<PAGE> 1
As filed with the Securities and Exchange Commission July 30, 1997
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. 42 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 44 [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 LLP
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)
[X] on August 1, 1997, pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 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 28, 1996, the Registrant
filed its Rule 24f-2 Notice with respect to the fiscal year ended June
30, 1996.
<PAGE> 3
CROSS REFERENCE SHEET
---------------------
THE KEYPREMIER AGGRESSIVE GROWTH FUND
One Funds
of
The Sessions Group
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
<S> <C> <C>
1. Cover page.................. Cover Page
2. Synopsis.................... Fee Table
3. Condensed Financial
Information............... Financial Highlights, 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
8. Redemption or Repurchase.... How to Purchase and Redeem Shares
9. Pending Legal Proceedings... Inapplicable
</TABLE>
<PAGE> 4
THE KEYPREMIER AGGRESSIVE GROWTH FUND
SUPPLEMENT DATED AUGUST 1, 1997,
TO PROSPECTUS DATED JANUARY 29, 1997
Capitalized terms used in this Supplement have the meaning assigned to
them in the Prospectus.
The Fee Table on page 3 of the Prospectus is deleted and is replaced
with the following:
<TABLE>
<CAPTION>
FEE 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 After Voluntary Fee Waiver(1) 0.50%
12b-1 Fees None
Other Expenses(2) .31
----
Estimated Total Fund Operating Expenses
After Voluntary Fee Waiver 0.81%
=====
</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:
1 Year 3 Years
------ -------
$53 $70
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 The Adviser has agreed voluntarily to reduce its investment
advisory fees to 0.50% through on or about October 31, 1997.
Absent such voluntary fee waiver, Management Fees and
Estimated Total Fund Operating Expenses for the Fund would be
1.00% and 1.31%, respectively.
2 "Other Expenses" are estimated for the current fiscal year.
-1-
<PAGE> 5
The following is added immediately before the heading "PERFORMANCE
INFORMATION" on page 4 of the Prospectus:
FINANCIAL HIGHLIGHTS
The Fund is one separate fund of the Group. The table below
sets forth certain information concerning the investment results of the
Fund since its inception. Further financial information is included in
the Statement of Additional Information. The Financial Highlights
contained in the table below have not been audited.
<TABLE>
<CAPTION>
Period from February 3, 1997 through
May 31, 1997 (a)
------------------------------------
(unaudited)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
Investment Activities:
Net investment income 0.01
Net realized and unrealized gains (losses)
on investments --
------
Total from Investment Activities 0.01
------
Distributions:
Net investment income (0.01)
Net realized gains --
-------
Total Distributions (0.01)
-------
NET ASSET VALUE, END OF PERIOD $ 10.00
=======
RATIOS/SUPPLEMENTAL DATA:
Total return (excludes sales charge) 0.10%(b)
Net Assets, at end of period (000) $102,832
Ratio of expenses to average net assets 0.61%(c)
Ratio of net investment income to average
net assets 0.25%(c)
Ratio of expenses to average net assets* 1.35%(c)
Ratio of net investment income to average
net assets* (0.49)%(c)
Portfolio turnover 1.54%(c)
Average commission rate paid $ 0.073(d)
--------------------
<FN>
* During the period certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
(a) Commencement of the Fund began February 3, 1997.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on
portfolio transactions divided by the total number of shares
purchased and sold by the Fund for which commissions were
charged.
</TABLE>
The paragraph under the heading "RISK FACTORS AND INVESTMENT TECHNIQUES
- -- INVESTMENT COMPANY SECURITIES" is hereby deleted and is replaced with the
following:
Investment Company Securities. The Fund may also invest in the
securities of other investment companies, including a money market fund
advised by the Adviser (a "KeyPremier
-2-
<PAGE> 6
money market fund"), in accordance with the limitations of the 1940 Act
and any exemptions therefrom. The Fund intends to invest in other
investment companies which, in the opinion of the Adviser, will assist
such Fund in achieving its investment objective and in money market
mutual funds for purposes of short-term cash management. The Fund will
incur additional expenses due to the duplication of fees and expenses
as a result of investing in mutual funds. In order to avoid the
imposition of additional fees as a result of investing in shares of a
KeyPremier money market fund, the Adviser, BISYS, as the Fund's
administrator, and their affiliates will reduce their fees charged to
the Fund by an amount equal to the fees charged by such service
providers based on a percentage of the Fund's assets attributable to
such Fund's investment in the KeyPremier money market fund. Additional
restrictions on the Fund's investments in the securities of other
mutual funds are contained in the Statement of Additional Information.
The following is added immediately following the paragraph under the
heading "HOW TO PURCHASE AND REDEEM SHARES -- DISTRIBUTOR" on page 12 of the
Prospectus:
EMPLOYEE BENEFIT PLANS
Purchases, exchanges and redemptions of Shares through an
employee benefit plan may be subject to different requirements and
limitations imposed by employers than those discussed below. Investors
should consult their employer for more information on how to purchase,
exchange and redeem Shares of the Fund through their employer's plan.
The following is added immediately before the heading "IN-KIND
PURCHASES" on page 14 of the Prospectus:
KEYPREMIER INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
A KeyPremier IRA enables individuals, even if they participate
in an employer-sponsored retirement plan, to establish their own
retirement program. KeyPremier IRA contributions may be tax-deductible
and earnings are tax deferred. Under the Tax Reform Act of 1986, the
tax deductibility of IRA contributions is restricted or eliminated for
individuals who participate in certain limits. Existing IRAs and future
contributions up to the IRA maximums, whether deductible or not, still
earn income on a tax-deferred basis.
All KeyPremier IRA distribution requests must be made in
writing to the Distributor. Any deposits to a KeyPremier IRA must
distinguish the type and year of the contributions.
For more information on the KeyPremier IRAs call the Group at
(800) 766-3960. Investment in Shares of the KeyPremier Pennsylvania
Municipal Bond Fund or any other tax-exempt fund would not be
appropriate for a KeyPremier IRA. Shareholders are advised to consult a
tax adviser on KeyPremier IRA contribution and withdrawal requirements
and restrictions.
