium grade obligations,
i.e, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
"Ba": Bonds which are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
"B": Bonds which generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
The following summarizes the six highest ratings used by S&P for state
and municipal bonds:
"AAA": Debt which has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
"AA": Debt which has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
"A": Debt which has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories. It differs from the two higher
ratings because:
General Obligations Bonds -- There is some weakness in the
local economic base, in debt burden, in the balance between
revenues and expenditures, or in quality of management. Under
certain adverse circumstances, any one such weakness might impair
the ability of the issuer to meet debt obligations at some future
date.
Revenue Bonds -- Debt service coverage is good, but not
exceptional. Stability of the pledged revenues could show some
variations because of increased competition or economic influences
on revenues. Basic security
A-6
<PAGE> 135
provisions, while satisfactory, are less stringent. Management
performance appears adequate.
"BBB": Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse
conditions, several of the above factors could contribute to a
lesser capacity for payment of debt service. The difference
between "A" and "BBB" rating is that the latter shows more than
one fundamental weakness, or one very substantial fundamental
weakness, whereas the former shows only one deficiency among the
factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of
the pledged revenues could show substantial variations, with the
revenue flow possibly being subject to erosion over time. Basic
security provisions are no more than adequate. Management
performance could be stronger.
"BB" and "B": Debt which is regarded as having predominantly
speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of
speculation of the two. While such debt will likely have some
quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
"BB": Debt which has less near-term vulnerability to default than
other speculative grade debt. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to
meet timely interest and principal payment.
"B": Debt which has a greater vulnerability to default but
presently has the capacity to meet interest payments and principal
repayments. Adverse business, financial or economic conditions
would likely impair capacity or willingness to pay interest and
repay principal.
The following summarizes the six highest ratings used by Fitch for
state and municipal bonds. The ratings represent Fitch's assessment of the
issuer's ability to meet the obligations of a specific debt issue or class of
debt. The ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial condition
and operative performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the issuer's future
financial strength and credit quality.
"AAA": Bonds which are considered to be investment grade and of
the highest credit quality. The obligor has an exceptionally
strong ability to pay interest and repay
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<PAGE> 136
principal, which is unlikely to be affected by reasonably
foreseeable events.
"AA": Bonds which are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest
and repay principal is very strong, although not quite as strong
as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated
F-1+.
"A": Bonds which are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.
"BBB": Bonds which are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest
and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely
to have an adverse impact on these bonds and, therefore, impair
timely payment. The likelihood that the ratings of these bonds
will fall below investment grade is higher than for bonds with
higher ratings.
"BB": Bonds which are considered speculative. The obligor's
ability to pay interest and repay principal may be affected over
time by adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.
"B": Bonds which are considered highly speculative. While bonds in
this class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of
the issue.
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
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<PAGE> 137
"F-1+": Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance
for timely payment.
"F-1": Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degrees than issues rated F-1+.
"F-2": Good Credit Quality. Issues carrying this rating have a
satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the
F-1+ and F-1 categories.
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 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
A-9
<PAGE> 138
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.
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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
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Included in Part B:
(i) Riverside Capital Money Market Fund
Independent Auditors' Report dated August 23, 1995.
Statement of Assets and Liabilities dated June 30,
1995.
Statement of Operations for the year ended June 30,
1995.
Statements of Changes in Net Assets for the years
ended June 30, 1995 and 1994.
Schedule of Portfolio Investments as of June 30,
1995.
Notes to Financial Statements.
Financial Highlights for the years ended June 30,
1991, 1992, 1993, 1994 and 1995.
(ii) Riverside Capital Value Equity Fund
Independent Auditors' Report dated August 23, 1995.
Statement of Assets and Liabilities dated June 30,
1995.
Statement of Operations for the year ended June 30,
1995.
Statement of Changes in Net Assets for the years
ended June 30, 1995 and 1994.
Schedule of Portfolio Investments as of June 30,
1995.
Notes to Financial Statements.
Financial Highlights for the years ended June 30,
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 23, 1995.
Statement of Assets and Liabilities dated June 30,
1995.
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Statement of Operations for the year ended June 30,
1995.
Statement of Changes in Net Assets for the years ended
June 30, 1995 and 1994.
Schedule of Portfolio Investments as of June 30, 1995.
Notes to Financial Statements.
Financial Highlights for the years ended June 30, 1995,
1994 and 1993, and the period from commencement of
operations (October 31, 1991) to June 30, 1992.
(iv) Riverside Capital Tennessee Municipal Obligations Fund
Independent Auditors' Report dated August 23, 1995.
Statement of Assets and Liabilities at June 30, 1995.
Statement of Operations for the year ended June 30,
1995.
Statement of Changes in Net Assets for the years ended
June 30, 1995 and 1994.
Schedule of Portfolio Investments as of June 30, 1995.
Notes to Financial Statements.
Financial Highlights for the years ended June 30, 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 23, 1995.
Statement of Assets and Liabilities at June 30, 1995.
Statement of Operations for the year ended June 30,
1995.
Statement of Changes in Net Assets for the year ended
June 30, 1995 and the period from commence-
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<PAGE> 142
ment of operations (April 18, 1994) to June 30, 1994.
Schedule of Portfolio Investments as of June 30, 1995.
Notes to Financial Statements.
Financial Highlights for the year ended June 30, 1995,
and for the period from commencement of operations
(April 18, 1994) to June 30, 1994.
(vi) Riverside Capital Growth Fund
Independent Auditor's Report dated August 23, 1995.
Statement of Assets and Liabilities at June 30, 1995.
Statement of Operations for the year ended June 30,
1995.
Statement of Changes in Net Assets for the year ended
June 30, 1995, and for the period from commencement of
operations (April 18, 1994) to June 30, 1994.
Schedule of Portfolio Investments as of June 30, 1995.
Notes to Financial Statements.
Financial Highlights for the year ended June 30, 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) All required financial statements are included in
Part B hereof. All other financial statements and
schedules are inapplicable.
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(b) Exhibits:
(1) (a) Declaration of Trust, dated as of April 25,
1988.
(b) Amendment of Article IV, Section 4.2 of
Declaration of Trust adopted August 15,
1989.
(c) Amendment of Article V, Section 5.3 of
Declaration of Trust adopted October 23,
1989.
(d) Amendment of Article IV, Section 4.2 of
Declaration of Trust adopted July 23, 1991.
(e) Amendment of Article IV, Section 4.2 of
Declaration of Trust as adopted August 13,
1992.
(f) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted October 28,
1992.
(g) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted February 18,
1994.
(h) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted May 16,
1994.
(i) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted April 10,
1996.
(2) By-Laws.
(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).
(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).
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<PAGE> 144
(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).
(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).
(e) Proposed Investment Advisory Agreement dated
July __, 1996, between Registrant and
Martin- dale Andres & Company, Inc. (with
respect to the KeyPremier Funds).
(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.
(c) Proposed Distribution Agreement dated as of
July ___, 1996, between Registrant and BISYS
Fund Services Limited Partnership (relating
to the KeyPremier Funds).
(d) Form of Shareholder Services Agreement.
(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) Proposed Custody Agreement dated July __,
1996, between Registrant and The Bank of New
York (with respect to the KeyPremier Funds).
(9) (a) Management and Administration Agreement
dated August 23, 1990, as amended October
27, 1992, between Registrant and The
Winsbury Company
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<PAGE> 145
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
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
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<PAGE> 146
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 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) Proposed Management and Administration
Agreement dated July __, 1996, between
Registrant and BISYS Fund Services Limited
Partnership (with respect to the KeyPremier
Funds).
(y) Proposed Fund Accounting Agreement dated
July __, 1996, between Registrant and BISYS
Fund Services Ohio, Inc. (with respect to
the KeyPremier Funds).
(z) Proposed Transfer Agency Agreement dated
July __, 1996, between Registrant and BISYS
Fund Services Ohio, Inc. (with respect to
the KeyPremier Funds).
(10) (a) Opinion of Counsel with respect to Shares of
the KeyPremier Money Market Fund and the
KeyPremier Pennsylvania Municipal Bond Fund.
An Opinion of Counsel with respect to Shares
of Riverside Capital Money Market Fund,
Riverside Capital Value Equity Fund,
Riverside Capital Fixed Income Fund,
Riverside Capital
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<PAGE> 147
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 30, 1995, 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.
(12) None.
(13) Purchase Agreement dated as of July 19, 1988,
between Registrant and Winsbury Associates is
incorporated by reference to Pre-Effective Amend-
ment 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.
(b) Rule 12b-1 Plan (with respect to the Key-
Premier Funds).
(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.
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<PAGE> 148
(m) Rule 12b-1 Agreement dated October 1, 1993,
between The Winsbury Company Limited
Partner- ship and Commerce Investment
Corporation (with respect to Riverside
Capital Money Market Fund, Riverside Capital
Value Equity Fund, Riverside Capital Fixed
Income Fund and River- side 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 Corpora-
tion (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 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.
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<PAGE> 149
(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.
(w) Proposed Shareholder Services Agreement
dated July __, 1996, between BISYS Fund
Services Limited Partnership and Keystone
Brokerage, Inc. (with respect to the
KeyPremier Funds).
(x) Proposed Shareholder Services Agreement
dated July __, 1996, between BISYS Fund
Services Limited Partnership and Keystone
Investor Services, Inc. (with respect to the
KeyPremier Funds).
(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
Registrant's Registration Statement (No. 33-
21489) filed on October 19, 1993.
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(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
the KeyPremier Funds to be filed by
amendment.
(17) Financial Data Schedules for the KeyPremier
Funds to be filed by amendment.
(18) None.
(19) (a) Powers of Attorney of Roy E. Rogers, Stephen
G. Mintos, Chalmers P. Wylie, Walter B.
Grimm, Maurice G. Stark and Michael M.
VanBuskirk 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.
Item 25. Persons Controlled By or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
As of March 31, 1996, the number of record holders of each
series of shares of the Registrant were as follows:
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<TABLE>
<CAPTION>
Title of Series Number of Record Holders
--------------- ------------------------
<S> <C>
Riverside Capital Money
Market Fund 28
Riverside Capital
Value Equity Fund 166
Riverside Capital
Fixed Income Fund 34
Riverside Capital Tennessee Municipal
Obligations Fund 21
Riverside Capital Low Duration
Government Securities Fund 6
Riverside Capital Growth Fund 56
KeyPremier Prime
Money Market Fund 0
KeyPremier Pennsylvania
Municipal Bond Fund 0
</TABLE>
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) and 6(c) hereto, Section 8 of the Custodial Services
Agreement filed as Exhibit 8(a) hereto, Article XVII, Section 1 of the
Custody Agreement filed as Exhibit 8(b) hereto, Section 8 of the
Investment Advisory Agreements filed as Exhibits 5(a), 5(b), 5(c), 5(d)
and 5(e) hereto, Section 4 of the Management and Administration
Agreements filed as Exhibits 9(a), 9(u) and 9(x) hereto, Section 9 of
the Transfer Agency Agreements filed as Exhibit 9(g) and 9(z) hereto,
and Section 6 of the Fund Accounting Agreements filed as Exhibits 9(h),
9(v) and 9(y) 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.
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<PAGE> 152
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 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, 1995, totalled $3.5 billion, and of which approximately $917
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.
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<PAGE> 153
<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/Richards, Inc.
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
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 Beverage, Inc.
45 E.H. Crumps Blvd.
Memphis, Tennessee 38106
(Distribution)
John D. Canale III Director President
D. Canale & Company, 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)
James K. Dobbs III Director Partner
Dobbs Brothers Management
P.O. Box 241750
Memphis, Tennessee 38124-1750
(Automobile)
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)
</TABLE>
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<PAGE> 154
<TABLE>
<S> <C> <C>
Thomas M. Garrett Chairman Chairman of the Board and
Chief Executive Officer
National Bank of Commerce and
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)
R. Lee Jenkins Director Retired
6075 Poplar, Suite 721
Memphis, Tennessee 38119
Michael McDonnell Director President
West Union Corporation
P.O. Box 3177
Memphis, Tennessee 38173-0177
(Distribution)
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
</TABLE>
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<TABLE>
<S> <C> <C>
Lucy Y. Shaw Director Retired
1674 South Parkway
East Memphis, Tennessee 38106
prior thereto -
Chief Executive Officer
Regional Medical Center at Memphis
877 Jefferson Avenue
Memphis, Tennessee 38103
(Hospital)
Robert M. Solmson Director President
RFS, 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
</TABLE>
(b) Martindale Andres & Company, Inc., West Conshohocken, Pennsylvania
("Martindale Andres"), is the investment adviser for KeyPremier
Prime Money Market Fund and KeyPremier Pennsylvania Municipal Bond
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,
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.
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
C-17
<PAGE> 156
Funds, The Riverfront Funds, Inc., the Summit Investment Trust, the
Qualivest Funds and the Marketwatch Funds, each of which is a
management investment company.
(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.
150 Clove Road
Little Falls, NJ 07424
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) BISYS Fund Services Limited Partnership, 3435 Stelzer Road,
Columbus, Ohio 43219 (records relating to its functions as manager,
administrator and distributor).
(4) BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as transfer agent and as
fund accountant).
(5) Baker & Hostetler, 65 East State Street, Columbus, Ohio 43215
(Declaration of Trust, By-Laws, and Minute Books).
(6) National City Bank, 1900 East 9th Street, Cleveland, Ohio 44114
(records relating to its function as custodian for the Riverside
Capital Funds).
(7) The Bank of New York, 48 Wall Street, New York, New York 10286
(records relating to its function as custodian for the KeyPremier
Funds).
C-18
<PAGE> 157
Item 31. Management Services
None
Item 32. Undertakings
Registrant undertakes to file a post-effective amendment, using
reasonably current financial statements of the KeyPremier Prime Money
Market Fund, which need not be certified, within four to six months of
the commencement of operations of such Fund.
Registrant undertakes to file a post-effective amendment, using
reasonably current financial statements of the KeyPremier Pennsylvania
Municipal Bond Fund, which need not be certified, without four to six
months of the commencement of operations of such Fund.
C-19
<PAGE> 158
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 22nd day of April, 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 April 22, 1996
- -------------------------- Officer and Trustee
Walter B. Grimm
/s/*Stephen G. Mintos Principal Financial April 22, 1996
- -------------------------- Officer and Principal
Stephen G. Mintos Accounting Officer
/s/*Roy E. Rogers Trustee April 22, 1996
- --------------------------
Roy E. Rogers
/s/*Maurice G. Stark Trustee April 22, 1996
- --------------------------
Maurice G. Stark
/s/*Michael M. VanBuskirk Trustee April 22, 1996
- --------------------------
Michael M. VanBuskirk
/s/*Chalmers P. Wylie Trustee April 22, 1996
- --------------------------
Chalmers P. Wylie
*By/s/ Walter B. Grimm April 22, 1996
-----------------------
Walter B. Grimm
Attorney-In-Fact
</TABLE>
C-20
<PAGE> 159
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
1(a) Declaration of Trust dated as of April 25, 1988.
(b) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted August 15, 1989.
(c) Amendment of Article V, Section 5.3 of Declaration of Trust
adopted October 23, 1989.
(d) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted July 23, 1991.
(e) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted August 13, 1992.
(f) Amendment of Article IV, Section 4.2 of Declaration of Trust as
adopted October 28, 1992.
(g) Amendment of Article IV, Section 4.2 of Declaration of Trust as
adopted February 18, 1994.
(h) Amendment of Article IV, Section 4.2 of Declaration of Trust as
adopted May 16, 1994.
(i) Amendment to Article IV, Section 4.2 of Declaration of Trust as
adopted April 10, 1996.
2 By-Laws.
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).
(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).
</TABLE>
C-21
<PAGE> 160
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(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).
(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).
(e) Proposed Investment Advisory Agreement dated July __, 1996,
between Registrant and Martindale Andres & Company, Inc. (with
respect to the KeyPremier Funds).
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.
(c) Proposed Distribution Agreement dated as of July __, 1996,
between Registrant and BISYS Fund Services Limited Partnership
(relating to the KeyPremier Funds).
</TABLE>
C-22
<PAGE> 161
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(d) Form of Shareholder Services Agreement.
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.
(b) Proposed Custody Agreement dated July __, 1996, between
Registrant and The Bank of New York (with respect to the
KeyPremier Funds).
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-23
<PAGE> 162
<TABLE>
<CAPTION>
EXHIBIT INDEX
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-24
<PAGE> 163
<TABLE>
<CAPTION>
EXHIBIT INDEX
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) Proposed Management and Administration Agreement dated July __,
1996, between Registrant and BISYS Fund Services Limited
Partnership (with respect to the KeyPremier Funds).
(y) Proposed Fund Accounting Agreement dated July __, 1996, between
Registrant and BISYS Fund Services Ohio, Inc. (with respect to
the KeyPremier Funds).
(z) Proposed Transfer Agency Agreement dated July __, 1996, between
Registrant and BISYS Fund Services Ohio, Inc. (with respect to
the KeyPremier Funds).
10(a) Opinion of Counsel with respect to Shares of the KeyPremier Prime
Money Market Fund and the KeyPremier Pennsylvania Municipal
Bond Fund. An Opinion of Counsel was filed by Notice on August
30, 1995, 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
</TABLE>
C-25
<PAGE> 164
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
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.
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 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.
(b) Rule 12b-1 Plan (with respect to the KeyPremier Funds).
(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
</TABLE>
C-26
<PAGE> 165
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
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 (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
</TABLE>
C-27
<PAGE> 166
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
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.
(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.
(w) Proposed Shareholder Services Agreement dated July __, 1996,
between BISYS Fund Services Limited Partnership and Keystone
Brokerage, Inc. (with respect to the KeyPremier Funds).
</TABLE>
C-28
<PAGE> 167
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(x) Proposed Shareholder Services Agreement dated July __, 1996,
between BISYS Fund Services Limited Partnership and Keystone
Investor Services, Inc. (with respect to the KeyPremier Funds).
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-29
<PAGE> 168
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(i) Computation of Performance Quotations for the KeyPremier Funds to
be filed by amendment.
17 Financial Data Schedules for the KeyPremier Funds to be filed by
amendment.
18 None.
19(a) Powers of Attorney of Roy E. Rogers, Stephen G. Mintos, Maurice
G. Stark, Chalmers P. Wylie, Walter B. Grimm and Michael M.
VanBuskirk were filed as Exhibit 17(a) to Post-Effective Amend-
ment No. 30 to Registrant's Registration Statement (No. 33-21489)
filed on August 24, 1994.
(b) Consent of Baker & Hostetler
</TABLE>
C-30
<PAGE> 169
As filed with the Securities and Exchange Commission April 24, 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. 34 / x /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / x /
Amendment No. 36 / 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)(a)
<PAGE> 2
THE SESSIONS GROUP
DECLARATION OF TRUST
DATED AS OF APRIL 25, 1988
<PAGE> 3
THE SESSIONS GROUP
------------------
DECLARATION OF TRUST
--------------------
<TABLE>
<CAPTION>
Table of Contents
-----------------
Page
----
<S> <C>
ARTICLE I NAME, PRINCIPAL OFFICE AND
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . iv
Section 1.1 Name and Principal Office . . . . . . . . . . . . . . iv
Section 1.2 Definitions . . . . . . . . . . . . . . . . . . . . . iv
ARTICLE II PURPOSES OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III THE TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.1 Number, Designation, Election,
Term, etc. . . . . . . . . . . . . . . . . . . . . . . 2
(a) Initial Trustee . . . . . . . . . . . . . . . . . . . . 2
(b) Number . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Term . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Resignation . . . . . . . . . . . . . . . . . . . . . . 3
(e) Removal . . . . . . . . . . . . . . . . . . . . . . . . 3
(f) Vacancies . . . . . . . . . . . . . . . . . . . . . . . 3
(g) Effect of Death, Resignation, etc . . . . . . . . . . . 4
(h) No Accounting . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.2 Powers of Trustees . . . . . . . . . . . . . . . . . 4
(a) Investments . . . . . . . . . . . . . . . . . . . . . . 5
(b) Disposition of Assets . . . . . . . . . . . . . . . . . 5
(c) Distribution of Securities . . . . . . . . . . . . . . . 5
(d) Ownership Powers . . . . . . . . . . . . . . . . . . . . 6
(e) Subscription . . . . . . . . . . . . . . . . . . . . . . 6
(f) Form of Holding . . . . . . . . . . . . . . . . . . . . 6
(g) Allocation of Series . . . . . . . . . . . . . . . . . . 6
(h) Reorganization, Merger and Consolidation . . . . . . . . 6
(i) Voting Trusts, etc. . . . . . . . . . . . . . . . . . . 6
(j) Compromise . . . . . . . . . . . . . . . . . . . . . . . 7
(k) Partnerships, etc. . . . . . . . . . . . . . . . . . . . 7
(l) Borrowing and Security . . . . . . . . . . . . . . . . . 7
(m) Guarantees, etc. . . . . . . . . . . . . . . . . . . . . 7
(n) Insurance . . . . . . . . . . . . . . . . . . . . . . . 7
(o) Pensions, etc. . . . . . . . . . . . . . . . . . . . . . 7
(p) Corporate Acts or Activities . . . . . . . . . . . . . . 8
Section 3.3 Certain Contracts . . . . . . . . . . . . . . . . . . 8
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(a) Advisory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Administration . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Custodian and Depository . . . . . . . . . . . . . . . . . . . . . 9
(e) Transfer and Dividend Disbursing Agency . . . . . . . . . . . . . 9
(f) Shareholder Servicing . . . . . . . . . . . . . . . . . . . . . . 9
(g) Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.4 Payment of Fund Expenses and
Compensation of Trustees . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.1 Description of Shares . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.2 Establishment and Designation
of Series . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Assets Belonging to a Series . . . . . . . . . . . . . . . . . . . 13
(b) Liabilities Belonging to a Series . . . . . . . . . . . . . . . . 14
(c) Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(f) Redemption by Shareholder . . . . . . . . . . . . . . . . . . . . 16
(g) Redemption by Trust . . . . . . . . . . . . . . . . . . . . . . . 16
(h) Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . 17
(i) Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Equality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(k) Fractions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(l) Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.3 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . 18
Section 4.4 Investments in the Trust . . . . . . . . . . . . . . . . . . . 18
Section 4.5 No Preemptive Rights . . . . . . . . . . . . . . . . . . . . . 18
Section 4.6 Status of Shares and Limitation
of Personal Liability . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V SHAREHOLDERS' VOTING POWERS
AND MEETINGS . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.1 Voting Powers . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.3 Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.4 Quorum and Required Vote . . . . . . . . . . . . . . . . . . . 21
Section 5.5 Action by Written Consent. . . . . . . . . . . . . . . . . . . . 21
Section 5.6 Inspection of Records . . . . . . . . . . . . . . . . . . . . . 21
Section 5.7 Additional Provisions . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
- ii -
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI LIMITATION OF LIABILITY;
INDEMNIFICATION . . . . . . . . . . . . . . . . . 22
Section 6.1 Trustees, Shareholders, etc.