In the first paragraph under the heading "SALES CHARGE WAIVERS" on page
15 of the Prospectus, the word "and" between the words "agency account," and
"(4) brokers" is deleted, and the following is added after "(and their spouses
and children under 21)":
-3-
<PAGE> 7
, and (5) investment advisers or financial planners regulated by a
federal or state governmental authority who are purchasing Shares for
their own account or for an account for which they are authorized to
make investment decisions (i.e., a discretionary account) and who
charge a management, consulting or other fee for their services, and
clients of such investment advisers or financial planners who place
trades for their own accounts if the accounts are linked to the master
account of such investment adviser or financial planner on the books
and records of a broker or agent.
The first paragraph under the heading "EXCHANGE PRIVILEGE" on page 17
of the Prospectus is deleted and is replaced with the following:
Shares of the Fund may be exchanged for Shares of a KeyPremier
money market fund or any other KeyPremier Load Fund if the amount to be
exchanged meets the applicable minimum investment requirements and the
exchange is made in a state where it is legally authorized. Each
exchange will be made at respective net asset values except that a
sales charge, equal to the difference, if any, between the sales charge
payable upon the purchase of shares of the KeyPremier Fund to be
acquired in the exchange and the sales charge previously paid on the
Shares to be exchanged, will be assessed. In determining the sales
charge previously paid on the Shares to be exchanged, such Shares may
include Shares which 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.
The last paragraph under the heading "GENERAL INFORMATION --
DESCRIPTION OF THE GROUP AND ITS SHARES" on page 24 of the Prospectus is deleted
and is replaced with the following:
As of July 16, 1997, Keystone possessed, on behalf of its or
its affiliates' underlying accounts, voting or investment power with
respect to more than 25% of the outstanding Shares of both the Fund
and the Group.
This Prospectus Supplement replaces in its entirety the Prospectus
Supplement dated as of April 1, 1997.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE PROSPECTUS
FOR FUTURE REFERENCE
-4-
<PAGE> 8
THE KEYPREMIER AGGRESSIVE GROWTH FUND [KEYPREMIER FUNDS LOGO]
- --------------------------------------------------------------------------------
3435 Stelzer Road
Columbus, Ohio 43219
For current purchase
and redemption information,
call (800) 766-3960.
- --------------------------------------------------------------------------------
The Sessions Group (the "Group") is an open-end management investment company.
The Group includes The KeyPremier Aggressive Growth Fund (the "Fund") which is a
diversified portfolio of the Group. The Trustees of the Group have divided the
Fund's beneficial ownership into an unlimited number of transferable units
called shares ("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.
Additional information about the Fund and the Group, contained in a Statement
of Additional Information, has been filed with the Securities and Exchange
Commission and is available upon request without charge by writing to the Group
at its address or by calling the Group at the telephone number shown above. The
Statement of Additional Information bears the same date as this Prospectus and
is incorporated by reference in its entirety into this Prospectus.
This Prospectus sets forth concisely the information about the Fund and the
Group that a prospective investor ought to know before investing. Investors
should read this Prospectus and retain it for future reference.
The Fund's net asset value per share will fluctuate as the value of its
portfolio changes in response to changing market prices and/or other factors.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
Columbus, Ohio, acts as the Fund's administrator and distributor. BISYS Fund
Services, Inc., Columbus, Ohio, the corporate general partner of BISYS, acts as
the Fund's transfer agent (the "Transfer Agent") and performs certain fund
accounting services for the Fund.
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is January 29, 1997.
<PAGE> 9
PROSPECTUS SUMMARY
SHARES OFFERED: Units of beneficial interest ("Shares") of the Fund, one
separate investment fund of The Sessions Group, an Ohio business trust (the
"Group").
OFFERING PRICE: The public offering price of the Fund is equal to the net
asset value per share plus a sales charge of 4.50% of the public offering price,
reduced on investments of $100,000 or more (See "HOW TO PURCHASE AND REDEEM
SHARES -- Sales Charges"). Under certain circumstances, the sales charge may be
eliminated (See "HOW TO PURCHASE AND REDEEM SHARES -- Sales Charge Waivers").
MINIMUM PURCHASE: $1,000 minimum initial investment with $25 minimum
subsequent investments. Such minimum initial investment is reduced for investors
using the Auto Invest Plan described herein and for employees of the Adviser and
its affiliates.
TYPE OF COMPANY: The Fund is a diversified series of an open-end,
management investment company.
INVESTMENT OBJECTIVE: Growth of capital.
INVESTMENT POLICIES: Under normal market conditions, the Fund will invest
substantially all, but under such conditions in no event less than 65%, of its
total assets in common stocks and securities convertible into common stocks of
companies with market capitalizations ranging between $100 million and $5
billion.
RISK FACTORS AND SPECIAL CONSIDERATIONS: An investment in the Fund is
subject to certain risks, including market risk, as set forth in detail under
"INVESTMENT OBJECTIVES AND POLICIES -- Risk Factors and Investment Techniques."
As with other mutual funds, there can be no assurance that the Fund will achieve
its investment objective. The Fund, to the extent set forth under "INVESTMENT
OBJECTIVE AND POLICIES," may engage in the following practices: the use of
repurchase agreements and reverse repurchase agreements, entering into options
and futures transactions, the purchase of securities on a when-issued or
delayed-delivery basis and the purchase of foreign securities through American
Depository Receipts, and derivatives.
INVESTMENT ADVISER: Martindale Andres & Company, Inc. (the "Adviser").
DIVIDENDS: Dividends from net income are declared and generally paid
quarterly. Net realized capital gains are distributed at least annually.
DISTRIBUTOR: BISYS Fund Services Limited Partnership d/b/a BISYS Fund
Services ("BISYS").