Not Personally Liable; Notice . . . . . . . . . . 22
Section 6.2 Trustee's Good Faith Action; Expert
Advice; No Bond or Surety . . . . . . . . . . . . 22
Section 6.3 Indemnification of Shareholders . . . . . . . . . 23
Section 6.4 Indemnification of Trustees,
Officers, etc. . . . . . . . . . . . . . . . . . . 23
Section 6.5 Advances of Expenses . . . . . . . . . . . . . . 24
Section 6.6 Indemnification Not Exclusive, etc. . . . . . . . 24
Section 6.7 Liability of Series . . . . . . . . . . . . . . . 25
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . 25
Section 7.1 Duration and Termination of Trust . . . . . . . . 25
Section 7.2 Sale or Disposition of Assets . . . . . . . . . . 25
Section 7.3 Merger or Consolidation . . . . . . . . . . . . 26
Section 7.4 Amendments . . . . . . . . . . . . . . . . . . . 26
Section 7.5 Filing of Copies; References; Headings . . . . . 28
Section 7.6 Applicable Law . . . . . . . . . . . . . . . . . 28
</TABLE>
- iii -
<PAGE> 6
THE SESSIONS GROUP
DECLARATION OF TRUST
--------------------
DECLARATION OF TRUST made at Columbus, Ohio, as of the 25th day of April,
1988, by the Trustee hereunder, and by the holders of Shares of beneficial
interest to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, the Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of an Ohio business trust in accordance with the provisions
of Chapter 1746, Ohio Revised Code, and as hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
---------
NAME, PRINCIPAL OFFICE AND DEFINITIONS
--------------------------------------
SECTION 1.1 NAME AND PRINCIPAL OFFICE. The Trust shall be known as
"The Sessions Group" and the Trustees shall conduct the business of the Trust
under that name or any other name as they may from time to time determine. The
principal office of the Trust is located in Columbus, Ohio.
SECTION 1.2 DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established
by this Declaration of Trust, as amended from time to time;
(b) "Trustee" or "Trustees" refers to the trustee or trustees
of the Trust named herein or selected in accordance with Article III;
(c) "Share" or "Shares" refers to the transferable unit or
units of interest into which the beneficial interest in the Trust or any
Series of the Trust (as the context may require) shall be divided from
time to time;
<PAGE> 7
(d) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article IV;
(e) "Shareholder" or "Shareholders" means a record owner or
owners of a Share or Shares;
(f) The "1940 Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as amended from time to
time;
(g) "Commission" shall have the meaning given it in the 1940
Act;
(h) "Declaration of Trust" shall mean this Declaration of
Trust as amended or restated from time to time; and
(i) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time.
ARTICLE II
----------
PURPOSES OF TRUST
-----------------
The purposes of the Trust are to operate as an investment company as
defined in the 1940 Act and to engage in any lawful act or activity for which
business trusts may be formed under Chapter 1746, Ohio Revised Code.
ARTICLE III
-----------
THE TRUSTEES
------------
SECTION 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) INITIAL TRUSTEE. Upon his execution of this Declaration
of Trust or a counterpart hereof or some other writing in which he accepts
such trusteeship and agrees to the provisions hereof, J. David Huber shall
become a Trustee hereof.
(b) NUMBER. The Trustee or Trustees serving as such, whether
named above or hereafter becoming a Trustee, may increase or decrease the
number of Trustees to a number other than the number theretofore
determined. A Trustee shall qualify by accepting in writing his election
or appointment and agreeing to be bound by the Declaration of Trust. No
decrease in the number of Trustees shall have the effect of removing any
Trustee
- 2 -
<PAGE> 8
from office prior to the expiration of his term, but the number of
trustees may be decreased in conjunction with the removal of a Trustee
pursuant to subsection (e) of this Section 3.1. Except as set forth in
subsection (f) of this Section 3.1, Trustees (other than the Initial
Trustee) shall be elected by the Shareholders, who shall vote as a single
class and not by Series and at such times as the Trustee or Trustees shall
determine that such election is required by the 1940 Act or is otherwise
advisable.
(c) TERM. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee during the continued lifetime
of the Trust until he dies, resigns or is removed, or, if sooner, until
the next meeting of Shareholders called for the purpose of electing
Trustees, and until the election and qualification of his successor.
(d) RESIGNATION. Any Trustee may resign his trust as a
Trustee, by written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust or at a meeting of the Trustees,
and such resignation shall take effect upon such delivery or upon such
later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed with or without
cause at any time either by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal, specifying the
date upon which such removal shall become effective, or by the
Shareholders at any meeting called for that purpose. No Trustee shall be
entitled to any damages on account of such removal.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting
from any reason, including without limitation the death, resignation,
removal or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the Trustees may (but need not
unless required by the 1940 Act) be filled either by a majority of the
remaining Trustees through the appointment in writing of such other person
as such remaining Trustees in their discretion shall determine (unless a
shareholder election is required by the 1940 Act) or by the election by
the Shareholders, at a meeting called for the purpose, of a person to fill
such vacancy, and such appointment or election shall be effective upon the
written acceptance of the person named therein to serve as a Trustee and
agreement by such person to be bound by the provisions of this Declaration
of Trust, except that any such appointment or election in anticipation of
a vacancy to occur by reason of resignation or increase in number of
Trustees to be effective at a later date shall become effective only at or
after the effective date of said
- 3 -
<PAGE> 9
resignation or increase in number of Trustees. As soon as any Trustee so
appointed or elected shall have accepted such appointment or election and
shall have agreed in writing to be bound by this Declaration of Trust and
the appointment or election is effective, the Trust estate shall vest in
the new Trustee, together with the continuing Trustees, without any
further act of conveyance.
Notwithstanding the foregoing, to the extent the Trust
adopts and implements a written plan pursuant to Rule 12b-1 under the 1940
Act, and so long as otherwise required by the 1940 Act, the selection and
nomination of Trustees who are not "interested persons" of the Trust as
defined in the 1940 Act, shall be committed to the discretion of the
Trustees who are not "interested persons," as so defined.
(g) EFFECT OF DEATH, RESIGNATION, ETC. The death,
resignation, removal, or incapacity of the Trustees, or any one of them,
shall not operate to annul or terminate the Trust or to revoke or
terminate any existing agency or contract created or entered into pursuant
to the terms of this Declaration of trust.
(h) NO ACCOUNTING. Except to the extent required by the 1940
Act or under circumstances which would justify his removal for cause, no
person ceasing to be a Trustee as a result of his death, resignation,
removal or incapacity (nor the estate of any such person) shall be
required to make an accounting to the Shareholders or remaining Trustees
upon such cessation.
SECTION 3.2 POWERS OF TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purposes of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business and affairs of
the Trust and may amend and repeal them to the extent that such By-Laws do not
reserve that right to the Shareholders; they may as they consider appropriate
elect and remove officers and appoint and terminate agents and consultants and
hire and terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the compensation of all of the foregoing; they may
appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including without implied limitation an
executive committee, which may, when the Trustees are not in session and
subject to the 1940 Act, exercise some or all of the power and authority of the
Trustees as the Trustees may determine; in accordance with Section 3.3 they may
employ one or more Advisers, Administrators, Depositories and Custodians and
may
- 4 -
<PAGE> 10
authorize any Depository or Custodian to employ sub-custodians or agents and to
deposit all or any part of such assets in a system or systems for the central
handling of securities and debt instruments, retain transfer, dividend,
accounting and Shareholder servicing agents or any of the foregoing, provide
for the distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, set record dates or times for the
determination of Shareholders or various of them with respect to various
matters; they may compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, custodians, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem appropriate;
and in general they may delegate to any officer of the Trust, to any committee
of the Trustees and to any employee, adviser, administrator, distributor,
depository, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such authority, powers, functions and duties
as they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority:
(a) INVESTMENTS. To invest and reinvest cash and other
property, and to hold cash or other property uninvested without in any
event being bound or limited by any present or future law or custom in
regard to investments by trustees;
(b) DISPOSITION OF ASSETS. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the assets
of the Trust;
(c) DISTRIBUTION OF SECURITIES. To act as a distributor of
shares and as underwriter of, or broker or dealer in, securities or other
property;
(d) OWNERSHIP POWERS. To vote or give assent, or exercise
any rights of ownership, with respect to stock or other securities, debt
instruments or property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation
to securities, debt instruments or property as the Trustees shall deem
proper;
(e) SUBSCRIPTION. To exercise powers and rights of
subscription or otherwise which in any manner arise out of ownership of
securities or debt instruments;
- 5 -
<PAGE> 11
(f) FORM OF HOLDING. To hold any security, debt instrument
or property in a form not indicating any trust, whether in bearer,
unregistered or other negotiable form, or in the name of the Trustees or
of the Trust or in the name of a custodian, sub-custodian or other
depository or a nominee or nominees or otherwise;
(g) ALLOCATION OF SERIES. To allocate assets, liabilities
and expenses of the Trust to a particular Series of Shares or to apportion
the same among two or more Series, provided that any liabilities or
expenses incurred by a particular Series of Shares shall be payable solely
out of the assets of that Series;
(h) REORGANIZATION, MERGER AND CONSOLIDATION. To consent to
or participate in any plan for the reorganization, consolidation or merger
of any corporation or issuer, any security or debt instrument of which is
or was held in the Trust; to consent to any contract, lease, mortgage,
purchase or sale or property by such corporation or issuer, and to pay
calls or subscriptions with respect to any security or debt instrument
held in the Trust;
(i) VOTING TRUSTS, ETC. To join with other holders of any
securities or debt instruments in acting through a committee, depository,
voting trustee or otherwise, and in that connection to deposit any
security or debt instrument with, or transfer any security or debt
instrument to, any such committee, depository or trustee, and to delegate
to them such power and authority with relation to any security or debt
instrument (whether or not so deposited or transferred) as the Trustees
shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depository or trustee as the
Trustees shall deem proper;
(j) COMPROMISE. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(k) PARTNERSHIPS, ETC. To enter into joint ventures, general
or limited partnerships and any other combinations or associations;
(l) BORROWING AND SECURITY. To borrow funds and to mortgage
and pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
(m) GUARANTEES, ETC. To endorse or guarantee the payment of
any notes or other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume
- 6 -
<PAGE> 12
liability for payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such obligations;
(n) INSURANCE. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and
principal on its portfolio investments, and insurance policies insuring
the Shareholders, Trustees, officers, employees, agents, consultants,
investment advisers, managers, administrators, distributors, principal
underwriters, or independent contractors, or any thereof (or any person
connected therewith), of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or having
held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person in any such capacity,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify
such person against such liability;
(o) PENSIONS, ETC. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift and
other retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for any or all of
the Trustees, officers, employees and agents of the Trust; and
(p) CORPORATE ACTS OR ACTIVITIES. To engage in any other
lawful act or activity in which corporations organized under Chapter 1701,
Ohio Revised Code, may engage.
Except as otherwise provided by the 1940 Act or other applicable law, this
Declaration of Trust or the By-Laws, any action to be taken by the Trustees may
be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting,
or by written consents of a majority of the Trustees then in office (or such
larger or different number as may be required by the 1940 Act or other
applicable law).
SECTION 3.3 CERTAIN CONTRACTS. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations
- 7 -
<PAGE> 13
of present and future law or custom in regard to delegation of powers by
trustees generally, the Trustees may, at any time and from time to time and
without limiting the generality of their powers and authority otherwise set
forth herein, enter into one or more exclusive or non-exclusive contracts with
any one or more corporations, trusts, associations, partnerships, limited
partnerships, other type of organizations, or individuals ("Contracting Party")
to provide for the performance and assumption of some or all of the following
services, duties and responsibilities to, for or of the Trust and/or the
Trustees, and to provide for the performance and assumption of such other
services, duties and responsibilities in addition to those set forth below as
the Trustees may determine appropriate:
(a) ADVISORY. Subject to the general supervision of the
Trustees and in conformity with the stated policy of the Trustees with
respect to the investments of the Trust or of the assets belonging to a
Series of Shares (as that phrase is defined in subsection (a) of Section
4.2), to manage such investments and assets, make investment decisions
with respect thereto, and to place purchase and sale orders for portfolio
transactions relating to such investments and assets;
(b) ADMINISTRATION. Subject to the general supervision of
the Trustees and in conformity with any policies of the Trustees with
respect to the operations of the Trust, to supervise all or any part of
the operations of the Trust, and to provide all or any part of the
administrative and clerical personnel, office space and office equipment
and services appropriate for the efficient administration and operations
of the Trust;
(c) DISTRIBUTION. To distribute the Shares of the Trust, to
be principal underwriter of such Shares, and/or to act as agent of the
Trust in the sale of Shares and the acceptance or rejection of orders for
the purchase of Shares;
(d) CUSTODIAN AND DEPOSITORY. To act as depository for and
to maintain custody of the property of the Trust and accounting records in
connection therewith;
(e) TRANSFER AND DIVIDEND DISBURSING AGENCY. To maintain
records of the ownership of outstanding Shares, the issuance and
redemption and the transfer thereof, and to disburse any dividends
declared by the Trustees and in accordance with the policies of the
Trustees and/or the instructions of any particular Shareholder to reinvest
any such dividends;
(f) SHAREHOLDER SERVICING. To provide service with respect
to the relationship of the Trust and its Shareholders,
- 8 -
<PAGE> 14
records with respect to Shareholders and their Shares, and similar
matters; and
(g) ACCOUNTING. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(a) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent of or for
any Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or affiliate
thereof is a Shareholder or has an interest in the Trust, or that
(b) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the Trust
and/or the Trustees or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders, provided that in the case of
any relationship or interest referred to in the preceding clause (a) on the
part of any Trustee or officer of the Trust either (i) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (ii) the material facts as to
such
- 9 -
<PAGE> 15
relationship or interest and as to the contract have been disclosed to or are
known by the Shareholders entitled to vote thereon and the contract involved is
specifically approved in good faith by vote of the Shareholders, or (iii) the
specific contract involved is fair to the Trust as of the time it is
authorized, approved or ratified by the Trustees or by the Shareholders.
SECTION 3.4 PAYMENT OF FUND EXPENSES AND COMPENSATION OF TRUSTEES.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of principal and partly out of income,
and to charge or allocate the same to, between or among such one or more of the
Series that may be established and designated pursuant to Article IV, as the
Trustees deem fair, all expenses, fees, charges, taxes and liabilities incurred
or arising in connection with the Trust, or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
investment adviser or advisers, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without
limiting the generality of any other provision hereof, the Trustees shall be
entitled to reasonable compensation from the Trust for their services as
Trustees and may fix the amount of such compensation.
ARTICLE IV
----------
SHARES
------
SECTION 4.1 DESCRIPTION OF SHARES. The beneficial interest in the
Trust shall be divided into Shares, all without par value and of one class but
the Trustees shall have the authority from time to time, without the approval
of Shareholders and upon the amendment of the Declaration of Trust, to divide
the class of Shares into two or more Series of Shares (in addition to the
Series specifically established and designated in Section 4.2), as they deem
necessary or desirable, to establish and designate such Series, and to fix and
determine the relative rights and preferences as between the different Series
of Shares as to right of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions,conversion rights, and
conditions under which the several Series shall have separate voting rights or
no voting rights. Except as aforesaid all Shares of the different Series shall
be identical.
- 10 -
<PAGE> 16
The Shares of each Series may be issued or reissued from time to time in
one or more sub-series ("Sub-Series"), as determined by the Board of Trustees
pursuant to resolution. Each Sub-Series shall be appropriately designated,
prior to the issuance of any shares thereof, by some distinguishing letter,
number or title. All Shares within a Sub-Series shall be alike in every
particular. All Shares of each Series shall be of equal rank and have the same
powers, preferences and rights, and shall be subject to the same
qualifications, limitations and restrictions without distinction between the
shares of different Sub-Series thereof, except with respect to such differences
among such Sub-Series, as the Board of Trustees shall from time to time
determine to be necessary to comply with the 1940 Act or other applicable laws,
including differences in the rate or rates of dividends or distributions. The
Board of Trustees may from time to time increase the number of Shares allocated
to any Sub-Series already created by providing that any unissued Shares of the
applicable Series shall constitute part of such Sub-Series, or may decrease the
number of Shares allocated to any Sub-Series already created by providing that
any unissued Shares previously assigned to such Sub-Series shall no longer
constitute part thereof. The Board of Trustees is hereby empowered to classify
or reclassify from time to time any unissued Shares of each Series by fixing or
altering the terms thereof and by assigning such unissued shares to an existing
or newly created Sub-Series. Notwithstanding anything to the contrary in this
paragraph the Board of Trustees is hereby empowered (a) to redesignate any
issued Shares of any Series by assigning a distinguishing letter, number or
title to such shares and (b) to classify all or any part of the issued Shares
of any Series to make them part of an existing or newly created Sub-Series.
The number of authorized Shares and the number of Shares of each Series
that may be issued is unlimited, and the Trustees may issue Shares of any
Series for such consideration and on such terms as they may determine (or for
no consideration if pursuant to a Share dividend or split-up), all without
action or approval of the Shareholders. All Shares when so issued on the terms
determined by the Trustees shall be fully paid and non-assessable (but may be
subject to mandatory contribution back to the Trust as provided in subsection
(h) of Section 4.2). The Trustees may classify or reclassify any unissued
Shares or any Shares previously issued and reacquired of any Series into one or
more Series that may be established and designated from time to time. The
Trustees may hold as treasury Shares (of the same or some other Series),
reissue for such consideration and on such terms as they may determine, or
cancel, at their discretion from time to time, any Shares of any Series
reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining
- 11 -
<PAGE> 17
the holders of Shares entitled to be treated as such, to the extent provided or
referred to in Section 5.3.
The establishment and designation of any Series of Shares in addition to
that established and designated in Section 4.2, or of any Sub-Series of
Shares, shall be effective upon the amendment of the Declaration of Trust
setting forth the establishment and designation and relative rights and
preferences of such Series or Sub-Series. At any time that there are no Shares
outstanding of any particular Series or Sub-Series previously established and
designated the Trustees may by an amendment to the Declaration of Trust abolish
that Series or Sub-Series and the establishment and designation thereof.
Any Trustee, officer or other agent of the Trust, and any organization in
which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust to the same extent as if such person were not
a trustee, officer, or other agent of the Trust; and the Trust may issue and
sell or cause to be issued and sold and may purchase Shares of any Series from
any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or
purchase of Shares of such Series generally.
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. Shares of Series A and any Shares 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 Sub-Series at the time of establishing and designating
the same) have the following relative rights and preferences:
(a) ASSETS BELONGING TO A SERIES. All consideration received
by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to
that Series for all purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such pro-
- 12 -
<PAGE> 18
ceeds, in whatever form the same may be, together with any General Items
allocated to that Series as provided in the following sentence, are herein
referred to as "assets belonging to" that Series. In the event that there
are any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Series (collectively "General Items"), the Trustees shall allocate such
General Items to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Series shall belong to that Series. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
The Trustees shall have full discretion, to the extent
not inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such determination
and allocation shall be conclusive and binding upon the Shareholders.
(b) LIABILITIES BELONGING TO A SERIES. The assets belonging
to each particular Series shall be charged with the liabilities of the
Trust in respect of that Series and all expenses, costs, charges and
reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable.
The liabilities, expenses, costs, charges and reserves allocated and so
charged to a Series are herein referred to as "liabilities belonging to"
that Series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the holders
of all Series for all purposes.
(c) DIVIDENDS. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the holders of Shares of that Series, from such
of the income and capital gains, accrued or realized, from the assets
belonging to that Series, as the Trustees may determine, after providing
for actual and accrued liabilities belonging to that Series. All
dividends and distributions on Shares of a particular Series shall be
distributed pro rata to the holders of that Series in proportion to the
number of Shares of that Series held by such
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<PAGE> 19
holders at the date and time of record established for the payment of such
dividends and distributions, except that in connection with any dividend
or distribution program or procedure the Trustees may determine that no
dividend or distribution shall be payable on Shares as to which the
Shareholder's purchase order and/or payment have not been received by the
time or times established by the Trustees under such program or procedure
and except that if Sub-Series have been established for any Series, the
rate of dividends or distributions may vary among such Sub-Series pursuant
to resolution, which may be a standing resolution, of the Board of
Trustees. Such dividends and distributions may be made in cash or Shares
or a combination thereof as determined by the Trustees or pursuant to any
program that the Trustees may have in effect at the time for the election
by each Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or distribution paid
in Shares will be paid at the net asset value thereof as determined in
accordance with subsection (h) of Section 4.2.
The Trust intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for
federal income tax purposes may vary from the computation thereof on the
books of the Trust, the Board of Trustees shall have the power, in its
sole discretion, to distribute in any fiscal year as dividends, including
dividends designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Trustees, to enable the
Trust to qualify as a regulated investment company and to avoid liability
of the Trust for federal income and excise tax in respect to that year.
However, nothing in the foregoing shall limit the authority of the Board
of Trustees to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid
liability of the Trust for such tax.
(d) LIQUIDATION. In event of the liquidation or dissolution
of the Trust, the Shareholders of each Series that has been established
and designated shall be entitled to receive, as a Series, when and as
declared by the Trustees, the excess of the assets belonging to that
Series over the liabilities belong to that Series. The assets so
distributable to the Shareholders of any particular Series shall be
distributed among such Shareholders in proportion to the number of Shares
of that Series held by them and recorded on the books of the Trust. The
liquidation of any particular Series may be authorized by vote of a
majority of the Trustees then in office subject to the approval of a
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<PAGE> 20
majority of the outstanding voting Shares of that Series, as defined in
the 1940 Act.
(e) VOTING. All Shares of all Series shall have "equal
voting rights" as such term is defined in the Investment Company Act of
1940 and except as otherwise provided by the 1940 Act or orders
promulgated thereunder. The holder of each of the Shares shall be
entitled to one vote for each dollar of value attributable thereto. On
each matter submitted to a vote of the Shareholders, all Shares of all
Series shall vote as a single class ("Single Class Voting"), provided,
however, that (a) as to any matter with respect to which a separate vote
of any Series is required by the 1940 Act or rules and regulations
promulgated thereunder, such requirements as to a separate vote by that
Series shall apply in lieu of Single Class Voting as described above; (b)
in the event that the separate vote requirements referred to in (a) above
apply with respect to one or more Series, then, subject to (c) below, the
Shares of all other Series shall vote as a single class; and (c) as to any
matter which does not affect the interest of a particular Series, only the
holders of Shares of the one or more affected Series shall be entitled to
vote.
(f) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a
particular Series shall have the right at such times as may be permitted
by the Trust, but no less frequently than once each week, to require the
Trust to redeem all or any part of his Shares of that Series at a
redemption price equal to the net asset value per Share of that Series
next determined in accordance with subsection (h) of this Section 4.2
after the Shares are properly tendered for redemption. Payment of the
redemption price shall be in cash; provided, however, that if the Trustees
determine, which determination shall be conclusive, that conditions exist
which make payment wholly in cash unwise or undesirable, the Trust may
make payment wholly or partly in securities or other assets belonging to
the Series of which the Shares being redeemed are part at the value of
such securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone
payment of the redemption price and may suspend the right of the holders
of Shares of any Series to require the Trust to redeem Shares of that
Series during any period or at any time when and to the extent permissible
under the 1940 Act, and such redemption is conditioned upon the Trust
having funds or property legally available therefor.
(g) REDEMPTION BY TRUST. Each Share of each Series that has
been established and designated is subject to redemption by the Trust at
the redemption price which would be applicable if
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<PAGE> 21
such Share was then being redeemed by the Shareholder pursuant to
subsection (f) of this Section 4.2: (i) at any time, if the Trustees
determine in their sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the holders of the
Shares, or any Series thereof, of the Trust, or (ii) upon such other
conditions as may from time to time be determined by the Trustees and set
forth in the then current Prospectus of the Trust applicable to such
Shares or any Series thereof with respect to maintenance of Shareholder
accounts of a minimum amount. Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
(h) NET ASSET VALUE. The net asset value per Share of any
Series shall be the quotient obtained by dividing the value of the net
assets of that Series (being the value of the assets belonging to that
Series less the liabilities belonging to that Series) by the total number
of Shares of that Series outstanding, all determined in accordance with
the methods and procedures, including without limitation those with
respect to rounding, established by the Trustees from time to time.
The Trustees may determine to maintain the net asset
value per Share of any Series at a designated constant dollar amount and
in connection therewith may adopt procedures not inconsistent with the
1940 Act for the continuing declarations of income attributable to that
Series as dividends payable in additional Shares of that Series at the
designated constant dollar amount and for the handling of any losses
attributable to that Series. Such procedures may provide that in the
event of any loss each Shareholder shall be deemed to have contributed to
the capital of the Trust attributable to that Series has pro rata portion
of the total number of Shares required to be cancelled in order to permit
the net asset value per Share of that Series to be maintained, after
reflecting such loss, at the designated constant dollar amount. Each
Shareholder of the Trust shall be deemed to have agreed, by his investment
in any Series with respect to which the Trustees shall have adopted any
such procedure, to make the contribution referred to in the preceding
sentence in the event of any such loss.
(i) TRANSFER. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series will be
recorded on the Share transfer records of the Trust applicable to that
Series only at such times as Shareholders shall have the right to require
the Trust to redeem Shares of that Series and at such other times as may
be permitted by the Trustees.
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<PAGE> 22
(j) EQUALITY. All Shares of each particular Series shall
represent an equal proportionate interest in the assets belonging to that
Series (subject to the liabilities belonging to that Series), and each
Share of any particular Series shall be equal to each other Share of that
Series; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may
exist with respect to dividends and distributions on Shares of the same
Series. The Trustees may from time to time divide or combine the Shares
of any particular Series into a greater or lesser number of Shares of that
Series without thereby changing the proportionate beneficial interest in
the assets belonging to that Series or in any way affecting the rights of
Shares of any other Series.
(k) FRACTIONS. Any fractional Share of any Series or
Sub-Series, if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole share of that
Series or Sub-Series, including with respect to voting, receipt of
dividends and distributions, redemption of Shares, and liquidation of the
Trust.
(l) CONVERSION RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series shall have the right to
convert said Shares into Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established by
the Trustees.
SECTION 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
that has been established and designated. No certificates certifying the
ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of
the Trust are kept by the Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to who are the Shareholders and as to the number
of Shares of each Series and Sub-Series held from time to time by each such
Shareholder.
SECTION 4.4 INVESTMENTS IN THE TRUST. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any
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<PAGE> 23
purchase orders for Shares whether or not conforming to such authorized terms.
SECTION 4.5 NO PREEMPTIVE RIGHTS. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
SECTION 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance
of the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Declaration of Trust. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole or any part
of the Trust property or right to call for a partition or division of the same
or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
ARTICLE V
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
SECTION 5.1 VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 7.1, 7.2 and 7.3, (iv) with respect to
any amendment of this Declaration of Trust to the extent and as provided in
Section 7.4, (v) to the same extent as the stockholders of an Ohio corporation
organized under Chapter 1701, Ohio Revised Code, as to whether or not a court
action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vi) with respect to such additional matters relating to the Trust as may
be required by the 1940 Act, this Declaration of Trust, the By- Laws or any
registration of the Trust with the Commission (or any successor agency) or any
state, or as the
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<PAGE> 24
Trustees otherwise may consider necessary or desirable. There shall be no
cumulative voting in the election of any Trustee or Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares may be voted in
person or by proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless at or prior
to exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden or proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustee or Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by Shareholders.
SECTION 5.2 MEETINGS. Meetings of the Shareholders of Trust or of
any one or more of its Series may be called by the Trustees, and shall be
called by the Trustees whenever required by law or upon the written request of
holders of at least twenty percent of all votes attributable to the outstanding
Shares of the Trust or, as applicable, any one or more of its Series, entitled
to vote.
Written notice, stating the place, day, and hour of each meeting of
Shareholders and the general nature of the business to be transacted, shall be
given by, or at the direction of, the person calling the meeting to each
Shareholder of record entitled to vote at the meeting at least ten days prior
to the day named for the meeting, unless in a particular case a longer period
of notice is required by law.
SECTION 5.3 RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than 60 days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or any adjournment thereof or to be treated as
Shareholders of record for purposes of such other action, and any Shareholder
who was a Shareholder at the date and time so fixed shall be entitled to vote
at such meeting or any adjournment thereof or (subject to any provisions
permissible under subsection (a) of Section 4.2 with respect to dividends or
distributions on Shares that have not been ordered and/or paid for by the time
or times established by the Trustees under the applicable dividend or
distribution program or procedure then in effect) to be treated as a
Shareholder of record
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<PAGE> 25
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
SECTION 5.4 QUORUM AND REQUIRED VOTE. At any meeting of the
Shareholders, a quorum for the transaction of business shall consist of a
majority represented in person or by proxy of all votes attributable to the
outstanding Shares (without regard to individual Series) entitled to vote with
respect to a matter; provided, however, that at any meeting at which the only
actions to be taken are actions required by the 1940 Act to be taken by vote of
the Shareholders of an individual Series, a quorum shall consist of a majority
of all votes attributable to the outstanding Shares of such individual Series
entitled to vote thereon, and that at any meeting at which the only actions to
be taken shall have been determined by the Board of Trustees to affect the
rights and interests of one or more but not all Series of the Trust, a quorum
shall consist of a majority of all votes attributable to the outstanding Shares
of the Series so affected; and provided, further, that reasonable adjournments
of such meeting until a quorum is obtained may be made by a vote attributable
to the Shares present in person or by proxy. A majority of the votes shall
decide any question and a plurality shall elect a Trustee, subject to any
applicable requirements of law or of this Declaration of Trust or the By-Laws;
provided, however, that when any provision of law or of this Declaration of
Trust requires the holders of Shares of any particular Series to vote by Series
and not in the aggregate with respect to a matter, then a majority of all votes
attributable to the outstanding Shares of that Series shall decide such matter
insofar as that particular Series shall be concerned.
SECTION 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such other proportion thereof as shall be required by the 1940 Act
or by any express provision of this Declaration of Trust or the By-Laws)
consent to the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
SECTION 5.6 INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation organized under Chapter 1701, Ohio Revised
Code.
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SECTION 5.7 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
----------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
SECTION 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE;
NOTICE. All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
A note, bond, contract, instrument, certificate or undertaking made or
issued by the Trust or Trustees or by any officer, employee or agent may give
notice that this Declaration of Trust is on file with the Secretary of State of
Ohio and may recite to the effect that the same was executed or made by or on
behalf of the Trust or by them as Trustee, officer, employee or agent and not
individually and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, as set forth in Section 1746.13(A), Ohio
Revised Code, but the omission thereof shall not operate to bind any Trustee,
officer, employee, agent or Shareholder individually.
SECTION 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his
own willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or
law. Subject to the foregoing, (a) the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing
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<PAGE> 27
of any officer, agent, employee, consultant, adviser, administrator,
distributor or principal underwriter, custodian or transfer, dividend
disbursing, Shareholder servicing or accounting agent of the Trust, nor shall
any Trustee be responsible for the act or omission of any other Trustee; (b)
the Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust and their duties as
Trustees, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice; and (c) in discharging
their duties, the Trustees, when acting in good faith, shall be entitled to
rely upon the books of account of the Trust and upon written reports made to
the Trustees by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the contract involved)
any officer, partner or responsible employee of a Contracting Party appointed
by the Trustees pursuant to Section 3.3. The Trustees as such shall not be
required to give any bond or surety or any other security for the performance
of their duties.
SECTION 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
of former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled
out of the assets of the Trust estate to be held harmless from and indemnified
against all loss and expense arising from such liability.
SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. The Trust
shall indemnify each of its Trustees and officers (including persons who serve
at the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person") against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Covered Person and except that no Covered Person shall be indemnified
against any liability to the Trust or its
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<PAGE> 28
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office ("disabling
conduct"). Anything herein contained to the contrary notwithstanding, no
Covered Person shall be indemnified for any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject unless (a)
a final decision on the merits is made by a court or other body before whom the
proceeding was brought that the Covered Person to be indemnified was not liable
by reason of disabling conduct or, (b) in the absence of such a decision, a
reasonable determination is made, based upon a review of the facts, that the
Covered Person was not liable by reason of disabling conduct, by (i) the vote
of a majority of a quorum of Trustees who are neither "interested persons" of
the Trust as defined in the 1940 Act nor parties to the proceeding
("disinterested, non-party Trustees"), or (ii) an independent legal counsel in
a written opinion.
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding,
upon the undertaking by or on behalf of the Covered Person to repay the advance
unless it is ultimately determined that such Covered Person is entitled to
indemnification, so long as one of the following conditions is met: (a) the
Covered Person shall provide security for his undertaking, (b) the Trust shall
be insured against losses arising by reason of any lawful advances, or (c) a
majority of a quorum of the disinterested non-party Trustees of the Trust, or
an independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be
found entitled to indemnification.
SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened, and a "disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened.
Nothing contained in this Article VI shall affect any rights to indemnification
to which personnel of the Trust, other than any Covered Person, may be
entitled, by contract or otherwise under law, nor
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<PAGE> 29
the power of the Trust to purchase and maintain liability insurance on behalf
of any such person.
SECTION 6.7 LIABILITY OF SERIES. Liabilities belonging to any Series
of the Trust, including, without limitation, expenses, fees, charges, taxes,
and liabilities incurred or arising in connection with a particular Series, or
in connection with the management thereof, shall be paid only from the assets
belonging to that Series.
ARTICLE VII
-----------
MISCELLANEOUS
-------------
SECTION 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The
Trust may be terminated at any time by the vote of Shareholders holding at
least a majority of the Shares of each Series entitled to vote or by the
Trustees by written notice to the Shareholders. Any Series of Shares may be
terminated at any time by vote of Shareholders holding at least a majority of
the Shares of such Series entitled to vote or by the Trustees by written notice
to the Shareholders of such Series.
Upon termination of the Trust or of any one or more Series of Shares,
after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series as may be determined by the Trustees, the Trust shall, in
accordance with such procedures as the Trustees consider appropriate, reduce
the remaining assets to distributable form in cash or shares or other
securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the Series involved, ratably according to the number of Shares
of such Series held by the several Shareholders of such Series on the date of
termination, all as set forth in subsection (d) of Section 4.2.
Section 7.2 SALE OR DISPOSITION OF ASSETS. The Trustees may sell,
convey and transfer the assets of the Trust, or the assets belonging to any one
or more Series, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or to the Trust, to
be held as assets belonging to another Series of the Trust, in exchange for
cash, shares or other securities (including, in the case of a transfer to
another Series of the Trust, Shares of such other Series) with such transfer
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Series the assets of which are so transferred;
provided, however, that if shareholder approval is required by the 1940 Act, no
assets belonging to any
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particular Series shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose by the
affirmative vote of the holders of a majority of the outstanding voting Shares,
as defined in the 1940 Act, of that Series. Following such transfer, the
Trustees shall distribute such cash, shares or other securities (giving due
effect to the assets and liabilities belonging to and any other differences
among the various Series the assets belonging to which have so been
transferred) among the Shareholders of the Series the assets belonging to which
have been so transferred; and if all of the assets of the Trust have been so
transferred, the Trust shall be terminated.
SECTION 7.3 MERGER OR CONSOLIDATION. The Trust or any Series thereof
may be a party, with one or more entities (including another Series), to an
agreement of merger or consolidation; provided, however, that any such
agreement of merger or consolidation shall be approved by the Trustees and, if
Shareholder approval is required by the 1940 Act, by the affirmative vote of
holders of a majority of the outstanding Shares of the Trust or of each Series
affected.
SECTION 7.4 AMENDMENTS. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right
to amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or
Trustee or repeal the prohibition of assessment upon the Shareholders without
the express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the
Trust pursuant to the vote of a majority of such Trustees), when authorized so
to do by the vote, in accordance with subsection (e) of Section 4.2, of
Shareholders holding a majority of the Shares entitled to vote, except that
amendments either (i) establishing and designating any new Series of Shares not
established and designated in Section 4.2, or any Sub-Series, or (ii)
abolishing any Series or Sub-Series under the circumstances described in
Section 4.1, or having the purpose of changing the name of the Trust or the
name of any Series theretofore established and designated or of conforming the
provisions hereof to the requirements of state or federal law or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
provision hereof which is internally inconsistent with any other provision
hereof or which is defective or inconsistent with the 1940 Act or with the
requirements of the Internal Revenue Code of 1986 and applicable regulations
for the Trust's obtaining the most favorable treatment thereunder available to
regulated investment companies,
- 25 -
<PAGE> 31
shall not require authorization by Shareholder vote. In addition, amendment of
this Declaration of Trust may be effected by vote of the Trustees at any time
when the Trust has no outstanding Shares or Shareholders. Subject to the
foregoing, any such amendment shall be effective as provided in the instrument
containing the terms of such amendment or, if there is no provision therein
with respect to effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such
- 26 -
<PAGE> 32
instrument) executed by a Trustee or officer of the Trust to the effect that
such amendment has been duly adopted.
SECTION 7.5 FILING OF COPIES; REFERENCES; HEADINGS. The original or
a copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. An original
of this instrument and each amendment hereto, or a copy of this instrument and
of each amendment hereto certified as true and correct by a Trustee before a
Notary Public, shall be filed by the Trust with the Secretary of the State of
Ohio, together with the report required by Section 1746.04, Ohio Revised Code.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. The masculine
gender shall include the feminine and neuter genders. Headings are placed
herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
SECTION 7.6 APPLICABLE LAW. This Declaration of Trust is made in the
State of Ohio and it is created under and is to be governed by and construed
and administered according to the laws of said State, as the same may be
amended from time to time, to which reference is made with the intention that
matters not specifically covered herein or under Chapter 1746, Ohio Revised
Code, or as to which an ambiguity may exist under either, shall be resolved as
if the Trust were an Ohio corporation organized under Chapter 1701, Ohio
Revised Code.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand in the City
of Columbus, Ohio for himself and his assigns, as of the day and year first
above written.
/s/ J. David Huber
------------------
J. David Huber
- 27 -
<PAGE> 1
EXHIBIT (1)(b)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Amended: August 15, 1989
ARTICLE IV, Section 4.2 -- first paragraph
The first paragraph of ARTICLE IV, Section 4.2 is amended by deleting
such first paragraph of ARTICLE IV, Section 4.2 in its entirety and
substituting in place thereof the following new first paragraph of ARTICLE IV,
Section 4.2:
"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 B, which shall represent interests in PSB Government Money Market Fund,
Series C, which shall represent interests in Sun Eagle Prime Obligations Fund,
Series D, which shall represent interests in Riverside Capital Equity Fund, and
Series E, which shall represent interests in Riverside Capital Fixed Income
Fund. Shares of Series A, Series B, Series C, Series D, Series E 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 Sub-Series at the time of establishing and designating the
same) have the following relative rights and preferences:;
<PAGE> 1
EXHIBIT (1)(c)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Amended: October 23, 1989
ARTICLE V, Section 5.3
Article V, Section 5.3 is amended by deleting such Article V, Section
5.3 in its entirety and substituting in place thereof the following new Article
V, Section 5.3:
"SECTION 5.3 RECORD DATES. For the purpose of determining
the Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to participate in any
dividend or distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such
period, not exceeding 30 days (except at or in connection with the
termination of the Trust), as the Trustees may determine; or without
closing the transfer books the Trustees may fix a date and time not
more than 90 days prior to the date of any meeting of Shareholders or
other action as the date and time of record for the determination of
Shareholders entitled to vote at such meeting or any adjournment
thereof or to be treated as Shareholders of record for purposes of
such other action, and any Shareholder who was a Shareholder at the
date and time so fixed shall be entitled to vote at such meeting or
any adjournment thereof or (subject to any provisions permissible
under subsection (a) of Section 4.2 with respect to dividends or
distributions on Shares that have not been ordered and/or paid for by
the time or times established by the Trustees under the applicable
dividend or distribution program or procedure then in effect) to be
treated as a Shareholder of record for purposes of such other action,
even though he has since that date and time disposed of his Shares,
and no Shareholder becoming such after that date and time shall be so
entitled to vote at such meeting or any adjournment thereof or to be
treated as a Shareholder of record for purposes of such other action."