2
<PAGE> 10
FEE TABLE
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................... 4.50%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees(1).................................................................. 1.00%
12b-1 Fees.......................................................................... None
Other Expenses(2)................................................................... .31
----
Estimated Total Fund Operating Expenses............................................. 1.31%
=====
</TABLE>
Example You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ 58 $85
</TABLE>
The purpose of the above table is to assist a potential purchaser of Shares of
the Fund in understanding the various costs and expenses that an investor in the
Fund will bear directly or indirectly. Such expenses do not include any fees
charged by the Adviser or any of its affiliates to its customer accounts which
may have invested in Shares of the Fund. See "MANAGEMENT OF THE GROUP" and
"GENERAL INFORMATION" for a more complete discussion of the annual operating
expenses of the Fund. THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
- ---------------
(1) The Adviser has agreed with the Group to waive all of its investment
advisory fees for the Fund through March 31, 1997.
(2) "Other Expenses" are estimated for the current fiscal year.
3
<PAGE> 11
PERFORMANCE INFORMATION
From time to time performance information for the Fund showing the Fund's
average annual total return may be presented in advertisements, sales literature
and shareholder reports. SUCH PERFORMANCE FIGURES ARE BASED ON HISTORICAL
RESULTS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. Average annual
total return will be calculated for the period since commencement of operations
for the Fund (or its respective collective investment and common trust funds)
and will reflect the imposition of the maximum sales charge, if any. Average
annual total return is measured by comparing the value of an investment in the
Fund at the beginning of the relevant period to the redeemable value of the
investment at the end of the period (assuming immediate reinvestment of any
dividends or capital gains distributions), which figure is then annualized. The
Fund may also present its average annual total return excluding the effect of a
sales charge.
The Fund has been initially funded by the transfer of all of the assets of a
corresponding collective investment fund and common trust fund managed by the
Adviser (collectively the "CIFs"). Because the management of the Fund is
substantially the same as the CIFs, the quoted performance of the Fund will
include the performance of the CIFs for the periods prior to the effectiveness
of the Group's registration statement as it relates to the Fund. Such
performance will be restated to reflect the estimated current fees of the Fund.
The CIFs were not registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and therefore were not subject to certain investment
restrictions that are imposed by the 1940 Act. If the CIFs had been so
registered, their performance might have been adversely affected.
Investors may also judge the performance of the Fund by comparing or
referencing it to the performance of other mutual funds with comparable
investment objectives and policies through various mutual fund or market indices
and to data prepared by various services, which indices or data may be published
by such services or by other services or publications. In addition to
performance information, general information about the Fund that appears in such
publications may be included in advertisements, sales literature and reports to
Shareholders.
Total return is generally a function of market conditions, types of
investments held, and operating expenses. Consequently, current total return
will fluctuate and is not necessarily representative of future results. Any fees
charged by Keystone or by any of its affiliates, including the Adviser, to its
customer accounts which may have invested in Shares of the Fund will not be
included in performance calculations; such fees, if charged, will reduce the
actual performance from that quoted. In addition, if the Adviser or BISYS
voluntarily reduces all or part of its fees for the Fund, as discussed below,
the total return for the Fund will be higher than it would otherwise be in the
absence of such voluntary fee reductions.
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The investment objective for the Fund is growth of capital. The investment
objective of the Fund is a non-fundamental policy, meaning that such objective
may be changed by the Group's Trustees without the vote of the Shareholders of
the Fund. There can be no assurance that the investment objective of the Fund
will be achieved. Any income earned by the Fund will be incidental to its
overall objective of growth of capital.
Under normal market conditions, the Fund will invest substantially all, but
under such conditions in no event less than 65%, of its total assets in common
stocks and securities convertible into common stocks of companies with market
capitalizations ranging between $100
4
<PAGE> 12
million and $5 billion. Under normal market conditions, the Fund intends to
operate with a fully invested philosophy, i.e., the Fund will generally invest
90% or more of its assets in common stocks and securities convertible into
common stocks.
The Fund attempts to invest in high quality small to mid capitalization
companies that the Adviser believes have demonstrated one or more of the
following characteristics: (1) strong management team with an ownership stake in
the business; (2) solid revenue and earnings history; (3) unique position in the
company's targeted market; (4) innovative products and solid new product
distribution channels; and (5) solid balance sheet. In addition, the Adviser
attempts to invest in companies that are selling at earnings multiples which the
Adviser believes to be less than their expected long-term growth rate.
The Adviser employs a "bottom-up" approach in its security selection process.
A "bottom-up" approach emphasizes company specific factors rather than industry
factors when making its buy/sell decisions. As a result of this approach, the
Adviser does not utilize a sector neutral strategy. The Adviser does not seek to
have the Fund have representation in all economic sectors; therefore, the Fund's
sector weightings may be overweighted and/or underweighted relative to its
appropriate peers and/or benchmarks.
For purposes of the foregoing, securities convertible into common stocks
include convertible bonds, convertible preferred stock, options and rights. The
securities purchased by the Fund are generally traded on established U.S.
markets and exchanges, although as discussed below, the Fund may invest in
restricted or privately placed securities. Under normal market conditions, the
Fund may also invest up to 35% of its total assets in warrants, foreign
securities through sponsored American Depositary Receipts ("ADRs"), securities
of other investment companies and equity REITs (real estate investment trusts),
cash and Short-Term Obligations and may engage in other investment techniques
described below.
"Short-Term Obligations" consist of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities (including U.S. Treasury
securities stripped of the unmatured interest coupons and such stripped interest
coupons), with maturities of 12 months or less, certificates of deposit,
bankers' acceptances and demand and time deposits of selected banks, securities
of money market mutual funds, and commercial paper rated in one of the two
highest rating categories by appropriate nationally recognized statistical
rating organizations (e.g., Standard & Poor's Corporation and Moody's Investors
Service) and repurchase agreements collateralized by such obligations. These
obligations are described further in the Statement of Additional Information.
The Fund may also invest up to 100% of its total assets in Short-Term
Obligations and cash when deemed appropriate for temporary defensive purposes as
determined by the Adviser to be warranted due to current or anticipated market
conditions. However, to the extent that the Fund is so invested, it may not
achieve its investment objectives.
RISK FACTORS AND INVESTMENT TECHNIQUES
Like any investment program, an investment in the Fund entails certain risks.