<PAGE> 1
EXHIBIT (1)(d)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Amended: July 23, 1991
The first paragraph of Article IV, Section 4.2 of the Group's
Declaration of Trust dated as of April 25, 1988, as amended, is hereby amended
further by deleting such first paragraph of Article IV, Section 4.2 in its
entirety and substituting in place thereof the following new first paragraph of
ARTICLE IV, Section 4.2:
"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 B, which shall represent
interests in PSB Government Money Market Fund, Series C, which shall
represent interests in Sun Eagle Prime Obligations Fund, Series D,
which shall represent interests in Riverside Capital Equity Fund,
Series E, which shall represent interests in Riverside Capital Fixed
Income Fund, Series F, which shall represent interests in Sun Eagle
U.S. Treasury Obligations Fund, Series G, which shall represent
interests in The H.O.M.E. Fund and Series I, which shall represent
interests in Forum U.S. Government Liquid Assets Fund. Shares of
Series A, Series B, Series C, Series D, Series E, Series F, Series G,
Series H 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 sub- Series
at the time of establishing and designating the same) have the
following relative rights and preferences:"
<PAGE> 1
EXHIBIT (1)(e)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Proposed to be adopted: August 13, 1992
This first paragraph of Article IV, Section 4.2 of the Group's
Declaration of Trust dated as of April 25, 1988, as amended, is hereby amended
further by deleting such first paragraph of Article IV, Section 4.2 in its
entirety and substituting in place thereof the following new first paragraph of
Article IV, Section 4.2:
"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 C, which shall represent
interests in Sun Eagle Prime Obligations Fund, Series D, which shall
represent interests in Riverside Capital Equity Fund, Series E, which
shall represent interests in Riverside Capital Fixed Income Fund,
Series F, which shall represent interests in Sun Eagle U.S. Treasury
Obligations Fund, Series G, which shall represent interests in The
H.O.M.E. Fund, Series I, which shall represent interests in First
Omaha U.S. Government Obligations Fund, Series J, which shall
represent interests in Sun Eagle Equity Growth Fund, Series K, which
shall represent interests in Sun Eagle Government Securities Fund,
Series L, which shall represent interests in Sun Eagle Intermediate
Fixed Income Fund and Series M, which shall represent interests in
Riverside Capital Tennessee Municipal Obligations Fund. Shares of
Series A, Series C, Series D, Series E, Series F, Series G, Series I,
Series J, Series K, Series L, Series M 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 Sub-Series at the time of establishing and
designating the same) have the following relative rights and
preferences:"
<PAGE> 1
EXHIBIT (1)(f)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Amended: October 28, 1992
ARTICLE IV, Section 4.2 -- first paragraph
ARTICLE IV, Section 4.2 of the Declaration of Trust dated as of April
25, 1988, as amended, is hereby further amended by deleting the 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 C, which shall represent
interests in Sun Eagle Prime Obligations Fund, Series D, which shall
represent interests in Riverside Capital Equity Fund, Series E, which
shall represent interests in Riverside Capital Fixed Income Fund,
Series F, which shall represent interests in Sun Eagle U.S. Treasury
Obligations Fund, Series G, which shall represent interests in The
H.O.M.E. Fund, Series I, which shall represent interests in First
Omaha U.S. Government Obligations Fund, Series J, which shall
represent interests in Sun Eagle Equity Growth Fund, Series K, which
shall represent interests in Sun Eagle Government Securities Fund,
Series L, which shall represent interests in Sun Eagle Intermediate
Fixed Income Fund, Series M, which shall represent interests in
Riverside Capital Tennessee Municipal Obligations Fund, Series N,
which shall represent interests in First Omaha Equity Fund, Series O,
which shall represent interests in First Omaha Intermediate Fixed
Income Fund, and Series P, which shall represent interests in First
Omaha Fixed Income Fund. Shares of Series A, Series C, Series D,
Series E, Series F, Series G, Series I, Series J, Series K, Series L,
Series M, Series N, Series O, Series P 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 Sub-Series at the time of establishing and
designating the same) have the following relative rights and
preferences:;
<PAGE> 1
EXHIBIT (1)(g)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Amended: February 18, 1994
The first paragraph of ARTICLE IV, Section 4.2 of the Group's
Declaration of Trust dated as of April 25, 1988, as amended, is amended further
amended by deleting the 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 I, which shall represent interests in First Omaha U.S.
Government Obligations Fund, Series M, which shall represent interests in
Riverside Capital Tennessee Municipal Obligations Fund, Series N, which shall
represent interests in First Omaha Equity Fund, Series O, which shall represent
interests in First Omaha Short/Intermediate Fixed Income Fund, Series P, which
shall represent interests in First Omaha Fixed Income Fund, Series Q, which
shall represent interests in Riverside Capital Low Duration Government
Securities Fund, Series R, which shall represent interests in Riverside Capital
Sunbelt Municipal Obligations Fund, and Series S, which shall represent
interests in Riverside Capital Growth Fund. Shares of Series A, Series D,
Series E, Series I, Series M, Series N, Series O, Series P, Series Q, Series R,
Series S 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 sub-Series at the time of establishing
and designating the same) have the following relative rights and preferences:"
<PAGE> 1
EXHIBIT (1)(h)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Amended: May 16, 1994
ARTICLE IV, Section 4.2 -- first paragraph
ARTICLE IV, Section 4.2 of the Declaration of Trust dated as of April
25, 1988, as amended, is hereby further amended by deleting the 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 I, which shall represent interests in First Omaha U.S.
Government Obligations Fund, Series M, which shall represent interests in
Riverside Capital Tennessee Municipal Obligations Fund, Series N, which shall
represent interests in First Omaha Equity Fund, Series O, which shall represent
interests in First Omaha Short/Intermediate Fixed Income Fund, Series P, which
shall represent interests in First Omaha Fixed Income Fund, Series Q, which
shall represent interests in Riverside Capital Low Duration Government
Securities Fund, Series R, which shall represent interests in Riverside Capital
Sunbelt Municipal Obligations Fund, Series S, which shall represent interests
in Riverside Capital Growth Fund and Series T which shall represent interests
in Riverside Capital Equity and Municipal Income Fund. Shares of Series A,
Series D, Series E, Series I, Series M, Series N, Series O, Series P, Series Q,
Series R, Series S, Series T 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 sub-Series at the
time of establishing and designating the same) have the following relative
rights and preferences:"
<PAGE> 1
EXHIBIT (1)(i)
<PAGE> 2
THE SESSIONS GROUP
AMENDMENT TO DECLARATION OF TRUST
---------------------------------
Adopted: April 10, 1996
ARTICLE IV, Section 4.2 -- first paragraph
ARTICLE IV, Section 4.2 of the Declaration of Trust dated as of April
25, 1988, as amended, is hereby further amended by deleting such first
paragraph of ARTICLE IV, Section 4.2 in its entirety and 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 The KeyPremier Prime Money Market Fund, and Series
V, which shall represent interests in The KeyPremier Pennsylvania Municipal
Bond Fund. Shares of Series A, Series D, Series E, Series M, Series Q,
Series S, Series U, Series V 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 sub-Series at the
time of establishing and designating the same) have the following relative
rights and preferences:"
<PAGE> 1
EXHIBIT (2)
<PAGE> 2
BY-LAWS
OF
THE SESSIONS GROUP
ARTICLE I
---------
Declaration of Trust and Offices
--------------------------------
1.1 DECLARATION OF TRUST. These By-Laws shall be subject to the
Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of The Sessions Group, the Ohio business trust established by the
Declaration of Trust (the "Trust").
1.2 OFFICES. The Trust shall maintain its principal office in
Columbus, Ohio, or in such other city as the Trustees otherwise may determine.
ARTICLE 2
---------
Trustees
--------
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may
from time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer or the Trustees calling the meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
<PAGE> 3
2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from
time to time by a majority of the votes cast upon the question, whether or not
a quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting
except as otherwise provided by the Investment Company Act of 1940.
2.6 ACTION BY CONSENT. Unless otherwise required by the Investment
Company Act of 1940, any action required or permitted to be taken at any
meeting of the Trustees or any committee thereof may be taken without a
meeting, if a written consent of such action is signed by a majority of the
Trustees then in office or a majority of the members of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
2.7 CHAIRMAN OF THE BOARD. The Trustees may at any time appoint one
of their number as Chairman of the Board, who shall serve at the pleasure of
the Trustees and who shall perform and execute such duties as the Trustees may
from time to time provide but who shall not by reason of performing or
executing these duties be deemed an officer or employee of the Trust.
ARTICLE 3
---------
Officers
--------
3.1 NUMBER. The officers of the Trust shall be chosen by the Trustees
and shall include a President, who shall be a Trustee, a Secretary and a
Treasurer. The Board of Trustees may, from time to time, elect or appoint one
or more Vice Presidents, Assistant Secretaries, and Assistant Treasurers.
3.2 OTHER OFFICERS. The Trustees may from time to time appoint such
other officers and agents as they shall deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties
as shall be determined from time to time by the Trustees. The Trustees may
delegate to one or more officers or agents the power to appoint any such
subordinate officers or agents and to prescribe their respective rights, terms
of office, authorities, and duties.
2
<PAGE> 4
3.3 ELECTION AND TENURE. The officers of the Trust shall be chosen
annually by the Trustees. Two or more offices may be held by the same person
but no officer shall execute, acknowledge, or verify any instrument in more
than one capacity, if such instrument is required by law, the Declaration of
Trust, or these By-Laws to be executed, acknowledged, or verified by two or
more officers. Any officer or agent may be removed by the Trustees. An
officer of the Trust may resign by filing a written resignation with the
President, with the Trustees, or with the Secretary. Any vacancy occurring in
any office of the Trust by death, resignation, removal, or otherwise shall be
filled by the Trustees.
3.4 COMPENSATION. The salaries or other compensation of all officers
and agents of the Trust shall be fixed by the Trustees, except that the
Trustees may delegate to any committee the power to fix the salary or other
compensation of any officer of the Trust.
3.5 PRESIDENT. The President shall be the chief executive officer of
the Trust, shall preside at all meetings of the Shareholders and the Trustees
unless a Chairman has been designated, shall be a member EX OFFICIO of all
standing committees, and shall see that all orders and resolutions of the
Trustees are carried into effect. The President, or such person as the
President may designate, shall sign, execute, and acknowledge, in the name of
the Trust, deeds, mortgages, bonds, contracts, and other instruments authorized
by the Trustees, except in the case where the signing and execution thereof
shall be delegated by the Trustees to some other officer or agent of the Trust.
The President shall also be the chief administrative officer of the Trust and
shall perform such other duties and have such other powers as the Trustees may
from time to time prescribe.
3.6 VICE PRESIDENTS. The Vice Presidents, if any, in the order of
their seniority, shall, in the absence or disability of the President, perform
the duties and exercise the powers of the President and shall perform such
other duties as the Trustees may from time to time prescribe.
3.7 SECRETARY. The Secretary shall attend meetings of the Trustees
and meetings of the Shareholders and record all the proceedings thereof and
shall perform like duties for any committee when required. The Secretary shall
give, or cause to be given, notice of meetings of the Shareholders and of the
Trustees, and shall perform such other duties as may be prescribed by the
Trustees or the President, under whose supervision he shall be.
3.8 ASSISTANT SECRETARIES. The Assistant Secretaries, if any, when so
directed by the Secretary, or in the absence or disability of the Secretary, in
order of their seniority, shall perform the duties and exercise the powers of
the Secretary and shall perform such other duties as the Trustees shall
prescribe.
3
<PAGE> 5
3.9 TREASURER. The Treasurer shall be the chief financial officer of
the Trust and shall be responsible for the maintenance of its accounting
records and shall render to the Trustees when the Trustees so require an
account of all the Trust's financial transactions and a report of the financial
condition of the Trust.
3.10 ASSISTANT TREASURERS. The Assistant Treasurers, if any, when so
directed by the Treasurer, or in the absence or disability of the Treasurer, in
the order of their seniority, shall perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as the Trustees may from
time to time prescribe.
ARTICLE 4
---------
Committees
----------
4.1 GENERAL. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided
by the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold offices at the pleasure
of the Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
ARTICLE 5
---------
Reports
-------
5.1 GENERAL. The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or any applicable
laws. Officers and Committees shall render such additional reports as they may
deem desirable or as may from time to time be required by the Trustees.
ARTICLE 6
---------
Fiscal Year
-----------
6.1 GENERAL. The fiscal year of the Trust shall be fixed, and shall
be subject to change by the Trustees
4
<PAGE> 6
ARTICLE 7
---------
Seal
----
7.1 GENERAL. If required by applicable law, the seal of the Trust
shall consist of a flat-faced die with the work "Ohio", together with the name
of the Trust and the year of its organization cut or engraved thereon, but,
unless otherwise required by the Trustees, the seal shall not be necessary to
be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
---------
Issuance of Share Certificates
------------------------------
8.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such
shares, who shall in either case be deemed, for all purposes hereunder, to be
the holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a
certificate stating the number of shares owned by him, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or a Vice President and by the Treasurer or Assistant
Treasurer. Such signatures may be facsimiles if the certificate is signed by a
transfer agent, or by a registrar, other than a Trustee, officer or employee of
the Trust. In case any officer who has signed or whose facsimile signature has
been placed on such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he were such officer at the time of its issue.
8.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction
or the mutilation of a share certificate, a duplicate certificate may be issued
in place thereof, upon such terms as the Trustees shall prescribe.
8.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who along shall be liable
as a shareholder, and entitled to vote thereon.
5
<PAGE> 7
8.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at
any time discontinue the issuance of share certificates and may, by written
notice to each shareholder, require the surrender of share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.
ARTICLE 9
---------
Custodian
---------
9.1 GENERAL. The Trust shall at all times employ a bank or trust
company having a capital surplus and undivided profits of at least Twenty-Five
Million Dollars ($25,000,000) as Custodian of the capital assets of the Trust.
The Custodian shall be compensated for its services by the Trust and upon such
basis as shall be agreed upon from time to time between the Trust and the
Custodian.
ARTICLE 10
----------
Dealings with Trustees and Officers
-----------------------------------
10.1 GENERAL. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he
were not a Trustee, officer or agent; and the Trust may accept subscriptions to
shares or repurchase shares from any firm or company in which he or she is
interested.
ARTICLE 11
----------
Amendments to the By-Laws
-------------------------
11.1 GENERAL. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
6
<PAGE> 1
EXHIBIT (5)(a)
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of July 19, 1988 between THE SESSIONS GROUP, an Ohio
business trust (herein called the "Trust"), and NATIONAL BANK OF COMMERCE, a
national banking association (herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, diversified, 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 furnish
investment advisory and administrative services to the initial investment
portfolio 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 initial investment
portfolio 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;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
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.
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, and any and all amendments thereto or restatements thereof (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;
(c) resolutions of the Trust's Board of Trustees authorizing
the appointment of the Investment Adviser and approving this Agreement;
<PAGE> 3
(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) 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 all amendments thereto; and
(f) the most recent Prospectus and Statement of Additional
Information 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.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of
Trustees, the Investment Adviser will provide a continuous investment program
for 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.
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 and resolutions of the Trust's Board
of Trustees. The Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will 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) will not make loans to any person to purchase or carry
shares of beneficial interest in the Trust or make loans to the Trust;
(d) will place orders pursuant to its investment
determinations for the Funds either directly with the issuer or with
2
<PAGE> 4
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. Consistent with this
obligation, when the execution and price offered by two or more brokers or
dealers are comparable, the Investment Adviser may, in its discretion,
purchase and sell portfolio securities to and from brokers and dealers who
provide the Investment Adviser with research advice and other services.
In no instance will portfolio securities be purchased from or sold to The
Winsbury Company, the Investment Adviser, or any affiliated person of the
Trust, The Winsbury Company 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 interestholders, 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 parent or its subsidiaries or affiliates. In dealing with such
customers, the Investment Adviser and its parent, subsidiaries, and
affiliates will not inquire or take into consideration whether securities
of those customers are held by the Trust.
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.
3
<PAGE> 5
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
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
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.
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 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.
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 The Winsbury
Company under the Administration Agreement between The Winsbury Company 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 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.
8. LIMITATION OF LIABILITY. 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
4
<PAGE> 6
of its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
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), 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 March 31, 1990.
Thereafter, if not terminated, this Agreement shall continue in
effect as to a particular Fund for successive periods of twelve months each
ending on March 31 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.)
10. 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.
11. 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.
5
<PAGE> 7
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 instrument to be
executed by their officers designated below as of the day and year first above
written.
THE SESSIONS GROUP
By:/s/ J. David Huber
---------------------------
Name: J. David Huber
-------------------------
Title: President
------------------------
NATIONAL BANK OF COMMERCE
By:/s/ J. Hallam Boyd, Jr.
---------------------------
Name: J. Hallam Boyd, Jr.
-------------------------
Title: Senior Vice President
------------------------
6
<PAGE> 8
Dated: July 19, 1988
Schedule A
to the
Investment Advisory Agreement
between The Sessions Group and
National Bank of Commerce
dated as of July 19, 1988
<TABLE>
<CAPTION>
Name of Fund Compensation*
- ------------ ------------
<S> <C>
Riverside Capital Money Market Fund Annual rate of thirty five one-hundredths of one
percent (.35%) of the average daily net assets of
such Fund
</TABLE>
THE SESSIONS GROUP
By:/s/ J. David Huber
---------------------------
Name: J. David Huber
-------------------------
Title: President
------------------------
NATIONAL BANK OF COMMERCE
By:/s/ J. Hallam Boyd, Jr.
---------------------------
Name: J. Hallam Boyd, Jr.
-------------------------
Title: Senior Vice President
------------------------
__________________________________
*All fees are computed daily and paid monthly.
A-1
<PAGE> 1
Exhibit (5)(b)
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of September 20, 1991, between THE SESSIONS GROUP,
an Ohio business trust (herein called the "Trust"), and NATIONAL BANK OF
COMMERCE, a national banking association (herein called the "Investment
Adviser").
WHEREAS, the Trust is registered as an open-end, diversified,
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 furnish
investment advisory and administrative 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 initial 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:
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.
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, and any and all amendments thereto or restatements
thereof (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) 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 all amendments thereto; and
(f) 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.
3. MANAGEMENT. Subject to the supervision of the Trust's Board
of Trustees, the Investment Adviser will provide a continuous investment
program for 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. 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 and resolutions of the
Trust's Board of Trustees. The Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(b) will 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;
- 2 -
<PAGE> 4
(c) will not make loans to any person to purchase or
carry shares of beneficial interest in the Trust or make loans to the
Trust;
(d) will 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. Consistent with
this obligation, when the execution and price offered by two or more
brokers or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers
and dealers who provide the Investment Adviser with research advice
and other services. Except as otherwise disclosed to the shareholders
of the Funds and as permitted by applicable laws, rules and
regulations, in no instance will portfolio securities be purchased
from or sold to The Winsbury Company, the Investment Adviser, or any
affiliated person of the Trust, The Winsbury Company 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
interestholders, 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 parent or its
subsidiaries or affiliates. In dealing with such customers, the
Investment Adviser and its parent, subsidiaries, and affiliates will
not inquire or take into consideration whether securities of those
customers are held by the Trust.
- 3 -
<PAGE> 5
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.
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 prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
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.
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 equal to the lesser of (a) the fee set forth on Schedule A hereto or (b)
such other fee as may from time to time be agreed upon in writing by the Trust
and Investment Adviser. 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.
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 The Winsbury
Company under the Administration Agreement between The Winsbury Company 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 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.
- 4 -
<PAGE> 6
8. LIMITATION OF LIABILITY. 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.
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),
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 March 31, 1993.
Thereafter, if not terminated, this Agreement shall continue
in effect as to a particular Fund for successive periods of twelve months each
ending on March 31 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.)
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.
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.
- 5 -
<PAGE> 7
12. 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.
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/ J. David Huber
---------------------------
Name: J. David Huber
-------------------------
Title: President
------------------------
NATIONAL BANK OF COMMERCE
By: /s/ J. Hallam Boyd, Jr.
---------------------------
Name: J. Hallam Boyd, Jr.
-------------------------
Title: Senior Vice President
------------------------
- 6 -
<PAGE> 8
Dated: September 20, 1991
Schedule A
to the
Investment Advisory Agreement
between The Sessions Group and
National Bank of Commerce
dated as of September 20, 1991
<TABLE>
<CAPTION>
Name of Fund Compensation* Date
------------ ------------ ----
<S> <C> <C>
Riverside Capital Annual rate of one percent September 20, 1991
Equity Fund (1.00%) of the first $50 million
of such Fund's average daily net
assets and seventy-five one-
hundredth of one percent (.75%)
of such Fund's remaining average
daily net assets
Riverside Capital Annual rate of sixty-five one- September 20, 1991
Fixed Income Fund hundredths of one percent (.65%)
of the average daily net assets
of such Fund
</TABLE>
THE SESSIONS GROUP
By: /s/ J. David Huber
---------------------------
Name: J. David Huber
-------------------------
Title: President
------------------------
NATIONAL BANK OF COMMERCE
By: /s/ J. Hallam Boyd, Jr.
---------------------------
Name: J. Hallam Boyd, Jr.
-------------------------
Title: Senior Vice President
------------------------
__________________________________
*All fees are computed daily and paid monthly.
A-1
<PAGE> 1
Exhibit (5)(c)
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of October 27, 1992, between THE SESSIONS GROUP, an
Ohio business trust (herein called the "Trust"), and NATIONAL BANK OF COMMERCE,
a national banking association (herein called 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 furnish
investment advisory and administrative services to a newly created investment
portfolio 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
portfolio 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:
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.
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, and any and all amendments thereto or restatements
thereof (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;
- 1 -
<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) 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 all amendments thereto; and
(f) 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.
3. MANAGEMENT. Subject to the supervision of the Trust's Board
of Trustees, the Investment Adviser will provide a continuous investment
program for 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. 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 and resolutions of the
Trust's Board of Trustees. The Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(b) will 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;
- 2 -
<PAGE> 4
(c) will not make loans to any person to purchase or
carry shares of beneficial interest in the Trust or make loans to the
Trust;
(d) will 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. Consistent with
this obligation, when the execution and price offered by two or more
brokers or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers
and dealers who provide the Investment Adviser with research advice
and other services. Except as otherwise disclosed to the shareholders
of the Funds and as permitted by applicable laws, rules and
regulations, in no instance will portfolio securities be purchased
from or sold to The Winsbury Company, the Investment Adviser, or any
affiliated person of the Trust, The Winsbury Company 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
interestholders, 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 parent or its
subsidiaries or affiliates. In dealing with such customers, the
Investment Adviser and its parent, subsidiaries, and affiliates will
not inquire or take into consideration whether securities of those
customers are held by the Trust.
- 3 -
<PAGE> 5
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.
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 prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
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.
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 equal to the lesser of (a) the fee set forth on Schedule A hereto or (b)
such other fee as may from time to time be agreed upon in writing by the Trust
and Investment Adviser. 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.
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 The Winsbury
Company under the Administration Agreement between The Winsbury Company 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 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.
- 4 -
<PAGE> 6
8. LIMITATION OF LIABILITY. 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.
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),
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 March 31, 1994.
Thereafter, if not terminated, this Agreement shall continue
in effect as to a particular Fund for successive periods of twelve months each
ending on March 31 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.)
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.
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.
- 5 -
<PAGE> 7
12. 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.
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/ Roy E. Rogers
---------------------------
Name Roy E. Rogers
-------------------------
Title President
------------------------
NATIONAL BANK OF COMMERCE
By /s/ J. Hallam Boyd, Jr.
---------------------------
Name J. Hallam Boyd, Jr.
-------------------------
Title Senior Vice President
------------------------
- 6 -
<PAGE> 8
Dated: October 27, 1992
Schedule A
to the
Investment Advisory Agreement
between The Sessions Group and
National Bank of Commerce
dated as of October 27, 1992
<TABLE>
<CAPTION>
Name of Fund Compensation* Date
- ------------ ------------ ----
<S> <C> <C>
Riverside Capital Annual rate of sixty-five one- October 27, 1992
Tennessee Municipal Obligations hundredths of one percent (.65%)
Fund of such Fund's average daily net
assets
THE SESSIONS GROUP
By /s/ Roy E. Rogers
----------------------------
Name Roy E. Rogers
--------------------------
Title President
-------------------------
NATIONAL BANK OF COMMERCE
By /s/ J. Hallam Boyd, Jr.
----------------------------
Name J. Hallam Boyd, Jr.
--------------------------
Title Senior Vice President
-------------------------
</TABLE>
__________________________________
*All fees are computed daily and paid monthly.
A-1
<PAGE> 1
Exhibit (5)(d)
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 5, 1994, between THE SESSIONS GROUP, an
Ohio business trust (herein called the "Trust"), and NATIONAL BANK OF COMMERCE,
a national banking association (herein called 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 furnish
investment advisory and administrative services to three 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 portfolio 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:
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.
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, and any and all amendments thereto or restatements
thereof (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;
- 1 -
<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) 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 all amendments thereto; and
(f) 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.
3. MANAGEMENT. Subject to the supervision of the Trust's Board
of Trustees, the Investment Adviser will provide a continuous investment
program for 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. 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 and resolutions of the
Trust's Board of Trustees. The Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(b) will 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;
- 2 -
<PAGE> 4
(c) will not make loans to any person to purchase or
carry shares of beneficial interest in the Trust or make loans to the
Trust;
(d) will 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. Consistent with
this obligation, when the execution and price offered by two or more
brokers or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers
and dealers who provide the Investment Adviser with research advice
and other services. Except as otherwise disclosed to the shareholders
of the Funds and as permitted by applicable laws, rules and
regulations, in no instance will portfolio securities be purchased
from or sold to The Winsbury Company, the Investment Adviser, or any
affiliated person of the Trust, The Winsbury Company 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
interestholders, 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 parent or its
subsidiaries or affiliates. In dealing with such customers, the
Investment Adviser and its parent, subsidiaries, and affiliates will
not inquire or take into consideration whether securities of those
customers are held by the Trust.
- 3 -
<PAGE> 5
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.
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 prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
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.
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 equal to the fee 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.
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 The Winsbury
Company under the Administration Agreement between The Winsbury Company 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 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.
8. LIMITATION OF LIABILITY. The Investment Adviser shall not be
liable for any error of judgment or mistake of law or for
- 4 -
<PAGE> 6
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.
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),
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 March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue
in effect as to a particular Fund for successive periods of twelve months each
ending on March 31 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.)
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.
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.
- 5 -
<PAGE> 7
12. 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.
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/ Roy E. Rogers
---------------------------
Name Roy E. Rogers
-------------------------
Title President
-------------------------
NATIONAL BANK OF COMMERCE
By /s/ John F. Ray
---------------------------
Name John F. Ray
--------------------------
Title Bank Officer
--------------------------
KHI0706\65495\94010\khi-5.inv
srh: 4/10/96
- 6 -
<PAGE> 8
Dated: June 3, 1994
Schedule A
to the
Investment Advisory Agreement
between The Sessions Group and
National Bank of Commerce
dated as of April 5, 1994
<TABLE>
<CAPTION>
Name of Fund Compensation* Date
- ------------ ------------ ----
<S> <C> <C>
Riverside Capital Annual Rate of fifty April 5, 1994
Low Duration one-hundredths of one
Government percent (.50%) of such
Securities Fund Fund's average net
assets
Riverside Capital Annual rate of sixty- April 5, 1994
Sunbelt Municipal five one-hundredths of
Obligations Fund one percent (.65%) of
such Fund's average
daily net assets
Riverside Capital Annual Rate of one April 5, 1994
Growth Fund percent (1.00%) of the
first $50 million of
such Fund's average
daily net assets and
seventy-five one-
hundredth of one
percent (.75%) of such
Fund's remaining
average daily net
assets
</TABLE>
__________________________________
*All fees are computed daily and paid monthly.
A-1
<PAGE> 9
<TABLE>
<S> <C> <C>
Riverside Capital Annual Rate of seventy June 3, 1994
Equity and Municipal one-hundredths of
Income Fund one percent (.70%)
of such Fund's
average net assets
THE SESSIONS GROUP
By /s/Roy E. Rogers
---------------------------
Name Roy E. Rogers
-------------------------
Title President
-------------------------
NATIONAL BANK OF COMMERCE
By /s/John F. Ray
---------------------------
Name John F. Ray
--------------------------
Title Bank Officer
--------------------------
</TABLE>
A-2
<PAGE> 1
Exhibit (5)(e)
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of July __, 1996, between THE SESSIONS
GROUP, an Ohio business trust (the "Trust"), and Martindale Andres & Company,
Inc., a ___________ 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;
- 1 -
<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) 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
(f) 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:
(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
- 2 -
<PAGE> 4
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. Except
as otherwise disclosed to the shareholders of the Funds and as
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
- 3 -
<PAGE> 5
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 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
- 4 -
<PAGE> 6
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.
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. 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
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. 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 __, 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 __ of each year, pro-
- 5 -
<PAGE> 7
vided 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.)
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.
- 6 -
<PAGE> 8
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 instrument to
be executed by their officers designated below as of the day and year first
above written.
THE SESSIONS GROUP
By
---------------------------
Name Walter B. Grimm
-------------------------
Title President
-------------------------
MARTINDALE ANDRES & COMPANY,
INC.
By
---------------------------
Name
-------------------------
Title
-------------------------
KHI0706\65495\95001\investme.agt
kji: 4/10/96
- 7 -
<PAGE> 9
Dated: July __, 1996
Schedule A
to the
Investment Advisory Agreement
between The Sessions Group and
Martindale Andres & Company, Inc.
dated as of July __, 1996
<TABLE>
<CAPTION>
Name of Fund Compensation* Date
------------ ------------ ----
<S> <C> <C>
The KeyPremier Prime Money Market Annual Rate of forty one- July __, 1996
Fund hundredths of one percent (0.40%)
of such Fund's average net assets
The KeyPremier Pennsylvania Annual rate of sixty one- July __, 1996
Municipal Bond Fund hundredths of one percent (0.60%)
of such Fund's average daily net
assets
</TABLE>
THE SESSIONS GROUP
By
---------------------------
Name Walter B. Grimm
-------------------------
Title President
-------------------------
MARTINDALE ANDRES & COMPANY,
INC.
By
---------------------------
Name
--------------------------
Title
-------------------------
__________________________________
*All Fees are computed daily and paid monthly.
A-1
<PAGE> 1
EXHIBIT (6)(b)
<PAGE> 2
BISYS FUND SERVICES LIMITED PARTNERSHIP, DISTRIBUTOR
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
DEALER AGREEMENT
Ladies and Gentlemen:
As the principal underwriter of the shares ("Shares") of each investment
company portfolio ("Fund") listed in Exhibit A attached hereto, which may be
amended from time to time, BISYS Fund Services Limited Partnership ("BISYS")
hereby agrees with you as follows:
1. You hereby represent that you are a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD") and that you
are a broker-dealer properly registered and qualified under all
applicable federal, state and local laws to engage in the business and
transactions described in this Agreement. You also represent that you
are a member in good standing of the Securities Investor Protection
Corporation ("SIPC"). We both agree to abide by the Rules of Fair
Practice of the NASD and all applicable laws, rules and regulations,
including applicable federal and state securities laws, rules and
regulations that are now or may become applicable to transactions
hereunder. You agree that it is your responsibility to determine the
suitability of any Fund Shares as investments for your customers, and
that BISYS has no responsibility for such determination. You further
agree to maintain all records required by applicable law or otherwise
reasonably requested by BISYS relating to Fund transactions that you
have executed. In addition, you agree to notify us immediately in the
event your status as a SIPC member changes.
2. We have furnished you with a list of the states or other jurisdictions
in which Fund Shares have been registered for sale or are otherwise
qualified for sale. Such list appears in Exhibit B attached hereto.
Shares of the Funds may from time to time be registered or otherwise
qualified for sale in states or jurisdictions other than those listed
in Exhibit B. Those states or jurisdictions are incorporated into
Exhibit B by reference. You agree to indemnify us and/or the Funds
for any claim, liability, expense or loss in any way arising out of a
sale of Shares in any state or jurisdiction in which such Shares are
not so registered or qualified for sale.
3. In all sales of Fund Shares, you shall act as agent for your customers
or as principal for your own bona fide investment. In no transaction
shall you act as our agent or as agent for any Fund or the Funds'
Transfer Agent. As agent for your customers, you are hereby
authorized to: (i) place orders directly with the investment company
(the "Company") for the purchase of Shares and (ii) tender Shares to
the Company for redemption, in each case subject to the terms and
conditions set forth in the applicable prospectus ("Prospectus") and
the operating procedures and policies established by us. The minimum
dollar purchase of Shares shall be the applicable minimum amount set
<PAGE> 3
forth in the applicable Prospectus, and no order for less than such
amount shall be accepted by you. The procedures relating to the
handling of orders shall be subject to instructions which we shall
forward to you from time to time. All orders are subject to
acceptance or rejection by BISYS in its sole discretion. No person is
authorized to make any representations concerning Shares of any Fund
except such representations contained in the relevant then-current
Prospectus and statement of additional information ("Statement of
Additional Information") and in such supplemental information that may
be supplied to you by us for a Fund. If you should make such an
unauthorized representation, you agree to indemnify the Funds and us
from and against any and all claims, liability, expense or loss in any
way arising out of or in any way connected with such representation.
You are specifically authorized to distribute the Prospectus and
Statement of Additional Information and sales material received from
us. No person is authorized to distribute any other sales material
relating to a Fund without our prior written approval. You further
agree to deliver, upon our request, copies of any relevant amended
Prospectus and Statement of Additional Information to shareholders of
the Fund to whom you have sold Shares. As agent for your customers,
you shall not withhold placing customers' orders for any Shares so as
to profit yourself as a result of such withholding and shall not
purchase any Shares from us except for the purpose of covering
purchase orders already received.
If any Shares purchased by you are repurchased by a Fund or by us for
the account of a Fund, or are tendered for redemption within seven
business days after confirmation by us of the original purchase order
for such Shares, (i) you agree forthwith to refund to us the full
concession allowed to you on the original sale and (ii) we shall
forthwith pay to such Fund that part of the discount retained by us on
the original sale. Notice will be given to you of any such repurchase
or redemption within ten days of the date on which the tender of
Shares for redemption is delivered to us or to the Fund. Neither
party to this Agreement shall purchase any Shares from a record holder
at a price lower than the net asset value next computed by or for the
issuer thereof. Nothing in this subparagraph shall prevent you from
selling Shares for the account of a record holder to us or the issuer
and charging the investor a fair commission for handling the
transaction. Any order placed by you for the repurchase of Shares of
a Fund is subject to the timely receipt by the Company of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
4. We will furnish you, upon request, with offering prices for the Shares
in accordance with the then-current Prospectuses for the Funds, and
you agree to quote such prices subject to confirmation by us on any
Shares offered to you for sale. The public offering price shall equal
the net asset value per Share of a Fund plus a front-end sales load,
if applicable. For Funds with a front-end sales load, you will
receive a discount from the public offering price as outlined in the
current Prospectus. For Funds with a contingent deferred sales load,
you will receive from us, or a paying agent appointed by us, a
2
<PAGE> 4
commission in the amount shown in Exhibit C. We reserve the right to
waive sales charges. Each price is always subject to confirmation,
and will be based upon the net asset value next computed after receipt
by us of an order that is in good form. You acknowledge that it is
your responsibility to date and time stamp all orders received by you
and to transmit such orders promptly to us. You further acknowledge
that any failure to promptly transmit such orders to us that causes a
purchaser of Shares to be disadvantaged, based upon the pricing
requirements of Rule 22c-1 under the 1940 Act, shall be your sole
responsibility. We reserve the right to cancel this Agreement at any
time without notice if any Shares shall be offered for sale by you at
less than the then-current offering price determined by or for the
applicable Fund.
5. Your customer will be entitled to a front-end sales load reduction
with respect to purchases made under a letter of intent ("Letter of
Intent") or right of accumulation ("Right of Accumulation") described
in the Prospectuses. In such case, your dealer's concession will be
based upon such reduced sales load; however, in the case of a Letter
of Intent signed by your customer, an adjustment to a higher dealer's
concession will thereafter be made to reflect actual purchases by your
customer if he or she should fail to fulfill the Letter of Intent.
Your customer will be entitled to an additional front-end sales load
reduction in those instances in which the customer makes purchases
that exceed the dollar amount indicated in the Letter of Intent and
qualifies for an additional front-end sales load reduction pursuant to
the appropriate Prospectus. In such case, your dealer's concession
will be reduced to reflect such additional sales load reduction. When
placing wire trades, you agree to advise us of any Letter of Intent
signed by your customer or of any Right of Accumulation available to
such customer of which he or she has made you aware. If you fail to
so advise us, you will be liable for the return of any commissions
plus interest thereon.
6. With respect to orders that are placed for the purchase of Fund
Shares, unless otherwise agreed, settlement shall be made with the
Company within three (3) business days after our acceptance of the
order. If payment is not so received or made, we reserve the right to
cancel the sale, or, at our option, to sell the Shares to the Funds at
the then prevailing net asset value. In this event or in the event
that you cancel the trade for any reason, you agree to be responsible
for any loss resulting to the Funds or to us from your failure to make
payments as aforesaid. You shall not be entitled to any gains
generated thereby.
7. You shall be responsible for the accuracy, timeliness and completeness
of any orders transmitted by you on behalf of your customers by wire
or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions. In addition, you
agree to guarantee the signatures of your customers when such
guarantee is required by the Prospectus of a Fund. In that
connection, you agree to indemnify and hold harmless all persons,
including us and the Funds' Transfer Agent, against any and all loss,
cost, damage or expense suffered or incurred in reliance upon such
signature guarantee.
3
<PAGE> 5
8. No advertisement or sales literature with respect to a Fund (as such
terms are defined in the NASD's Rules of Fair Practice) shall be used
by you without first having obtained our approval.
9. Neither of us shall be liable to the other except for (1) acts or
failures to act which constitute a lack of good faith or negligence
and (2) obligations expressly assumed under this Agreement. In
addition, you agree to indemnify us and hold us harmless from any
claims or assertions relating to the lawfulness of your participation
in this Agreement and the transactions contemplated hereby or relating
to any activities of any persons or entities affiliated with your
organization which are performed in connection with the discharge of
your responsibilities under this Agreement. If such claims are
asserted, we shall have the right to manage our own defense, including
the selection and engagement of legal counsel, and all costs of such
defense shall be borne by you.
10. This Agreement will automatically terminate in the event of its
assignment. This Agreement may be terminated by either of us, without
penalty, upon ten days' prior written notice to the other party. This
Agreement may also be terminated at any time without penalty by the
vote of a majority of the members of a Fund's Board of Trustees who
are not "interested persons" (as such term is defined in the 1940
Act), or (with respect to a Fund) by a vote of a majority of the
outstanding voting securities of that Fund on ten days' written
notice.
11. All communications to us shall be sent to the address set forth on
page 1 hereof or at such other address as we may designate in writing.
Any notice to you shall be duly given if mailed or telecopied to you
at the address set forth below or at such other address as you may
provide in writing.
_________________________________________________________
_________________________________________________________
_________________________________________________________
12. You hereby represent that all requisite corporate proceedings have
been undertaken to authorize you to enter into this Agreement and to
perform the services contemplated herein. You further represent that
the individual that has signed this Agreement below is a duly elected
officer that has been empowered to act for and on behalf of your
organization with respect to the execution of this Agreement.
13. This Agreement supersedes any other agreement between us with respect
to the offer and sale of Shares and relating to any other matters
discussed herein. All covenants, agreements, representations and
warranties made herein shall be deemed to have been material and
relied on by each party. The invalidity or unenforceability of any
term or provision hereof shall not affect the validity or
enforceability of any other term or provision thereof. This Agreement
may be executed in any number of counterparts, which together shall
constitute one instrument, and shall be governed by and construed
4
<PAGE> 6
in accordance with the laws (other than the conflict of laws rules) of
the State of Ohio and shall bind and insure to the benefit of the
parties hereto and their respective successors and assigns.
If the foregoing corresponds with your understanding of our agreement, please
sign this document and the accompanying copies thereof in the appropriate space
below and return the same to us, whereupon this Agreement shall be binding upon
each of us, effective as of the date of execution.
BISYS FUND SERVICES LIMITED PARTNERSHIP The foregoing Agreement is hereby
BY: BISYS FUND SERVICES, INC., GENERAL accepted:
PARTNER
_________________________________
[name]
By _____________________________________ By ______________________________
Stephen G. Mintos Date Date
Executive Vice President
Title: ___________________________
KFH0706\65495\EDGAR.EXH\DEALER
kji: 4/10/96 5
<PAGE> 1
EXHIBIT (6)(c)
<PAGE> 2
DISTRIBUTION AGREEMENT
July __, 1996
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
Gentlemen:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, The Sessions Group (the "Trust"), an
Ohio business trust, has agreed that BISYS Fund Services Limited Partnership
("Distributor"), shall be, for the period of this Distribution Agreement (the
"Agreement"), the distributor of the shares of beneficial interest of the two
newly created investment portfolios and any additional investment portfolios of
the Trust, as each are or will be identified on Schedule A hereto (such newly
created investment portfolio and any additional investment portfolios together
called the "Funds"). Such shares of beneficial interest are hereinafter called
"Shares."
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").
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.
Except as provided in Section 2 herein, 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 All activities by Distributor and its partners, agents, and
employees as distributor of the Shares shall comply with all applicable laws,
rules and regulations, including, without
<PAGE> 3
limitation, all rules and regulations made or adopted pursuant to the
Investment Company Act of 1940 ("1940 Act") by the Securities and Exchange
Commission or 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) quarterly earnings
statements prepared by the Trust, (c) a monthly itemized list of the securities
in the Funds, (d) monthly balance sheets as soon as practicable after the end
of each month, and (e) from time to time such additional information regarding
the financial condition of the Funds as Distributor may reasonably request.
1.10 The Trust represents to Distributor that all registration
statements and prospectuses filed by the Trust with the Securities and Exchange
Commission under the 1933 Act with respect to the Shares have been carefully
prepared in conformity with the requirements of said Act and rules and
regulations of the
- 2 -
<PAGE> 4
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
statement and any prospectus and Statement of Additional Information relating
to the Funds filed with the Securities and Exchange Commission and any
amendments and supplements thereto which at any time shall have been filed with
the same Commission. The Trust represents and warrants to Distributor that any
registration statement and prospectus, when such registration statement becomes
effective, will contain all statements required to be stated therein in
conformity with said Act and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of the Shares. The 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
- 3 -
<PAGE> 5
upon any omission, or alleged omission, to state a material fact required to be
stated in either any registration statement or any prospectus or necessary to
make the statements in either thereof not misleading; provided, however, that
the 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 gross 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
- 4 -
<PAGE> 6
fees and expenses of any counsel retained by Distributor or them. 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, as amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this paragraph 1.13
shall in any way restrict or have an application to or bearing upon the 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 Securities and Exchange
Commission for amendments to the registration statement or prospectus
then in effect or for additional information;
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the effectiveness of
the registration statement or prospectus then in effect or the
initiation by service of process on the 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 Securities and Exchange
Commission with respect to any amendment to any registration statement
or prospectus which may from time to time be filed with the Securities
and Exchange Commission.
- 6 -
<PAGE> 8
For purposes of this section, informal requests by or acts of the
Staff of the Securities and Exchange Commission shall not be deemed actions of
or requests by the Securities and Exchange Commission.
1.15 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. Fee.