Equity securities such as those in which the Fund may invest are more volatile
and carry more risk than some other forms of investment, including investments
in equity securities of large capitalization issuers or in high grade fixed
income securities. Therefore, the Fund is subject to stock market risk, i.e.,
the possibility that stock prices in general will decline over short or even
extended periods of time. The Fund is intended for investors who have a
long-term investment time horizon and who can accept the higher risks involved
in seeking potentially higher capital appreciation through invest-
5
<PAGE> 13
ments in growth oriented companies. A growth oriented company typically invests
most of its net income in its enterprise and does not pay out much, if any, in
dividends. Accordingly, the Fund does not anticipate any significant
distributions to Shareholders from net investment income, and potential
investors should be in a financial position to forego current income from their
investment in the Fund. In addition, smaller capitalized companies generally
have limited product lines, markets and financial resources and are dependent
upon a limited management group. The securities of less seasoned companies
and/or smaller capitalized companies may have limited marketability, which may
effect or limit their liquidity and therefore the ability of the Fund to sell
such securities at the time and price it deems advisable. In addition, such
securities may be subject to more abrupt or erratic market movements over time
than securities of more seasoned and/or larger capitalized companies or the
market as a whole.
Depending upon the performance of the Fund's investments, the net asset value
per share of the Fund may decrease instead of increase.
The Fund may invest in put and call options and futures as more fully
discussed below. Such instruments are considered to be "derivatives." A
derivative is generally defined as an instrument whose value is based upon, or
derived from, some underlying index, reference rate (e.g., interest rates),
security, commodity or other asset. The Fund will not invest more than 20% of
its total assets in any such derivatives at any one time.
Repurchase Agreements. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund would
acquire securities, in exchange for cash, from banks and/or registered broker-
dealers which the Adviser deems creditworthy under guidelines approved by the
Group's Board of Trustees. The seller agrees to repurchase such securities at a
mutually agreed-upon date and price. The repurchase price generally equals the
price paid by the Fund plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the underlying
portfolio securities. Securities subject to repurchase agreements must be of the
same type and quality as those in which the Fund may invest directly. Repurchase
agreements are considered to be loans by the Fund under the 1940 Act. For
further information about repurchase agreements and the related risks, see
"INVESTMENT OBJECTIVE AND POLICIES--Additional Information on Portfolio
Instruments--Repurchase Agreements" in the Statement of Additional Information.
Reverse Repurchase Agreements. The Fund may borrow funds by entering into
reverse repurchase agreements in accordance with the investment restrictions
described below. Pursuant to such agreements, the Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed-upon date and price. At the time the
Fund enters into a reverse repurchase agreement, it will place in a segregated
custodial account assets such as U.S. Government securities or other liquid
high-grade debt securities consistent with the Fund's investment restrictions
having a value equal to the repurchase price (including accrued interest), and
will continually monitor the account to ensure that such equivalent value is
maintained at all times. Reverse repurchase agreements involve the risk that the
market value of the securities sold by the Fund may decline below the price at
which the Fund is obligated to repurchase the securities. Reverse repurchase
agreements are considered to be borrowings by the Fund under the 1940 Act and
therefore a form of leverage. The Fund may experience a negative impact on its
net asset value if interest rates rise during the term of a reverse repurchase
agreement. The Fund generally will invest the proceeds of such borrow-
6
<PAGE> 14
ings 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. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying foreign securities
and are denominated in U.S. dollars.
Investments in foreign securities, including ADRs, may subject the Fund to
investment risks that differ in some respects from those related to investments
in securities of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other investment income, possible seizure, nationalization,
or expropriation of foreign deposits or investments, the possible establishment
of exchange controls or taxation at the source, less stringent disclosure
requirements, less liquid or developed securities markets or the adoption of
other foreign governmental restrictions which might adversely affect the payment
of principal, interest or dividends on such securities or the purchase or sale
thereof.
Restricted Securities. Securities in which the Fund may invest include
securities issued by corporations without registration under the Securities Act
of 1933, as amended (the "1933 Act"), such as securities issued in reliance on
the so-called "private placement" exemption from registration which is afforded
by Section 4(2) of the 1933 Act ("Section 4(2) securities"). Section 4(2)
securities are restricted as to disposition under the Federal securities laws,
and generally are sold to institutional investors such as the Fund who agree
that they are purchasing the securities for investment and not with a view to
public distribution. Any resale must also generally be made in an exempt
transaction. Section 4(2) securities are normally resold, if at all, to other
institutional investors through or with the assistance of the issuer or
investment dealers who facilitate the resale of such Section 4(2) securities,
thus providing some liquidity.
Pursuant to procedures adopted by the Board of Trustees of the Group, the
Adviser may determine Section 4(2) securities to be liquid if such securities
are eligible for resale under Rule 144A under the 1933 Act and are readily
saleable. Rule 144A permits the Fund to purchase securities which have been
privately placed and resell such securities to certain qualified institutional
buyers without restriction. For purposes of determining whether a Rule 144A
security is readily saleable, and therefore liquid, the Adviser must consider,
among other things, the frequency of trades and quotes for the security, the
number of dealers willing to purchase or sell the security, the number of
potential purchasers, dealer undertakings to make a market in the security, and
the nature of the security and marketplace trades of such security. However,
investing in Rule 144A securities, even if such securities are initially
determined to be liquid, could have the effect of increasing the level of the
Fund's illiquidity to the extent that qualified institutional buyers become, for
a time, uninterested in purchasing these securities.
7
<PAGE> 15
Securities Lending. In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities to broker-dealers, banks, or
institutional borrowers of securities. The Fund must receive 100% collateral in
the form of cash or U.S. Government securities. This collateral will be valued
daily by the Adviser. Should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest received on such securities. Loans are subject to termination by the
Fund or the borrower at any time. While the Fund does not have the right to vote
securities on loan, the Fund intends to terminate the loan and regain the right
to vote if that is considered important with respect to the investment. In the
event the borrower would default in its obligations, the Fund bears the risk of
delay in recovery of the portfolio securities and the loss of rights in the
collateral. The Fund will enter into loan agreements only with broker-dealers,
banks, or other institutions that the Adviser has determined are creditworthy
under guidelines established by the Group's Board of Trustees. The Fund will not
lend more than 33% of the total value of its portfolio securities at any one
time.