---
The Distributor shall receive from the Funds identified on Schedule B
hereto (the "12b-1 Plan Funds") a distribution fee and a service fee at the
rate and upon the terms and conditions set forth in the Distribution and
Shareholder Service Plan attached as Schedule C hereto, and as amended from
time to time. The distribution fee and the service fee shall be accrued daily
and shall be paid on the first business day of each month, or at such time(s)
as the Distributor shall reasonably request.
3. Sale and Payment.
----------------
Under this Agreement, the following provisions shall apply with
respect to the sale of and payment of Shares sold at an offering price which
includes a sales load as described in the prospectuses of any Funds identified
on Schedule D hereto (collectively, the "Load Funds"; individually, a "Load
Fund"):
(a) The Distributor shall have the right, as principal,
to purchase Shares from the Load Funds at their net asset value and to
sell such Shares to the public against orders therefor at the
applicable public offering price, as defined in Section 3 hereof. The
Distributor shall also have the right, as principal, to sell Shares to
dealers against orders therefor at the public offering price less a
concession determined by the Distributor, which concession shall not
exceed the amount of the sales charge or underwriting discount, if
any, referred to in Section 4 below.
- 7 -
<PAGE> 9
(b) Prior to the time of delivery of any Shares by a Load
Fund to, or on the order of, the Distributor, the 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] [federal reserve] funds equal to
the applicable net asset value of such Shares. The Distributor may
retain so much of any sales charge or underwriting discount as is not
allowed by the Distributor as a concession to dealers.
4. Public Offering Price.
---------------------
The public offering price shall be the net asset value of Shares, plus
any applicable sales charge 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 Fund.
5. Issuance of Shares.
------------------
The Load Funds reserve the right to issue, transfer or sell 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 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.
6. Term and Matters Relating to the Trust as an Ohio Business
----------------------------------------------------------
Trust.
-----
This Agreement shall become effective as of the date first set forth
above, and, unless sooner terminated as provided herein, shall continue in
effect until July __, 1998. Thereafter, if not terminated as provided herein,
this Agreement shall continue in effect automatically for successive annual
periods ending on July __ of each year with respect to each of the Funds,
provided such continuance is specifically approved at least annually by (i) the
Trust's Board of Trustees or (ii) 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 the majority of the Trust's
Trustees who are not parties to the agreement or interested persons (as defined
in the 1940 Act) of any party to this agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable without penalty, on
- 8 -
<PAGE> 10
not less than sixty days' notice, by the Trust's Board of Trustees, by vote of
a majority of the outstanding voting securities (as defined in the 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.
- 9 -
<PAGE> 11
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below
indicated, whereupon it shall become a binding agreement between us.
Yours very truly,
THE SESSIONS GROUP
By
----------------------------
Name Walter B. Grimm
---------------------------
Title President
--------------------------
Accepted:
BISYS FUND SERVICES LIMITED PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By
--------------------------
Name
-------------------------
Title
------------------------
- 10 -
<PAGE> 12
Dated: July __, 1996
Schedule A
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July __, 1996
<TABLE>
<CAPTION>
Name of Fund Date
- ------------ ----
<S> <C>
The KeyPremier Prime Money July __, 1996
Market Fund
The KeyPremier Pennsylvania
Municipal Bond Fund July __, 1996
</TABLE>
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By By
--------------------------- ---------------------------
Name Name Walter B. Grimm
------------------------- -------------------------
Title Title President
------------------------ ------------------------
A-1
<PAGE> 13
Dated: July __, 1996
Schedule B
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July __, 1996
<TABLE>
<Caption
<S> <C>
Name of Distribution Plan Fund Date
- ------------------------------ ----
The KeyPremier Prime Money July __, 1996
Market Fund
The KeyPremier Pennsylvania
Municipal Bond Fund July __, 1996
</TABLE>
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By By
--------------------------- ---------------------------
Name Name Walter B. Grimm
------------------------- -------------------------
Title Title President
------------------------ ------------------------
B-1
<PAGE> 14
Schedule C
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July __, 1996
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
-----------------------------------------
This Plan (the "Plan") constitutes the distribution and shareholder
service plan of The Sessions Group, an Ohio business trust (the "Trust"),
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). The Plan relates to those investment portfolios ("Funds")
identified on Schedule B to the Trust's Distribution Agreement dated as of July
__, 1996, and as amended from time to time (the "Distribution Plan Funds").
SECTION 1. Each Distribution Plan Fund shall pay to BISYS Fund
Services Limited Partnership, the distributor (the "Distributor") of the
Funds' shares of beneficial interest (the "Shares") a fee in an amount not to
exceed on an annual basis .25% of the average daily net asset value of such
Fund (the "12b-1 Fee") for: (i) (a) efforts of the Distributor expended in
respect of or in furtherance of sales of Shares, and (b) to enable the
Distributor to make payments to banks and other institutions and
broker/dealers (a "Participating Organization") for distribution assistance
pursuant to an agreement with the Participating Organization; (ii)
reimbursement of expenses (a) incurred by the Distributor, and (b) incurred by
a Participating Organization pursuant to an agreement in connection with
distribution assistance including, but not limited to, the reimbursement of
expenses relating to printing and distributing prospectuses to persons other
than Shareholders of such Distribution Plan Fund, printing and distributing
advertising and sales literature and reports to Shareholders for use in
connection with the sales of Shares, processing purchase, exchange and
redemption request from customers and placing orders with the Distributor or
the Distribution Plan Fund's transfer agent, and personnel and communication
equipment used in servicing Shareholder accounts and prospective shareholder
inquiries; (iii) (a) efforts of the Distributor expended in servicing
shareholders holding Shares, and (b) to enable the Distributor to make payments
to a Participating Organization for shareholder services pursuant to an
agreement with the Participating Organization; and (iv) reimbursement of
expenses (a) incurred by the Distributor, and (b) incurred by a Participating
Organization pursuant to an agreement in connection with shareholder service
including, but not limited to, personal, continuing services to investors
C-1
<PAGE> 15
in the Shares of such Distribution Plan Fund, and providing office
space, equipment, telephone facilities and various personnel
including clerical, supervisory and computer, as is necessary or
beneficial in connection therewith.
For purposes of the Plan, a Participating Organization may
include the Distributor or any of its affiliates or subsidiaries.
SECTION 2. The 12b-1 Fee shall be paid by the Distribution Plan
Funds to the Distributor only to compensate or to reimburse the Distributor
for payments or expenses incurred pursuant to Section 1.
SECTION 3. The Plan shall not take effect with respect to a
Distribution Plan Fund until it has been approved by a vote of the initial
shareholder of such Fund.
SECTION 4. The Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
1940 Act or the rules and regulations thereunder) of both (a) the Trustees of
the Trust, and (b) the Independent Trustees of the Trust cast in person at a
meeting called for the purpose of voting on the Plan or such agreement.
SECTION 5. The Plan shall continue in effect for a period of more
than one year after it takes effect only so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in Section 4.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by the Distribution Plan Funds pursuant to the Plan or any
related agreement shall provide to the Trustees of the Trust, and the Trustees
shall review, at least quarterly, a written report of the amounts so expended
and the purposes for which such expenditures were made.
SECTION 7. The Plan may be terminated at any time as to a
Distribution Plan Fund by vote of a majority of the Independent Trustees, or by
vote of a majority of a Distribution Plan Fund's outstanding voting securities.
SECTION 8. All agreements with any person relating to implementation
of the Plan shall be in writing, and any agreement related to the Plan shall
provide:
(a) That such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the outstanding
voting securities of the Distribution Plan Fund, on not more than 60
days' written notice to any other party to the agreement; and
C-2
<PAGE> 16
(b) That such agreement shall terminate automatically in
the event of its assignment.
SECTION 9. The Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 1 hereof without
approval in the manner provided in Section 3 hereof, and all material
amendments to the Plan shall be approved in the manner provided for approval of
the Plan in Section 4.
SECTION 10. As used in the Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
the Plan or any agreements related to it, and (b) the terms "assignment",
"interested person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
C-3
<PAGE> 17
Schedule D Dated: July __, 1996
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July __, 1996
Name of Load Fund Date
- ----------------- ----
The KeyPremier Pennsylvania July __, 1996
Municipal Bond Fund
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By By
--------------------------- ---------------------------
Name Name Walter B. Grimm
------------------------- -------------------------
Title Title President
------------------------ ------------------------
D-1
<PAGE> 1
EXHIBIT (6)(d)
<PAGE> 2
BISYS FUND SERVICES LIMITED PARTNERSHIP, DISTRIBUTOR
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
SHAREHOLDER SERVICES AGREEMENT
Ladies and Gentlemen:
As the principal underwriter of the shares ("Shares") of each investment
company portfolio ("Fund") of _________________________________________
__________________ (the "Trust"), BISYS Fund Services Limited Partnership
("BISYS") hereby agrees that you, the undersigned broker-dealer, shall provide
the shareholder services that are more fully described below.
1. We represent and warrant to you that the shareholder services
described herein have been authorized pursuant to a Distribution and
Shareholder Services Plan (the "Plan") adopted by the shareholders
("Shareholders") of each Fund. The Plan has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act").
It is intended that you shall provide such shareholder services to
your customers ("Customers") who may, from time to time, beneficially
own a Fund's Shares.
2. You represent and warrant to us that (i) you are and will be at all
times relevant to this Agreement a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"), and
(ii) you are and will be at all times relevant to this Agreement a
broker-dealer properly registered and qualified under all applicable
federal, state and local laws to engage in the business and
transactions described in this Agreement. You agree to comply with
all applicable laws, including federal and state securities laws, the
Rules and Regulations of the Securities and Exchange Commission and
the Rules of Fair Practice of the NASD. We have furnished you with a
list of the states or other jurisdictions in which Shares of the Funds
have been registered for sale under, or are otherwise qualified for
sale pursuant to, the respective securities laws of such states and
jurisdictions. You agree that you will not offer a Fund's Shares to
persons in any jurisdiction in which such Shares are not registered or
otherwise qualified for sale. You further agree that you will
maintain all records required by applicable law or otherwise
reasonably requested by us relating to Fund transactions that you have
executed.
3. You agree to provide various types of distribution assistance and
Shareholder support services with respect to a Fund's Shares. Such
distribution assistance and Shareholder support services may include
those items that are enumerated in Schedule A attached hereto and such
other similar services that we may reasonably request to the extent
you are permitted to do so under applicable statutes, rules and
regulations.
4. For all purposes of this Agreement, you shall be deemed to be an
independent contractor, and shall have no authority to act as agent
for us or for the Trust in any matter or in any respect. No person is
authorized to make any representations concerning us, the Trust,
<PAGE> 3
or a Fund's Shares except those representations contained in the
Fund's then-current Prospectus and the Trust's Statement of Additional
Information and in such printed information as we or the Trust may
subsequently prepare. You are specifically authorized to distribute
to Customers a Fund's Prospectus (including any supplements to such
Prospectus), the Trust's Statement of Additional Information and sales
material received from us. No person is authorized to distribute any
other sales material relating to the Trust without our prior written
approval. You further agree to deliver to Customers, upon our
request, copies of amended Prospectuses and Statements of Additional
Information.
5. You and your employees will, upon request, be available during normal
business hours to consult with us concerning the performance of your
responsibilities under this Agreement. You will provide to us and the
Trust's Board of Trustees a written report of all expenditures under
this Agreement, including a discussion of the purposes for which such
expenditures were made. In addition, you will furnish to us or to the
Trust such information as we or the Trust may reasonably request
(including, without limitation, periodic certifications confirming the
rendering of distribution assistance and support services with respect
to Shares described herein), and will otherwise cooperate with us and
the Trust in the preparation of reports to the Trust's Board of
Trustees concerning this Agreement and the monies paid or payable by
us under this Agreement, as well as any other reports or filings that
may be required by law.
6. The minimum dollar purchase of a Fund's Shares (including Shares being
acquired by Customers pursuant to the exchange privileges described in
the Fund's Prospectus) shall be the applicable minimum amount set
forth in the Prospectus of such Fund, and no order for less than such
amount shall be accepted by you. The procedures relating to the
handling of orders shall be subject to instructions which we shall
forward to you from time to time. All orders for a Fund's Shares are
subject to acceptance or rejection by the Trust in its sole
discretion, and the Trust may, in its discretion and without notice,
suspend or withdraw the sale of a Fund's Shares, including the sale of
such Shares to you for the account of any Customer or Customers. You
acknowledge that it is your responsibility to date and time stamp all
orders received by you and to transmit such orders promptly to us.
You further acknowledge that any failure to promptly transmit such
orders to us that causes a purchaser of Shares to be disadvantaged,
based upon the pricing requirements of Rule 22c-1 under the 1940 Act,
shall be your sole responsibility. We reserve the right to cancel
this Agreement at any time without notice if any Shares shall be
offered for sale by you at less than the then-current offering price
determined by or for the applicable Fund.
7. For the services provided under this Agreement, you shall receive a
fee calculated at the applicable annual rate set forth on Schedule B
hereto with respect to the average daily net asset value of each
Fund's Shares which are owned of record by you as nominee for
Customers or which are owned by Customers whose records, as maintained
by such Fund or its agent, designate you as the Customer's dealer of
record, which fee will be
2
<PAGE> 4
computed daily and paid monthly. The fee will not be paid with
respect to (i) Shares of a Fund sold by you and redeemed or
repurchased by the Trust or by us within seven business days of
receipt of confirmation of such sale, or (ii) a Customer if the amount
of such fee on an annual basis with respect to such Customer shall be
less than $1.00. The fee rate stated on Schedule B hereto may be
prospectively increased or decreased by us in our sole discretion, at
any time upon notice to you. Such fee shall be subject to the
limitations on the payment of asset-based sales charges that are set
forth in Article III, Section 26 of the NASD's Rules of Fair Practice.
8. Neither of us shall be liable to the other except for (1) acts or
failures to act which constitute a lack of good faith or negligence
and (2) obligations expressly assumed under this Agreement. In
addition, you agree to indemnify us and hold us harmless from any
claims or assertions relating to the lawfulness of your participation
in this Agreement and the transactions contemplated hereby or relating
to any activities of any persons or entities affiliated with your
organization which are performed in connection with the discharge of
your responsibilities under this Agreement. If such claims are
asserted, you shall have the right to manage your own defense,
including the selection and engagement of legal counsel, and all costs
of such defense shall be borne by you.
9. This Agreement will automatically terminate in the event of its
assignment. This Agreement may be terminated by either of us, without
penalty, upon ten days' prior written notice to the other party. This
Agreement may also be terminated at any time without penalty by the
vote of a majority of the Disinterested Trustees of a Fund or by a
vote of a majority of the outstanding voting securities of a Fund on
ten days' written notice.
10. All communications to us shall be sent to the address set forth on
page 1 hereof or at such other address as we may designate in writing.
Any notice to you shall be duly given if mailed or telecopied to you
at the address set forth below or at such other address as you may
provide in writing.
---------------------
---------------------
---------------------
11. You represent and warrant that all requisite corporate proceedings
have been undertaken to authorize you to enter into this Agreement and
to perform the services contemplated herein. You further represent and
warrant that the individual that has signed this Agreement below is a
duly elected officer that has been empowered to act for and on behalf
of your organization with respect to the execution of this Agreement.
12. This Agreement supersedes any other agreement between us with respect
to the offer and sale of Shares and relating to any other matters
discussed herein. All covenants, agreements, representations and
warranties made herein shall be deemed to have been
3
<PAGE> 5
material and relied on by each party. The invalidity or
unenforceability of any term or provision hereof shall not affect the
validity or enforceability of any other term or provision thereof.
This Agreement may be executed in any number of counterparts, which
together shall constitute one instrument, and shall be governed by and
construed in accordance with the laws (other than the conflict of laws
rules) of the State of Ohio and shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns.
If the foregoing corresponds with your understanding of our agreement, please
sign this document and the accompanying copies thereof in the appropriate space
below and return the same to us, whereupon this Agreement shall be binding upon
each of us, effective as of the date of execution.
<TABLE>
<CAPTION>
<S> <C>
BISYS FUND SERVICES LIMITED PARTNERSHIP The foregoing Agreement is hereby
BY: BISYS FUND SERVICES, INC., GENERAL PARTNER accepted:
----------------------------------
Company Name
By By
------------------------------------- -------------------------------
Stephen G. Mintos Date Date
Date Executive Vice President
</TABLE>
4
<PAGE> 6
Dated: As of
-------------------
Schedule A
to the
Shareholder Services Agreement
SHAREHOLDER SERVICES
--------------------------------
In accordance with Section 3 of the Shareholder Services Agreement, you agree
to provide various types of distribution assistance and shareholder support
services that we may reasonably request with respect to Fund Shares that are
beneficially owned by your Customers. Such distribution assistance and
shareholder support services may include the following.
DISTRIBUTION ASSISTANCE
- -----------------------
(i) placing orders with the Trust for the purchase or exchange of a Fund's
Shares and tendering a Fund's Shares to the Trust for redemption; (ii)
promoting the purchase of Shares by Customers; (iii) responding to inquiries
from Customers concerning their investments in Fund Shares; (iv) engaging in
advertising with respect to a Fund's Shares; and (v) distributing Fund
prospectuses, reports and sales literature.
SHAREHOLDER SUPPORT SERVICES
- ----------------------------
(i) providing Customers with a service that invests the assets of their
accounts in a Fund's Shares pursuant to specific or pre-authorized
instructions; (ii) processing dividend payments from the Trust on behalf of
Customers; (iii) providing information periodically to Customers showing their
positions in a Fund's Shares; (iv) arranging for bank wire transfers of funds
to or from a Customer's account; (v) responding to inquiries from Customers
relating to the services performed by the Participating Organization under this
Agreement; (vi) providing subaccounting, in the case of omnibus accounts, with
respect to a Fund's Shares beneficially owned by Customers or the information
to the Trust necessary for subaccounting; (vii) if required by law, forwarding
Shareholder communications from the Trust (such as proxies, Shareholder
reports, annual and semi-annual financial statements, and dividend,
distribution, and tax notices) to Customers; (viii) forwarding to Customers
proxy statements and proxies containing any proposals regarding this Agreement
or a Fund's Plan; and (ix) rendering ongoing advice respecting the suitability
of particular investment opportunities offered by the Trust in light of the
Customer's need.
A-1
<PAGE> 7
Dated: As of
------------------
Schedule B
to the
Shareholder Services Agreement
Compensation
------------------------------
Annual rate of up to _______ one-hundredths of one percent (_______%)
of the average daily net asset value of each Fund's Shares held of
record by you from time to time on behalf of Customers.
_________________________
* All fees are computed daily and paid monthly.
B-1
<PAGE> 1
EXHIBIT (8)(b)
<PAGE> 2
CUSTODY AGREEMENT
-----------------
Agreement made as of this ___ 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/Treasury
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 Clerk, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Clerk, 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
-3-
<PAGE> 5
other securities having characteristics similar to common stocks, 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(es) 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 it with respect to the 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
-5-
<PAGE> 7
the Depository 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 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 definitive
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
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<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
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<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
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<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
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<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.
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<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
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<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.
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<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
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<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)
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<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
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<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
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<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.
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<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
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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:
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(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 for any other reason indebted to the
Custodian with respect to a Series, including any indebtedness 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
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 Fund may have an
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interest which is then in the Custodian's possession or control or in
possession or control of any third party acting in the Custodian's behalf. 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 collateral status to be returned
directly to the Custodian, and the
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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.
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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
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persons or Officers, or by only a single Officer, nor for any alteration,
omission, or failure to promptly forward by the Intermediary.
9(a). Except as otherwise specifically provided in Section 9(b) of
this Article, the Custodian shall have no liability for any losses, damages,
injuries, claims, costs or expenses arising out of or in connection with any
failure, malfunction or other problem relating to the Terminal Link except for
money damages suffered as the direct result of the negligence of the Custodian
in an amount not exceeding for any incident $25,000 provided, however, that the
Custodian shall have no liability under this Section 9 if the Fund fails to
comply with the provisions of Section 11.
9(b). The Custodian's liability for its negligence in executing or
failing to execute in accordance with a Certificate received through Terminal
Link shall be only with respect to a transfer of funds which is not made in
accordance with such Certificate after such Certificate shall have been duly
acknowledged by the Custodian, and shall be contingent upon the Fund complying
with the provisions of Section 11 of this Article, and shall be limited to (i)
restoration of the principal amount mistransferred, if and to the extent that
the Custodian would be required to make such restoration under applicable law,
and (ii) the lesser of (A) a Fund's actual pecuniary loss incurred by reason of
its loss of use of the mistransferred funds or the funds which were not
transferred, as the case may be, or (B) compensation for the loss of the use of
the mistransferred funds or the funds which were not transferred, as the case
may be, at a rate per annum equal to the average federal funds rate as computed
from the Federal Reserve Bank of New York's daily determination of the
effective rate for federal funds, for the period during which a Fund has lost
use of such funds. In no event shall the Custodian have any liability for
failing to execute in accordance with a Certificate a transfer of funds where
the Certificate is received by the Custodian through Terminal Link other than
through the applicable transfer module for the particular instructions
contained in such Certificate.
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.
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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.
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
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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.
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.
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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 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.
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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;
(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.
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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 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 the Fund, 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.
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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 is set
forth in Exhibit F hereto as the same may be agreed upon and amended 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 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.
-35-
<PAGE> 37
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 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
-36-
<PAGE> 38
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) 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 Fund 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 Fund 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
-37-
<PAGE> 39
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.
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.
-38-
<PAGE> 40
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.
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:
---------------------
[SEAL]
Attest:
- -----------------------
THE BANK OF NEW YORK
By:
---------------------
Name:
Title:
[SEAL]
Attest:
- -----------------------
-39-
<PAGE> 41
APPENDIX A
I, ____________________, President and I, __________________,
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 ------------------------
J. David Huber Vice President ------------------------
William J. Tomko Vice President ------------------------
Stephen J. Mintos Treasurer ------------------------
Nancy E. Converse Secretary ------------------------
Alaina V. Metz Assistant Secretary -----------------------
R. Jeffrey Young Assistant Secretary ------------------------
</TABLE>
-40-
<PAGE> 42
APPENDIX B
SERIES
The KeyPremier Prime Money Market Fund
The KeyPremier Pennsylvania Municipal Bond Fund
-41-
<PAGE> 43
APPENDIX C
I, _______________, 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, Nancy E. Converse, hereby certifies that he or she is
the duly elected and acting Secretary 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 ___,
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 ___, 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 ____ day of ______________, 1996.
________________________
[SEAL]
-43-
<PAGE> 45
EXHIBIT B
CERTIFICATION
The undersigned, Nancy E. Converse, hereby certifies that he or she is
the duly elected and acting Secretary 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 ___,
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 ___________________, 199__, (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 ____ day of _________________, 1996.
_________________________
[SEAL]
-44-
<PAGE> 46
EXHIBIT B-1
CERTIFICATION
The undersigned, Nancy E. Converse, hereby certifies that he or she is
the duly elected and acting Secretary 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 ___,
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 ___________________, 199__ (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 ___ day of ______________, 1996.
__________________________
[SEAL]
-45-
<PAGE> 47
EXHIBIT C
CERTIFICATION
The undersigned, ____________________, 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 ___,
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 ___, 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 ___ day of __________________, 1996.
_______________________________
[SEAL]
-46-
<PAGE> 48
EXHIBIT D
The undersigned, _______________________, hereby certifies that he or
she is the duly elected and acting _________________ 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 _______________, 199__, 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 ________________, 199___ (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 __ day of ____________, 1996.
_______________________
[SEAL]
-47-
<PAGE> 49
EXHIBIT E
The undersigned, ________________________, hereby certifies that he or
she is the duly elected and acting __________________ 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 _______________, 199___, 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 ____ day of _____________, 1996.
____________________________
[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
July __, 1996
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
Gentlemen:
The Sessions Group, an Ohio business trust (the "Trust"), herewith
confirms its Agreement with BISYS Fund Services Limited Partnership
("Administrator") as follows:
The Trust desires to employ a portion of its capital by investing and
reinvesting the same in investments of the type and in accordance with the
limitations specified in its Declaration of Trust and in the Prospectus and
Statement of Additional Information relating to the investment portfolios and
any additional investment portfolios of the Trust, as each are or will be
identified on Schedule A hereto (such new investment portfolios and any
additional investment portfolios together called the "Funds"), copies of which
have been or will be submitted to Administrator, and in resolutions of the
Trust's Board of Trustees. The Trust desires to employ Administrator as the
manager and administrator for the Funds upon the following terms and
conditions.
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
and Shareholder Service 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 Securities and Exchange Commission (the
"Commission") on Form N-SAR or any replacement forms therefor; compile data
for, prepare for execution by the Funds 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
<PAGE> 3
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 Investment Company Act of 1940 (the "1940 Act"); keep
and maintain the financial accounts and records of the Funds, including daily
expense accruals; in the case of money market funds, determine the actual
variance from $1.00 of a Fund's net asset value 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.
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
equal to the fee calculated at the applicable annual rate set forth on Schedule
A hereto. Net asset value shall be computed at least once a day pursuant to
terms of the Funds' Fund Accounting Agreement. 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 the 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. The compensation of such person or persons shall be paid by
Administrator and no obligation may be incurred on behalf of the
- 2 -
<PAGE> 4
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 and administration fees, pricing service fees, custodian
fees, transfer and dividend disbursing agents' fees, fund accounting fees,
certain insurance premiums, outside auditing and legal 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 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 and to Martindale Andres & Company, Inc.
under the Investment Advisory Agreement between Martindale Andres & Company,
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 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.
- 3 -
<PAGE> 5
4. Limitation of Liability
-----------------------
Administrator 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 matters to
which this Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross 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 __,
1999, and thereafter shall be renewed automatically for successive three-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. This Agreement is terminable with respect to a particular Fund only upon
mutual agreement of the parties hereto or for "cause" (as defined below) by the
party alleging "cause," in either case on not less than 60 days' notice by the
Trust's Board of Trustees or by Administrator.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, 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 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
- 4 -
<PAGE> 6
substantially impairs the performance of either party's obligations and duties
as contemplated 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.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE SESSIONS GROUP
By
---------------------------
Walter B. Grimm, President
Accepted:
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By
-----------------------------
(name) (title)
- 5 -
<PAGE> 7
Dated: July __, 1996
Schedule A to the
Management and Administration Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
dated July __, 1996
<TABLE>
<CAPTION>
Name of Fund Compensation* Date
- ------------ ------------ ----
<S> <C> <C>
The KeyPremier Annual rate of eleven July __, 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 __, 1996
Pennsylvania and one-half hundredths
Municipal Bond of one percent (.115%) of
Fund such Fund's average daily
net assets
</TABLE>
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc. By
General Partner --------------------------
Walter B. Grimm, President
By
-------------------------
(name) (title)
__________________________________
*All fees are computed daily and paid periodically.
A-1
<PAGE> 1
EXHIBIT (9)(y)
<PAGE> 2
FUND ACCOUNTING AGREEMENT
This Agreement is made as of July __, 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 Ohio, Inc.
("BISYS"), a corporation organized under the laws of the State of Ohio and
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 shall 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:
1. SERVICES AS FUND ACCOUNTANT. 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"):
(a) 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;
(b) 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;
(c) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule; and
(d) A monthly trial balance of all ledger
accounts (except shareholder accounts) as required by
subsection (b)(8) of the Rule.
In addition to the maintenance of the books and records
specified above, BISYS shall perform the following accounting services daily
for each Fund:
(a) Calculate the net asset value per share;
<PAGE> 3
(b) Calculate the dividend and capital gain
distribution, if any;
(c) Calculate the yield;
(d) Reconcile cash movements with the Fund's
custodian;
(e) Affirm to the Fund's custodian all portfolio
trades and cash settlements;
(f) Verify and reconcile with the Fund's
custodian all daily trade activity;
(g) Provide the following reports:
(i) A current security position report;
(ii) A summary report of transactions and
pending maturities (including the principal, cost,
and accrued interest on each portfolio security in
maturity date order); and
(iii) A current cash position report
(including cash available from portfolio sales and
maturities and sales of a Fund's Shares less cash
needed for redemptions and settlement of portfolio
purchases); and
(h) Such other similar services with respect to
a Fund as may be reasonably requested by the Trust.
BISYS shall perform the following accounting services for each
Fund at least monthly:
(a) Obtain actual dealer quotations, prices from
a pricing service, or matrix prices on all portfolio
securities (including those with less than 60 days to
maturity) in order to mark the entire portfolio to the market;
and
(b) Prepare an interim balance sheet, statement
of income and expense, and statement of changes in net assets
for the Fund.
2. COMPENSATION. BISYS shall be entitled to receive a fee from
each Fund at the annual rate of .03% of each Fund's average daily net assets,
with a minimum annual fee of $30,000 per Fund ($35,000 for each municipal,
tax-free on tax-exempt Fund).
-2-
<PAGE> 4
3. REIMBURSEMENT OF EXPENSES. In addition to paying BISYS the
fees described in Section 2 hereof, the Trust agrees to reimburse BISYS for
BISYS's out-of-pocket expenses in providing services hereunder, including
without limitation the following:
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 or others as required for BISYS to
perform the services to be provided hereunder;
C. Costs of pricing the portfolio securities of each Fund;
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.
4. 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").
5. TERM. This Agreement shall continue in effect with respect to
a Fund, unless earlier terminated by either party hereto as provided hereunder,
until July __, 1999, and thereafter shall be renewed automatically for
successive three-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 paragraph 2 hereof, the amount of all of
BISYS's cash disbursements for services in connection with BISYS's 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. Subsequent to such termination, for a
reasonable fee, BISYS will
-3-
<PAGE> 5
provide the Trust with reasonable access to any Trust documents or records
remaining in its possession. This Agreement is terminable with respect to a
particular Fund only upon mutual agreement of the parties hereto or for "cause"
(as defined below) by the party alleging "cause," in either case 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, 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.
6. 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 or gross negligence. 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's actions taken or
nonactions with respect to the performance 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 the Trust or the investment adviser and on any record
provided by any transfer agent or custodian thereof; provided that this
indemnification shall not apply to actions or omissions of BISYS in cases of
its own willful misfeasance or gross negligence, 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.
-4-
<PAGE> 6
7. 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, 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, or requested
by a shareholder 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 the dealer of record as to such account.
8. 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.
9. 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 or gross negligence with respect to BISYS' responsibilities and
duties hereunder and shall in no event be liable to the Trust or any Fund or
any shareholder or beneficial owner of the Trust for any action reasonably
taken pursuant to such advice.
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 three days after conducting a
diligent examination, are not so reported within the aforesaid
-5-
<PAGE> 7
period of time, a report will for all purposes be accepted by and binding upon
the Trust and any other recipient, and 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.
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.
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 which are no longer needed by BISYS in the
performance of its services or for its legal protection. 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.
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) 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 (3) 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.
14. REPRESENTATIONS OF BISYS. BISYS represents and warrants that
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.
15. INSURANCE. BISYS shall notify the Trust should any of its
insurance coverage be changed for any reason. Such noti-
-6-
<PAGE> 8
fication 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.
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:
1. The Trust's By-Laws and any amendments thereto;
2. 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.
17. INFORMATION FURNISHED BY BISYS. BISYS has furnished to the
Trust the following:
A. BISYS's Articles of Incorporation.
B. BISYS's Code of Regulations 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; and
2. Authorization of BISYS to act as fund accountant for
the Trust and to provide accounting services for the
Trust.
18. AMENDMENTS TO DOCUMENTS. The Trust shall furnish BISYS
written copies of any amendments to, or changes in, any of the
-7-
<PAGE> 9
items referred to in Section 17 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.
19. COMPLIANCE WITH LAW. Except for the obligations of BISYS set
forth in Section 7 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 Investment Company Act of 1940, as amended, 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 Investment Company Act of 1940 has
been declared or becomes effective.
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.
21. HEADINGS. Paragraph headings in this Agreement are included
for convenience only and are not to be used to construe or interpret this
Agreement.
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.
23. GOVERNING LAW. This Agreement shall be governed by and
provisions shall be construed in accordance with the laws of the State of Ohio.
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 agents are made
not individually, but in such capacities, and are
-8-
<PAGE> 10
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
--------------------------------
Walter B. Grimm, President
BISYS FUND SERVICES OHIO, INC.
By
--------------------------------
(name) (title)
-9-
<PAGE> 11
Dated: July __, 1996
SCHEDULE A
TO THE
FUND ACCOUNTING AGREEMENT
BETWEEN
THE SESSIONS GROUP
AND
BISYS FUND SERVICES OHIO, INC.
JULY __, 1996
Name of Fund Date
------------ ----
The KeyPremier Prime Money
Market Fund July __, 1996
The KeyPremier Pennsylvania
Municipal Bond Fund
THE SESSIONS GROUP
By
----------------------------------
Walter B. Grimm, President
BISYS FUND SERVICES OHIO, INC.
By
----------------------------------
(name) (title
<PAGE> 1
EXHIBIT (9)(z)
<PAGE> 2
TRANSFER AGENCY AGREEMENT
-------------------------
This Agreement is made as of July __, 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 Ohio, Inc.
("BISYS"), an Ohio corporation having its principal place of business at 3435
Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain services for the
Trust, and for each of its series denominated as funds which are identified on
the attached Schedule A hereto, as may be amended from time to time, and whose
shares of beneficial interest comprise from time to time certain shares of the
Trust (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:
1. SERVICES. BISYS shall perform for the Trust the services set
forth in Schedule B hereto, including services as Transfer Agent.
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 and shareholder 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.
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 C hereto shall be
subject to mutual agreement at the time such amendment to Schedule C is
proposed.
<PAGE> 3
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:
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.
4. EFFECTIVE DATE. This Agreement shall become effective as of
the date first written above (the "Effective Date").
5. TERM. This Agreement shall continue in effect, unless earlier
terminated by either party hereto as provided hereunder, for an initial term of
three years from the Effective Date (the "Initial Term"). Thereafter, this
Agreement shall continue in effect unless either party hereto terminates this
Agreement by giving 60 days' written notice to the other party, whereupon this
Agreement shall terminate automatically upon the expiration of said 60 days;
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. Fees
and out-of-pocket expenses incurred by BISYS but 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' cash disbursements and a reasonable fee (which fee shall be not
less than one hundred two percent (102%) of the sum of the actual costs
incurred by BISYS in performing such service) for
- 3 -
<PAGE> 4
services in connection with BISYS' activities in effecting such termination,
including without limitation, the delivery to the Trust and/or its distributors
or investment advisers and/or other parties, of the Trust's property, records,
instruments and documents, or any copies thereof. Subsequent to such
termination, BISYS, for a reasonable fee, will provide the Trust with
reasonable access to any Trust documents or records remaining in its
possession. Further, this Agreement is terminable with respect to a particular
Fund only upon mutual agreement of the parties hereto or for "cause" (as
defined below) by the party alleging "cause," in either case 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, 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.
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.
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 or gross negligence with respect to BISYS' responsibilities and
duties hereunder and shall in no event be liable to the Trust or any Fund or
any shareholder or beneficial owner of the Trust for any action reasonably
taken pursuant to such advice.
8. INSTRUCTIONS. Whenever BISYS is requested or authorized to
take action hereunder pursuant to instructions from a
- 4 -
<PAGE> 5
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.
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 or gross negligence. 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 willful misfeasance
or gross negligence, 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.
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, relating to the maintenance of
books and records in connection with the services to be provided
- 5 -
<PAGE> 6
hereunder. BISYS further agrees that all such books and records shall be the
property of the Trust and to make such 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, or requested
by a shareholder 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 the dealer of record as to such account.
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 three 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 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.
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.
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 and cease to
retain BISYS' files, records and documents created and maintained by BISYS
pursuant to this Agreement which are no longer needed by BISYS in the
performance of its services or for its legal protection. 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.
- 6 -
<PAGE> 7
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.
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.
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, 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 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.
17. INSURANCE. BISYS shall notify the Trust should its insurance
coverage with respect to professional liability or errors and omissions
coverage be changed for any reason. 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.
18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS. The Trust
has furnished to BISYS the following:
- 7 -
<PAGE> 8
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
b. Authorization of BISYS to act as Transfer
Agent for the Trust on behalf of the Funds.
C. Two copies of the following (if such documents are employed by
the Trust):
1. Prospectuses and Statements of Additional Information
for each Fund;
2. Distribution Agreements; 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.
19. INFORMATION FURNISHED BY BISYS. BISYS has furnished to the
Trust the following:
A. BISYS' Articles of Incorporation.
B. BISYS' Code of Regulations 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 Securities and Exchange Commission pursuant to Rule
17Ad-13 of the Securities Exchange Act of 1934, as amended.
- 8 -
<PAGE> 9
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.
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.
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 Investment Company Act of 1940, as amended, 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 Investment Company Act of 1940 has
been declared or becomes effective.
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.
24. HEADINGS. Paragraph headings in this Agreement are included
for convenience only and are not to be used to construe or interpret this
Agreement.
- 9 -
<PAGE> 10
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.
26. GOVERNING LAW. This Agreement shall be governed by and
provisions shall be construed in accordance with the laws of the State of Ohio.
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 OHIO, INC. THE SESSIONS GROUP
By By
------------------------------- -------------------------------
(name) (title) Walter B. Grimm, President
- 10 -
<PAGE> 11
Dated: July __, 1996
SCHEDULE A
TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN
THE SESSIONS GROUP
AND
BISYS FUND SERVICES OHIO, INC.
JULY __, 1996
Name of Fund Date
------------ ----
The KeyPremier Prime Money Market Fund July __, 1996
and The KeyPremier Pennsylvania
Municipal Bond
THE SESSIONS GROUP
By
------------------------------
Walter B. Grimm, President
BISYS FUND SERVICES OHIO, INC.
By
------------------------------
(name) (title)
- 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 number and wire instructions.
c. Issue confirmation for every transaction.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchasing 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 detail 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
NASD 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.
4. Dealer/Load Processing (if applicable)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
- 12 -
<PAGE> 13
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 __, 1996
SCHEDULE C
----------
Fees
----
Transfer Agent:
--------------
Annual fees per fund:
- --------------------
Daily dividend fund base fee $ 16 per shareholder
Variable NAV fund fee $ 14 per shareholder
Annual Minimums:
Institutional transfer agent services:
Per class for less than 100 shareholders: $ 10,000
Per class for 100 to 499 shareholders: 18,000
Per class for 500 or more shareholders: 24,000
Retail transfer agent services:
- ------------------------------
This schedule applies to any portfolio or class with any of the following
features; combined statementing, 12B-1 fees, load features, checkwriting,
auto-invest or auto-withdrawal processing or special data-base reports.
Per class for less than 100 shareholders: $ 18,000
Per class for 100 to 499 shareholders: 24,000
Per class for 500 or more shareholders: 36,000
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.
- 14 -
<PAGE> 15
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
---------------------------
Walter B. Grimm, President
BISYS FUND SERVICES OHIO, INC.
By
---------------------------
(name) (title)
- 15 -
<PAGE> 16
Date: July __, 1996
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 Securities Exchange Act of 1934, as amended.
- 16 -
<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
April 22, 1996
The Sessions Group
3435 Stelzer Road
Columbus, Ohio 43219
Subject: THE SESSIONS GROUP -- POST-EFFECTIVE AMENDMENT NO. 34
TO REGISTRATION STATEMENT ON FORM N-1A, FILE NO.
33-21489, FILED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND AMENDMENT NO. 36 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 Prime Money Market Fund and The
KeyPremier Pennsylvania Municipal Bond Fund, two separate investment
portfolios 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-Key Premier 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
April 22, 1996
<PAGE> 1
EXHIBIT (15)(b)
<PAGE> 2
Schedule C
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July __, 1996
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
-----------------------------------------
This Plan (the "Plan") constitutes the distribution and shareholder
service plan of The Sessions Group, an Ohio business trust (the "Trust"),
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"). The Plan relates to those investment portfolios ("Funds")
identified on Schedule B to the Trust's Distribution Agreement dated as of July
__, 1996, and as amended from time to time (the "Distribution Plan Funds").
SECTION 1. Each Distribution Plan Fund shall pay to BISYS Fund
Services Limited Partnership, the distributor (the "Distributor") of the Funds'
shares of beneficial interest (the "Shares") a fee in an amount not to
exceed on an annual basis .25% of the average daily net asset value of such
Fund (the "12b-1 Fee") for: (i) (a) efforts of the Distributor expended
in respect of or in furtherance of sales of Shares, and (b) to enable the
Distributor to make payments to banks and other institutions and broker/dealers
(a "Participating Organization") for distribution assistance pursuant to an
agreement with the Participating Organization; (ii) reimbursement of
expenses (a) incurred by the Distributor, and (b) incurred by a Participating
Organization pursuant to an agreement in connection with distribution
assistance including, but not limited to, the reimbursement of expenses
relating to printing and distributing prospectuses to persons other than
Shareholders of such Distribution Plan Fund, printing and distributing
advertising and sales literature and reports to Shareholders for use in
connection with the sales of Shares, processing purchase, exchange and
redemption request from customers and placing orders with the Distributor or
the Distribution Plan Fund's transfer agent, and personnel and communication
equipment used in servicing Shareholder accounts and prospective shareholder
inquiries; (iii) (a) efforts of the Distributor expended in servicing
shareholders holding
C-1
<PAGE> 3
Shares, and (b) to enable the Distributor to make payments to a Participating
Organization for shareholder services pursuant to an agreement with the
Participating Organization; and (iv) reimbursement of expenses (a) incurred by
the Distributor, and (b) incurred by a Participating Organization pursuant to
an agreement in connection with shareholder service including, but not limited
to, personal, continuing services to investors in the Shares of such
Distribution Plan Fund, and providing office space, equipment, telephone
facilities and various personnel including clerical, supervisory and computer,
as is necessary or beneficial in connection therewith.
For purposes of the Plan, a Participating Organization may
include the Distributor or any of its affiliates or subsidiaries.
SECTION 2. The 12b-1 Fee shall be paid by the Distribution Plan Funds
to the Distributor only to compensate or to reimburse the Distributor for
payments or expenses incurred pursuant to Section 1.
SECTION 3. The Plan shall not take effect with respect to a
Distribution Plan Fund until it has been approved by a vote of the initial
shareholder of such Fund.
SECTION 4. The Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
1940 Act or the rules and regulations thereunder) of both (a) the Trustees of
the Trust, and (b) the Independent Trustees of the Trust cast in person at a
meeting called for the purpose of voting on the Plan or such agreement.
SECTION 5. The Plan shall continue in effect for a period of more
than one year after it takes effect only so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in Section 4.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by the Distribution Plan Funds pursuant to the Plan or any
related agreement shall provide to the Trustees of the Trust, and the Trustees
shall review, at least quarterly, a written report of the amounts so expended
and the purposes for which such expenditures were made.