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 the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is consideration for undertaking the obligations
under the option contract. Such options will be listed on national securities or
futures exchanges. The Fund may write covered call options as a means of seeking
to enhance its income through the receipt of premiums in instances in which the
Adviser determines that the underlying securities or futures contracts are not
likely to increase in value above the exercise price. The Fund also may seek to
earn additional income through the receipt of premiums by writing put options.
By writing a call option, the Fund limits its opportunity to profit from any
increase in the market value of the underlying security above the exercise price
of the option; by writing a put option, the Fund assumes the risk that it may be
required to purchase the underlying security at a price in excess of its then
current market value.
The Fund, as part of its option transactions, also may write index put and
call options. Through the writing of index options the Fund can achieve many of
the same objectives as through the use of options on individual securities.
Options on securities indices are similar to options on a security except that,
rather than the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the
securities index upon which the option is based is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option.
When the Fund writes an option, an amount equal to the net premium (the
premium less the commission) received by the Fund is included in the liability
section of the Fund's statement of assets and liabilities as a deferred credit.
The amount of the deferred credit will be subsequently marked-to-market to
reflect the current value of the option written. The current value of the traded
option is the last sale price or, in the absence of a sale, the mean between bid
and asked price. If an option expires on the stipulated expiration date or if
the Fund enters into a closing purchase transaction, it will realize a gain (or
a loss if the cost of
8
<PAGE> 16
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 a
call option is exercised, the Fund may deliver the underlying security in the
open market. In either event, the proceeds of the sale will be increased by the
net premium originally received and the Fund will realize a gain or loss. The
Fund will limit its writing of options such that at no time will more than 20%
of the Fund's total assets be subject to such option transactions.
Purchasing Options. In addition, the Fund may purchase put and call options
written by third parties covering indices and those types of financial
instruments or securities in which the Fund may invest to attempt to provide
protection against adverse price effects from anticipated changes in prevailing
prices for such instruments. The purchase of a put option is intended to protect
the value of the Fund's holdings in a falling market while the purchase of a
call option is intended to protect the value of the Fund's positions in a rising
market. Put and call options purchased by the Fund will be valued at the last
sale price, or in the absence of such a price, at the mean between bid and asked
price. Such options will be listed on national securities or futures exchanges.
In purchasing a call option, the Fund would be in a position to realize a gain
if, during the option period, the price of the underlying security, index or
futures contract increased by an amount in excess of the premium paid for the
call option. It would realize a loss if the price of the underlying security,
index or futures contract declined or remained the same or did not increase
during the period by more than the amount of the premium. By purchasing a put
option, the Fund would be in a position to realize a gain if, during the option
period, the price of the security, index or futures contract declined by an
amount in excess of the premium paid. It would realize a loss if the price of
the security, index or futures contract increased or remained the same or did
not decrease during that period by more than the amount of the premium. If a put
or call option purchased by the Fund were permitted to expire without being sold
or exercised, its premium would represent a realized loss to the Fund.
Futures Contracts. The Fund may purchase or sell contracts for the future
delivery of the specific financial instruments or securities in which the Fund
may invest, and indices based upon the types of securities in which the Fund may
invest (collectively, "Futures Contracts"). The Fund may use this investment
technique as a substitute for a comparable market position in the underlying
securities or to hedge against anticipated future changes in market prices,
which otherwise might adversely affect either the value of the Fund's securities
or the prices of securities which the Fund intends to purchase at a later date.
To the extent the Fund is engaging in a futures transaction as a hedging
device, because of the risk of an imperfect correlation between securities in
the Fund's portfolio that are the subject of a hedging transaction and the
futures contract used as a hedging device, it is possible that the hedge will
not be fully effective if, for example, losses on the portfolio securities
exceed gains on the futures contract or losses on the futures contract exceed
gains on the portfolio securities. For futures contracts based on indices, the
risk of imperfect correlation increases as the composition of the Fund's
portfolio varies from the composition of the index. In an effort to compensate
for the imperfect correlation of movements in the price of the securities being
hedged and movements in the price of futures contracts, the Fund may buy or sell
futures contracts in a greater or lesser dollar amount than the dollar amount of
the securities being hedged if the historical volatility of the future contract
has been less or greater than that of the securities. Such "over hedging" or
"under hedging" may
9
<PAGE> 17
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. For example, if
the Fund has hedged against the possibility of a decline in the market adversely
affecting the value of securities held in its portfolio and prices increase
instead, the Fund will lose part or all of the benefit of the increased value of
securities which it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
An option on a futures contract gives the purchaser the right, in return for
the premium paid, to assume a position in a futures contract (a long position if
the option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer of the
option is required upon exercise to assume an offsetting futures position (a
short position if the option is a call and a long position if the option is a
put). Upon exercise of the option, the assumption of offsetting futures
positions by the writer and holder of the option will be accompanied by delivery
of the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract.
Call options sold by the Fund with respect to futures contracts will be
covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which are
expected to move relatively consistently with the instruments underlying, the
futures contract. Put options sold by the Fund with respect to futures contracts
will be covered when, among other things, cash or liquid securities are placed
in a segregated account to fulfill the obligation undertaken.
The Fund may utilize various index futures to protect against changes in the
market value of the securities in its portfolio or which it intends to acquire.
Securities index futures contracts are based on an index of various types of
securities, e.g., stocks. The index assigns relative values to the securities
included in an index, and fluctuates with changes in the market value of such
securities. The contract is an agreement pursuant to which two parties agree to
take or make delivery of an amount of cash based upon the difference between the
value of the index at the close of the last trading day of the contract and the
price at which the index contract was originally written. The acquisition or
sale of an index futures contract enables the Fund to protect its assets from
fluctuations in rates or prices of certain securities without actually buying or
selling such securities.
In general, the value of futures contracts sold by the Fund to offset declines
in its portfolio securities will not exceed the total market value of the
portfolio securities to be hedged, and futures contracts purchased by the Fund
will be covered by a segregated account consisting of cash or liquid securities
in an amount equal to the total market value of such futures contracts, less the
initial margin deposited therefor.
When buying futures contracts and when writing put options, the Fund will be
required to segregate in a separate account cash and/or U.S. Government
securities in an amount sufficient to meet 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.
10
<PAGE> 18
Government securities in an amount sufficient to meet its obligations under
written calls.
When-Issued or Delayed-Delivery Securities. The Fund may purchase securities
on a when-issued or delayed-delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The Fund will engage in when-issued and delayed-delivery
transactions only for the purpose of acquiring portfolio securities consistent
with and in furtherance of its investment objectives and policies, not for
investment leverage, although such transactions represent a form of leveraging.
When-issued or delayed-delivery securities are securities purchased for delivery
beyond the normal settlement date at a stated price and thereby involve a risk
that the price obtained in the transaction will be less advantageous than those
available in the market when delivery takes place. The Fund will generally not
pay for such securities or start earning dividends, if any, on them until they
are received on the settlement date. When the Fund agrees to purchase such
securities, however, its custodian will set aside cash or liquid securities
equal to the amount of the commitment in a separate account. Securities
purchased on a when-issued or delayed-delivery basis are recorded as an asset
and are subject to changes in value based upon market factors. In when-issued
and delayed-delivery transactions, the Fund relies on the seller to complete the
transaction; the seller's failure to do so may cause the Fund to miss a price
considered to be advantageous.
Investment Company Securities. The Fund may also invest in the securities of
other investment companies in accordance with the limitations of the 1940 Act
and any exemptions therefrom. The Fund intends to invest in other investment
companies which, in the opinion of the Adviser, will assist such Fund in
achieving its investment objective and in money market mutual funds for purposes
of short-term cash management. The Fund will incur additional expenses due to
the duplication of fees and expenses as a result of investing in mutual funds.
Additional restrictions on the Fund's investments in the securities of other
mutual funds are contained in the Statement of Additional Information.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions that may be changed
only by a vote of a majority of the outstanding Shares of the Fund (as defined
under "GENERAL INFORMATION--Miscellaneous" herein). The Fund will not:
1. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, if,
immediately after such purchase, more than 5% of the Fund's total assets would
be invested in such issuer or the Fund would hold more than 10% of the
outstanding voting securities of the issuer, except that 25% or less of the
Fund's total assets may be invested without regard to such limitations. There
is no limit to the percentage of assets that may be invested in U.S. Treasury
bills, notes, or other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Purchase any securities which would cause more than 25% of the Fund's
total assets at the time of purchase to be invested in securities of one or
more issuers conducting their principal business activities in the same
industry, provided that (a) there is no limitation with respect to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements secured by obligations of the
U.S. Government, its agencies or instrumentalities; (b) wholly owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their parents;
and (c) technology companies will be divided according to their
11
<PAGE> 19
services. For example, medical devices, biotechnology, semi-conductor,
software and communications will each be considered a separate industry.
3. Borrow money or issue senior securities except that the Fund may enter
into reverse repurchase agreements and may otherwise borrow money or issue
senior securities as and to the extent permitted by the 1940 Act or any rule,
order or interpretation thereunder.
4. Make loans, except that the Fund may purchase or hold debt instruments
and lend portfolio securities in accordance with its investment objective and
policies, make time deposits with financial institutions and enter into
repurchase agreements.
The following additional investment restriction may be changed without the
vote of a majority of the outstanding Shares of the Fund: the Fund may not
purchase or otherwise acquire any security if, as a result, more than 15% of its
net assets would be invested in securities that are illiquid. For purposes of
this investment restriction, illiquid securities include securities which are
not readily marketable and repurchase agreements with maturities in excess of
seven days.
VALUATION OF SHARES
The net asset value of the Fund is determined and its Shares are priced as of
the close of regular trading on the New York Stock Exchange (the "Exchange")
(generally 4:00 p.m. Eastern time) on each Business Day of the Fund. The time at
which the Shares of the Fund are priced is hereinafter referred to as the
"Valuation Time." A "Business Day" of the Fund is a day on which the Exchange is
open for trading and any other day (other than a day on which no Shares of the
Fund are tendered for redemption and no order to purchase any Shares of the Fund
is received) during which there is sufficient trading in portfolio instruments
such that the Fund's net asset value per share might be materially affected. The
Exchange will not be open in observance of the following holidays: New Year's
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. Net asset value per share for purposes of pricing
purchases and redemptions is calculated by dividing the value of all securities
and other assets belonging to the Fund, less the liabilities charged to the
Fund, by the number of the Fund's outstanding Shares.
The net asset value per share for the Fund will fluctuate as the value of the
investment portfolio of the Fund changes. The Trustees of the Group have set the
initial price of the Fund's Shares at $10 per share.
The portfolio securities for which market quotations are readily available are
valued based upon their current available prices in the principal market in
which such securities normally are traded. Unlisted securities for which market
quotations are readily available are valued at such market values. Other
securities, including restricted securities and other securities for which
market quotations are not readily available, and other assets are valued at fair
value by the Adviser under procedures established by, and under the supervision
of the Group's Board of Trustees. Securities may be valued by an independent
pricing service approved by the Group's Board of Trustees. Investments in debt
securities with remaining maturities of 60 days or less may be valued based upon
the amortized cost method.
HOW TO PURCHASE
AND REDEEM SHARES
DISTRIBUTOR
Shares of 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.
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<PAGE> 20
PURCHASES OF SHARES
Shares may be purchased through procedures established by the Distributor in
connection with the requirements of qualified accounts maintained by or on
behalf of certain persons ("Customers") by the Adviser, its affiliates or its
correspondent entities (collectively, "Entities").
Shares of the Fund sold to the Entities acting in a fiduciary, advisory,
custodial, agency, or other similar capacity on behalf of Customers will
normally be held of record by the Entities. With respect to Shares of the Fund
so sold, it is the responsibility of the particular Entity to transmit purchase
or redemption orders to the Distributor and to deliver federal funds for
purchase on a timely basis. Beneficial ownership of Shares will be recorded by
the Entities and reflected in the account statements provided by the Entities to
Customers.
Investors may also purchase Shares of the Fund by completing and signing an
Account Registration Form and mailing it, together with a check (or other
negotiable bank draft or money order) in at least the minimum initial purchase
amount, payable to the applicable Fund, to The KeyPremier Funds, P.O. Box
182707, Columbus, Ohio 43218-2707. Subsequent purchases of Shares of the Fund
may be made at any time by mailing a check (or other negotiable bank draft or
money order) payable to the Group to the above address.