SECTION 7. The Plan may be terminated at any time as to a
Distribution Plan Fund by vote of a majority of the Independent
C-2
<PAGE> 4
Trustees, or by vote of a majority of a Distribution Plan Fund's outstanding
voting securities.
SECTION 8. All agreements with any person relating to implementation
of the Plan shall be in writing, and any agreement related to the Plan shall
provide:
(a) That such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the outstanding
voting securities of the Distribution Plan Fund, on not more than 60
days' written notice to any other party to the agreement; and
(b) That such agreement shall terminate automatically in
the event of its assignment.
SECTION 9. The Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 1 hereof without
approval in the manner provided in Section 3 hereof, and all material
amendments to the Plan shall be approved in the manner provided for approval of
the Plan in Section 4.
SECTION 10. As used in the Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
the Plan or any agreements related to it, and (b) the terms "assignment",
"interested person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
C-3
<PAGE> 1
EXHIBIT (15)(w)
<PAGE> 2
BISYS FUND SERVICES LIMITED PARTNERSHIP, DISTRIBUTOR
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
SHAREHOLDER SERVICES AGREEMENT
Ladies and Gentlemen:
As the principal underwriter of the shares ("Shares") of The KeyPremier Prime
Money Market Fund and The KeyPremier Pennsylvania Municipal Bond Fund
(collectively, the "Funds") of The Sessions Group, an Ohio business trust (the
"Trust"), BISYS Fund Services Limited Partnership ("BISYS") hereby agrees that
you, the undersigned broker-dealer, shall provide the shareholder services that
are more fully described below.
1. We represent and warrant to you that the shareholder services
described herein have been authorized pursuant to a Distribution and
Shareholder Services Plan (the "Plan") adopted by the shareholders
("Shareholders") of each Fund. The Plan has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act").
It is intended that you shall provide such shareholder services to
your customers ("Customers") who may, from time to time, beneficially
own a Fund's Shares.
2. You represent and warrant to us that (i) you are and will be at all
times relevant to this Agreement a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"), and
(ii) you are and will be at all times relevant to this Agreement a
broker-dealer properly registered and qualified under all applicable
federal, state and local laws to engage in the business and
transactions described in this Agreement. You agree to comply with
all applicable laws, including federal and state securities laws, the
Rules and Regulations of the Securities and Exchange Commission and
the Rules of Fair Practice of the NASD. We have furnished you with a
list of the states or other jurisdictions in which Shares of the Funds
have been registered for sale under, or are otherwise qualified for
sale pursuant to, the respective securities laws of such states and
jurisdictions. You agree that you will not offer a Fund's Shares to
persons in any jurisdiction in which such Shares are not registered or
otherwise qualified for sale. You further agree that you will
maintain all records required by applicable law or otherwise
reasonably requested by us relating to Fund transactions that you have
executed.
3. You agree to provide various types of Shareholder support services
with respect to a Fund's Shares. Such Shareholder support services
may include those items that are enumerated in Schedule A attached
hereto and such other similar services that we may reasonably request
to the extent you are permitted to do so under applicable statutes,
rules and regulations.
<PAGE> 3
4. For all purposes of this Agreement, you shall be deemed to be an
independent contractor, and shall have no authority to act as agent
for us or for the Trust in any matter or in any respect. No person is
authorized to make any representations concerning us, the Trust, or a
Fund's Shares except those representations contained in the Fund's
then-current Prospectus and the Trust's Statement of Additional
Information and in such printed information as we or the Trust may
subsequently prepare. You are specifically authorized to distribute
to Customers a Fund's Prospectus (including any supplements to such
Prospectus), the Trust's Statement of Additional Information and sales
material received from us. No person is authorized to distribute any
other sales material relating to the Trust without our prior written
approval. You further agree to deliver to Customers, upon our
request, copies of amended Prospectuses and Statements of Additional
Information.
5. You and your employees will, upon request, be available during normal
business hours to consult with us concerning the performance of your
responsibilities under this Agreement. You will provide to us and the
Trust's Board of Trustees a written report of all expenditures under
this Agreement, including a discussion of the purposes for which such
expenditures were made. In addition, you will furnish to us or to the
Trust such information as we or the Trust may reasonably request
(including, without limitation, periodic certifications confirming the
rendering of distribution assistance and support services with respect
to Shares described herein), and will otherwise cooperate with us and
the Trust in the preparation of reports to the Trust's Board of
Trustees concerning this Agreement and the monies paid or payable by
us under this Agreement, as well as any other reports or filings that
may be required by law.
6. The minimum dollar purchase of a Fund's Shares (including Shares being
acquired by Customers pursuant to the exchange privileges described in
the Fund's Prospectus) shall be the applicable minimum amount set
forth in the Prospectus of such Fund, and no order for less than such
amount shall be accepted by you. The procedures relating to the
handling of orders shall be subject to instructions which we shall
forward to you from time to time. All orders for a Fund's Shares are
subject to acceptance or rejection by the Trust in its sole
discretion, and the Trust may, in its discretion and without notice,
suspend or withdraw the sale of a Fund's Shares, including the sale of
such Shares to you for the account of any Customer or Customers. You
acknowledge that it is your responsibility to date and time stamp all
orders received by you and to transmit such orders promptly to us.
You further acknowledge that any failure to promptly transmit such
orders to us that causes a purchaser of Shares to be disadvantaged,
based upon the pricing requirements of Rule 22c-1 under the 1940 Act,
shall be your sole responsibility. We reserve the right to cancel
this Agreement at any time without notice if any Shares shall be
offered for sale by you at less than the then-current offering price
determined by or for the applicable Fund.
7. For the services provided under this Agreement, you shall receive a
fee calculated at the applicable annual rate set forth on Schedule B
hereto with respect to the average daily net asset value of each
Fund's Shares which are owned of record by you as nominee for
2
<PAGE> 4
Customers or which are owned by Customers whose records, as maintained
by such Fund or its agent, designate you as the Customer's dealer of
record, which fee will be computed daily and paid monthly. The fee
will not be paid with respect to (i) Shares of a Fund sold by you and
redeemed or repurchased by the Trust or by us within seven business
days of receipt of confirmation of such sale, or (ii) a Customer if
the amount of such fee on an annual basis with respect to such
Customer shall be less than $1.00. The fee rate stated on Schedule B
hereto may be prospectively increased or decreased by us in our sole
discretion, at any time upon notice to you. Such fee shall be subject
to the limitations on the payment of asset-based sales charges that
are set forth in Article III, Section 26 of the NASD's Rules of Fair
Practice.
8. Neither of us shall be liable to the other except for (1) acts or
failures to act which constitute a lack of good faith or negligence
and (2) obligations expressly assumed under this Agreement. In
addition, you agree to indemnify us and hold us harmless from any
claims or assertions relating to the lawfulness of your participation
in this Agreement and the transactions contemplated hereby or relating
to any activities of any persons or entities affiliated with your
organization which are performed in connection with the discharge of
your responsibilities under this Agreement. If such claims are
asserted, you shall have the right to manage your own defense,
including the selection and engagement of legal counsel, and all costs
of such defense shall be borne by you.
9. This Agreement will automatically terminate in the event of its
assignment. This Agreement may be terminated by either of us, without
penalty, upon ten days' prior written notice to the other party. This
Agreement may also be terminated at any time without penalty by the
vote of a majority of the Disinterested Trustees of a Fund or by a
vote of a majority of the outstanding voting securities of a Fund on
ten days' written notice.
10. All communications to us shall be sent to the address set forth on
page 1 hereof or at such other address as we may designate in writing.
Any notice to you shall be duly given if mailed or telecopied to you
at the address set forth below or at such other address as you may
provide in writing.
______________________________
______________________________
______________________________
11. You represent and warrant that all requisite corporate proceedings
have been undertaken to authorize you to enter into this Agreement and
to perform the services contemplated herein. You further represent and
warrant that the individual that has signed this Agreement below is a
duly elected officer that has been empowered to act for and on behalf
of your organization with respect to the execution of this Agreement.
3
<PAGE> 5
12. This Agreement supersedes any other agreement between us with respect
to the offer and sale of Shares and relating to any other matters
discussed herein. All covenants, agreements, representations and
warranties made herein shall be deemed to have been material and
relied on by each party. The invalidity or unenforceability of any
term or provision hereof shall not affect the validity or
enforceability of any other term or provision thereof. This Agreement
may be executed in any number of counterparts, which together shall
constitute one instrument, and shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of
the State of Ohio and shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
If the foregoing corresponds with your understanding of our agreement, please
sign this document and the accompanying copies thereof in the appropriate space
below and return the same to us, whereupon this Agreement shall be binding upon
each of us, effective as of the date of execution.
BISYS FUND SERVICES LIMITED PARTNERSHIP The foregoing Agreement is hereby
BY: BISYS FUND SERVICES, INC., accepted:
GENERAL PARTNER
KEYSTONE BROKERAGE, INC.
By ___________________________________ By _______________________________
Stephen G. Mintos
Executive Vice President
Date: Date:
4
<PAGE> 6
Dated: As of July __, 1996
Schedule A
to the
Shareholder Services Agreement
Shareholder Services
----------------------------
In accordance with Section 3 of the Shareholder Services Agreement, you agree
to provide various types of distribution assistance and shareholder support
services that we may reasonably request with respect to Fund Shares that are
beneficially owned by your Customers. Such distribution assistance and
shareholder support services may include the following.
Distribution Assistance
- -----------------------
(i) placing orders with the Trust for the purchase or exchange of a Fund's
Shares and tendering a Fund's Shares to the Trust for redemption; (ii)
promoting the purchase of Shares by Customers; (iii) responding to inquiries
from Customers concerning their investments in Fund Shares; (iv) engaging in
advertising with respect to a Fund's Shares; and (v) distributing Fund
prospectuses, reports and sales literature.
Shareholder Support Services
- ----------------------------
(i) providing Customers with a service that invests the assets of their
accounts in a Fund's Shares pursuant to specific or pre-authorized
instructions; (ii) processing dividend payments from the Trust on behalf of
Customers; (iii) providing information periodically to Customers showing their
positions in a Fund's Shares; (iv) arranging for bank wire transfers of funds
to or from a Customer's account; (v) responding to inquiries from Customers
relating to the services performed by the Participating Organization under this
Agreement; (vi) providing subaccounting, in the case of omnibus accounts, with
respect to a Fund's Shares beneficially owned by Customers or the information
to the Trust necessary for subaccounting; (vii) if required by law, forwarding
Shareholder communications from the Trust (such as proxies, Shareholder
reports, annual and semi-annual financial statements, and dividend,
distribution, and tax notices) to Customers; (viii) forwarding to Customers
proxy statements and proxies containing any proposals regarding this Agreement
or a Fund's Plan; and (ix) rendering ongoing advice respecting the suitability
of particular investment opportunities offered by the Trust in light of the
Customer's need.
A-1
<PAGE> 7
Dated: As of July __, 1996
Schedule B
to the
Shareholder Services Agreement
Compensation
-----------------------
Annual rate of up to twenty-five one-hundredths of one percent (0.25%)
of the average daily net asset value of each Fund's Shares held of
record by you from time to time on behalf of Customers.
_________________________
* All fees are computed daily and paid monthly.
B-1
<PAGE> 1
EXHIBIT (15)(x)
<PAGE> 2
BISYS FUND SERVICES LIMITED PARTNERSHIP, DISTRIBUTOR
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
SHAREHOLDER SERVICES AGREEMENT
Ladies and Gentlemen:
As the principal underwriter of the shares ("Shares") of The KeyPremier Prime
Money Market Fund and The KeyPremier Pennsylvania Municipal Bond Fund
(collectively, the "Funds") of The Sessions Group, an Ohio business trust (the
"Trust"), BISYS Fund Services Limited Partnership ("BISYS") hereby agrees that
you, the undersigned broker-dealer, shall provide the shareholder services that
are more fully described below.
1. We represent and warrant to you that the shareholder services
described herein have been authorized pursuant to a Distribution and
Shareholder Services Plan (the "Plan") adopted by the shareholders
("Shareholders") of each Fund. The Plan has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act").
It is intended that you shall provide such shareholder services to
your customers ("Customers") who may, from time to time, beneficially
own a Fund's Shares.
2. You represent and warrant to us that (i) you are and will be at all
times relevant to this Agreement a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"), and
(ii) you are and will be at all times relevant to this Agreement a
broker-dealer properly registered and qualified under all applicable
federal, state and local laws to engage in the business and
transactions described in this Agreement. You agree to comply with
all applicable laws, including federal and state securities laws, the
Rules and Regulations of the Securities and Exchange Commission and
the Rules of Fair Practice of the NASD. We have furnished you with a
list of the states or other jurisdictions in which Shares of the Funds
have been registered for sale under, or are otherwise qualified for
sale pursuant to, the respective securities laws of such states and
jurisdictions. You agree that you will not offer a Fund's Shares to
persons in any jurisdiction in which such Shares are not registered or
otherwise qualified for sale. You further agree that you will
maintain all records required by applicable law or otherwise
reasonably requested by us relating to Fund transactions that you have
executed.
3. You agree to provide various types of Shareholder support services
with respect to a Fund's Shares. Such Shareholder support services
may include those items that are enumerated in Schedule A attached
hereto and such other similar services that we may reasonably request
to the extent you are permitted to do so under applicable statutes,
rules and regulations.
<PAGE> 3
4. For all purposes of this Agreement, you shall be deemed to be an
independent contractor, and shall have no authority to act as agent
for us or for the Trust in any matter or in any respect. No person is
authorized to make any representations concerning us, the Trust, or a
Fund's Shares except those representations contained in the Fund's
then-current Prospectus and the Trust's Statement of Additional
Information and in such printed information as we or the Trust may
subsequently prepare. You are specifically authorized to distribute
to Customers a Fund's Prospectus (including any supplements to such
Prospectus), the Trust's Statement of Additional Information and sales
material received from us. No person is authorized to distribute any
other sales material relating to the Trust without our prior written
approval. You further agree to deliver to Customers, upon our
request, copies of amended Prospectuses and Statements of Additional
Information.
5. You and your employees will, upon request, be available during normal
business hours to consult with us concerning the performance of your
responsibilities under this Agreement. You will provide to us and the
Trust's Board of Trustees a written report of all expenditures under
this Agreement, including a discussion of the purposes for which such
expenditures were made. In addition, you will furnish to us or to the
Trust such information as we or the Trust may reasonably request
(including, without limitation, periodic certifications confirming the
rendering of distribution assistance and support services with respect
to Shares described herein), and will otherwise cooperate with us and
the Trust in the preparation of reports to the Trust's Board of
Trustees concerning this Agreement and the monies paid or payable by
us under this Agreement, as well as any other reports or filings that
may be required by law.
6. The minimum dollar purchase of a Fund's Shares (including Shares being
acquired by Customers pursuant to the exchange privileges described in
the Fund's Prospectus) shall be the applicable minimum amount set
forth in the Prospectus of such Fund, and no order for less than such
amount shall be accepted by you. The procedures relating to the
handling of orders shall be subject to instructions which we shall
forward to you from time to time. All orders for a Fund's Shares are
subject to acceptance or rejection by the Trust in its sole
discretion, and the Trust may, in its discretion and without notice,
suspend or withdraw the sale of a Fund's Shares, including the sale of
such Shares to you for the account of any Customer or Customers. You
acknowledge that it is your responsibility to date and time stamp all
orders received by you and to transmit such orders promptly to us.
You further acknowledge that any failure to promptly transmit such
orders to us that causes a purchaser of Shares to be disadvantaged,
based upon the pricing requirements of Rule 22c-1 under the 1940 Act,
shall be your sole responsibility. We reserve the right to cancel
this Agreement at any time without notice if any Shares shall be
offered for sale by you at less than the then-current offering price
determined by or for the applicable Fund.
7. For the services provided under this Agreement, you shall receive a
fee calculated at the applicable annual rate set forth on Schedule B
hereto with respect to the average daily net asset value of each
Fund's Shares which are owned of record by you as nominee for
B-2
<PAGE> 4
Customers or which are owned by Customers whose records, as maintained
by such Fund or its agent, designate you as the Customer's dealer of
record, which fee will be computed daily and paid monthly. The fee
will not be paid with respect to (i) Shares of a Fund sold by you and
redeemed or repurchased by the Trust or by us within seven business
days of receipt of confirmation of such sale, or (ii) a Customer if
the amount of such fee on an annual basis with respect to such
Customer shall be less than $1.00. The fee rate stated on Schedule B
hereto may be prospectively increased or decreased by us in our sole
discretion, at any time upon notice to you. Such fee shall be subject
to the limitations on the payment of asset-based sales charges that
are set forth in Article III, Section 26 of the NASD's Rules of Fair
Practice.
8. Neither of us shall be liable to the other except for (1) acts or
failures to act which constitute a lack of good faith or negligence
and (2) obligations expressly assumed under this Agreement. In
addition, you agree to indemnify us and hold us harmless from any
claims or assertions relating to the lawfulness of your participation
in this Agreement and the transactions contemplated hereby or relating
to any activities of any persons or entities affiliated with your
organization which are performed in connection with the discharge of
your responsibilities under this Agreement. If such claims are
asserted, you shall have the right to manage your own defense,
including the selection and engagement of legal counsel, and all costs
of such defense shall be borne by you.
9. This Agreement will automatically terminate in the event of its
assignment. This Agreement may be terminated by either of us, without
penalty, upon ten days' prior written notice to the other party. This
Agreement may also be terminated at any time without penalty by the
vote of a majority of the Disinterested Trustees of a Fund or by a
vote of a majority of the outstanding voting securities of a Fund on
ten days' written notice.
10. All communications to us shall be sent to the address set forth on
page 1 hereof or at such other address as we may designate in writing.
Any notice to you shall be duly given if mailed or telecopied to you
at the address set forth below or at such other address as you may
provide in writing.
______________________________
______________________________
______________________________
11. You represent and warrant that all requisite corporate proceedings
have been undertaken to authorize you to enter into this Agreement and
to perform the services contemplated herein. You further represent and
warrant that the individual that has signed this Agreement below is a
duly elected officer that has been empowered to act for and on behalf
of your organization with respect to the execution of this Agreement.
B-3
<PAGE> 5
12. This Agreement supersedes any other agreement between us with respect
to the offer and sale of Shares and relating to any other matters
discussed herein. All covenants, agreements, representations and
warranties made herein shall be deemed to have been material and
relied on by each party. The invalidity or unenforceability of any
term or provision hereof shall not affect the validity or
enforceability of any other term or provision thereof. This Agreement
may be executed in any number of counterparts, which together shall
constitute one instrument, and shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of
the State of Ohio and shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
If the foregoing corresponds with your understanding of our agreement, please
sign this document and the accompanying copies thereof in the appropriate space
below and return the same to us, whereupon this Agreement shall be binding upon
each of us, effective as of the date of execution.
BISYS FUND SERVICES LIMITED PARTNERSHIP The foregoing Agreement is
BY: BISYS FUND SERVICES, INC., hereby accepted:
GENERAL PARTNER
KEYSTONE INVESTMENT
SERVICES, INC.
By ___________________________________ By________________________________
Stephen G. Mintos,
Executive Vice President
Date: Date:
B-4
<PAGE> 6
Dated: As of July __, 1996
Schedule A
to the
Shareholder Services Agreement
Shareholder Services
---------------------------------
In accordance with Section 3 of the Shareholder Services Agreement, you agree
to provide various types of distribution assistance and shareholder support
services that we may reasonably request with respect to Fund Shares that are
beneficially owned by your Customers. Such distribution assistance and
shareholder support services may include the following.
Distribution Assistance
- -----------------------
(i) placing orders with the Trust for the purchase or exchange of a Fund's
Shares and tendering a Fund's Shares to the Trust for redemption; (ii)
promoting the purchase of Shares by Customers; (iii) responding to inquiries
from Customers concerning their investments in Fund Shares; (iv) engaging in
advertising with respect to a Fund's Shares; and (v) distributing Fund
prospectuses, reports and sales literature.
Shareholder Support Services
- ----------------------------
(i) providing Customers with a service that invests the assets of their
accounts in a Fund's Shares pursuant to specific or pre-authorized
instructions; (ii) processing dividend payments from the Trust on behalf of
Customers; (iii) providing information periodically to Customers showing their
positions in a Fund's Shares; (iv) arranging for bank wire transfers of funds
to or from a Customer's account; (v) responding to inquiries from Customers
relating to the services performed by the Participating Organization under this
Agreement; (vi) providing subaccounting, in the case of omnibus accounts, with
respect to a Fund's Shares beneficially owned by Customers or the information
to the Trust necessary for subaccounting; (vii) if required by law, forwarding
Shareholder communications from the Trust (such as proxies, Shareholder
reports, annual and semi-annual financial statements, and dividend,
distribution, and tax notices) to Customers; (viii) forwarding to Customers
proxy statements and proxies containing any proposals regarding this Agreement
or a Fund's Plan; and (ix) rendering ongoing advice respecting the suitability
of particular investment opportunities offered by the Trust in light of the
Customer's need.
A-1
<PAGE> 7
Dated: As of July __, 1996
Schedule B
to the
Shareholder Services Agreement
Compensation
-----------------
Annual rate of up to twenty-five one-hundredths of one percent (0.25%)
of the average daily net asset value of each Fund's Shares held of
record by you from time to time on behalf of Customers.
_________________________
* All fees are computed daily and paid monthly.
B-1
<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" including 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
April 22, 1996