If an Account Registration Form has been previously received by the Group,
investors may also purchase Shares by wiring funds to the Fund's custodian.
Prior to wiring any such funds and in order to ensure that wire orders are
invested promptly, investors must call the Group at (800) 766-3960 to obtain
instructions regarding the bank account number into which the funds should be
wired and other pertinent information.
Shares of the Fund are purchased at the net asset value per share (see
"VALUATION OF SHARES") next determined after receipt by the Distributor, its
agents or broker-dealers with whom it has an agreement of an order in good form
to purchase Shares plus any applicable sales charge as described below.
Purchases of Shares of the Fund will be effected only on a Business Day (as
defined in "VALUATION OF SHARES") of the Fund.
For an order for the purchase of Shares of the Fund that is placed through a
broker-dealer, the applicable public offering price will be the net asset value
as so determined (plus any applicable sales charge), but only if the
broker-dealer receives the order and transmits it to the Distributor prior to
the Valuation Time for that day. The broker-dealer is responsible for
transmitting such orders by the Valuation Time. If the broker-dealer fails to do
so, the investor's right to that day's closing price must be settled between the
investor and the broker-dealer. If the broker-dealer receives the order after
the Valuation Time for that day, the price will be based on the net asset value
determined as of the Valuation Time for the next Business Day.
MINIMUM INVESTMENT
Except as otherwise discussed below under "Auto Invest Plan," the minimum
investment is $1,000 for the initial purchase of Shares of the Fund by an
investor and $25 for subsequent purchases of Shares of the Fund. The initial
minimum investment amount is reduced to $250 for employees of the Adviser,
Keystone or any of their affiliates.
Depending upon the terms of a particular Customer's account, the Entities or
their affiliates may charge a Customer account fees for automatic investment and
other cash management services provided in connection with an investment in the
Fund. Information concerning these services and any charges will be provided by
the Entities. This Prospectus should be read in conjunction with any such
information received from the Entities or their affiliates.
13
<PAGE> 21
The Fund reserves the right to reject any order for the purchase of its Shares
in whole or in part, including purchases made with foreign checks and third
party checks not originally made payable to the order of the investor.
Every Shareholder will receive a confirmation of each new transaction in his
or her account, which will also show the total number of Shares owned by the
Shareholder and the number of Shares being held in safekeeping by the Transfer
Agent for the account of the Shareholder. Reports of purchases and redemptions
of Shares by Entities on behalf of their Customers will be sent by the Entities
to their Customers. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Shares will not be issued.
AUTO INVEST PLAN
The KeyPremier Funds Auto Invest Plan enables Shareholders to make regular
monthly or quarterly purchases of Shares of the Fund through automatic
deduction from their bank accounts, provided that the Shareholder's bank is a
member of the Federal Reserve and the Automated Clearing House (ACH) system.
With Shareholder authorization the Transfer Agent will deduct the amount
specified (subject to the applicable minimums) from the Shareholder's bank
account which will automatically be invested in Shares of the Fund at the
public offering price next determined after receipt of payment by the Transfer
Agent. The required minimum initial investment when opening an account using
the Auto Invest Plan is $250; the minimum amount for subsequent investments is
$25. To participate in the Auto Invest Plan, Shareholders should complete the
appropriate section of the Account Registration Form or a supplemental sign-up
form which can be acquired by calling the Group at (800) 766-3960. For a
Shareholder to change the Auto Invest instructions, the request must be made in
writing to the Group at: 3435 Stelzer Road, Columbus, Ohio 43219.
The Group may eliminate or change the Auto Invest Plan at any time or from
time to time without notice thereof.
IN-KIND PURCHASES
Payment for Shares of the Fund may, in the discretion of the Adviser, be made
in the form of securities that are permissible investments for the Fund as
described in this Prospectus. For further information about this form of
payment, contact the Adviser. In connection with an in-kind securities payment,
the Fund will require, among other things, that the securities be valued on the
day of purchase in accordance with the pricing methods used by the Fund and that
the Fund received satisfactory assurances that it will have good and marketable
title to the securities received by it; that the securities be in proper form of
transfer to the Fund; and that adequate information be provided concerning the
basis and other tax matters relating to the securities.
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.
14
<PAGE> 22
<TABLE>
<CAPTION>
SALES DEALER
CHARGE SALES DISCOUNTS AND
AS CHARGE AS BROKERAGE
AMOUNT OF % OF NET % OF PUBLIC COMMISSIONS AS
TRANSACTION AT AMOUNT OFFERING % OF PUBLIC
PUBLIC OFFERING PRICE INVESTED PRICE OFFERING PRICE
- --------------------- -------- ----------- --------------
<S> <C> <C> <C>
Less than $100,000... 4.71% 4.50% 4.05%
$100,000 but less
than $250,000...... 3.63 3.50 3.15
$250,000 but less
than $500,000...... 2.56 2.50 2.25
$500,000 but less
than $1,000,000.... 1.52 1.50 1.35
$1,000,000 or more... 0 0 0
</TABLE>
From time to time dealers who receive dealer discounts and brokerage
commissions from the Distributor may reallow all or a portion of such dealer
discounts and brokerage commissions to other dealers or brokers. The
Distributor, at its expense, will also provide additional compensation to
dealers in connection with sales of Shares of the Fund. Such compensation will
include financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding the Fund, and/or other dealer-sponsored special events. In
some instances, this compensation will be made available only to certain dealers
whose representatives have sold a significant amount of such Shares.
Compensation will include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Compensation will also
include the following types of non-cash compensation offered through sales
contests: (1) vacation trips, including the provision of travel arrangements and
lodging at luxury resorts at an exotic location, (2) tickets for entertainment
events (such as concerts, cruises and 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-regulatory agency, such as the National
Association of Securities Dealers, Inc. None of the aforementioned compensation
is paid for by the Fund or its Shareholders.
SALES CHARGE WAIVERS
The Distributor will waive sales charges for the purchase of Shares of the
Fund by or on behalf of (1) purchasers for whom Keystone, the Adviser, one of
their affiliates or another financial institution acts in a fiduciary, advisory,
agency, custodial (other than individual retirement accounts), or similar
capacity, (2) officers, trustees, directors, advisory board members, employees
and retired employees (including spouses, children and parents of the foregoing)
of Keystone, the Adviser, the Group, BISYS and any affiliated company thereof,
(3) investors who purchase Shares with the proceeds from a distribution from the
Adviser, Keystone or an affiliate trust or agency account, and (4) brokers,
dealers and agents who have a sales agreement with the Distributor, and their
employees (and their spouses and children under 21). The Distributor may change
or eliminate the foregoing waivers at any time or from time to time without
notice thereof. The Distributor may also periodically waive all or a portion of
the sales charge for all investors with respect to the Fund.
In addition, the Distributor may waive sales charges for the purchase of the
Fund's Shares with the proceeds from the recent redemption of shares of a
non-money market fund that imposes a sales charge. The purchase must be made
within 60 days of the redemption, and the Distributor must be notified in
writing by the investor, or by his financial institution, at the time the
purchase is made. A copy of the investor's account statement showing such
redemption must accompany such notice.
CONCURRENT PURCHASES
For purposes of qualifying for a lower sales charge, investors have the
privilege of combining concurrent purchases of the Fund and one or more of the
other funds of the Group sold with a sales charge and advised by the Adviser
15
<PAGE> 23
("KeyPremier Load Funds"). For example, if a Shareholder concurrently purchases
Shares of the Fund at the total public offering price of $50,000 and Shares of
another KeyPremier Load Fund at the total public offering price of $50,000, the
sales charge would be that applicable to a $100,000 purchase as shown in the
table above. This privilege, however, may be modified or eliminated at any time
or from time to time by the Group without notice thereof.
LETTER OF INTENT
An investor may obtain a reduced sales charge by means of a written Letter of
Intent which expresses the intention of such investor to purchase Shares of the
Fund at a designated total public offering price within a designated 13-month
period. Each purchase of Shares under a Letter of Intent will be made at the net
asset value plus the sales charge applicable at the time of such purchase to a
single transaction of the total dollar amount indicated in the Letter of Intent.
A Letter of Intent may include purchases of Shares made not more than 90 days
prior to the date such investor signs a Letter of Intent; however, the 13-month
period during which the Letter of Intent is in effect will begin on the date of
the earliest purchase to be included. This program may be modified or eliminated
at any time or from time to time by the Group without notice. For further
information about letters of intent, interested investors should contact the
Group at (800) 766-3960.
A Letter of Intent is not a binding obligation upon the investor to purchase
the full amount indicated. The minimum initial investment under a Letter of
Intent is 5% of such amount. Shares purchased with the first 5% of such amount
will be held in escrow (while remaining registered in the name of the investor)
to secure payment of the higher sales charge applicable to the Shares actually
purchased if the full amount indicated is not purchased, and such escrowed
Shares will be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed Shares, whether paid in cash or reinvested in
additional Shares, are not subject to escrow. The escrowed Shares will not be
available for disposal by the investor until all purchases pursuant to the
Letter of Intent have been made or the higher sales charge has been paid. When
the full amount indicated has been purchased, the escrow will be released. An
adjustment will be made to reflect any reduced sales charge applicable to Shares
purchased during the 90-day period prior to the date the Letter of Intent was
entered into at the conclusion of the 13-month period and in the form of
additional Shares credited to the Shareholder's account at the then current
public offering price applicable to a single purchase of the total amount of the
total purchases. Additionally, if the total purchases within the 13-month period
exceed the amount specified, a similar adjustment will be made to reflect
further reduced sales charges applicable to such purchases, if any.
RIGHT OF ACCUMULATION
Pursuant to the right of accumulation, investors are permitted to purchase
Shares of the Fund at the public offering price applicable to the total of (a)
the total public offering price of the Shares then being purchased plus (b) an
amount equal to the then current net asset value of the purchaser's combined
holdings of the Shares of all KeyPremier Load Funds. The "purchaser's 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.
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<PAGE> 24
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for Shares of The KeyPremier Prime Money
Market Fund or any other KeyPremier Load Fund at respective net asset values if
the amount to be exchanged meets the applicable minimum investment requirements
and the exchange is made in a state where it is legally authorized. When shares
of The KeyPremier Prime Money Market Fund are exchanged for Shares of the Fund
or other KeyPremier Load Fund, the applicable sales load will be assessed,
unless such shares to be exchanged were acquired through a previous exchange for
shares on which a sales charge was paid. Under such circumstances, the
Shareholder must notify the Group that a sales charge was originally paid and
provide the Group with sufficient information to permit confirmation of the
Shareholder's right not to pay a sales charge.
An exchange is considered a sale of Shares for federal income tax purposes.
However, a Shareholder may not include any sales charge on Shares of the Fund as
a part of the cost of those Shares for purposes of calculating the gain or loss
realized on an exchange of those Shares within 90 days of their purchase.
The Group may at any time modify or terminate the foregoing exchange
privileges. The Group, however, will give Shareholders 60 days' advance written
notice of any such modification.
A Shareholder wishing to exchange his or her Shares may do so by contacting
the Group at (800) 766-3960 or by providing written instructions to the Group.
Any Shareholder who wishes to make an exchange should obtain and review the
current prospectus of the fund in which he or she wishes to invest before making
the exchange. For a discussion of risks associated with unauthorized telephone
exchanges, see "Redemption by Telephone" below.
REDEMPTION OF SHARES
Shares may ordinarily be redeemed by mail or by telephone. However, all or
part of a Customer's Shares may be redeemed in accordance with instructions and
limitations pertaining to his or her account at an Entity. For example, if a
Customer has agreed with an Entity to maintain a minimum balance in his or her
account with the Entity, and the balance in that account falls below that
minimum, the Customer may be obliged to redeem, or the Entity may redeem on
behalf of the Customer, all or part of the Customer's Shares of the Fund to the
extent necessary to maintain the required minimum balance.
REDEMPTION BY MAIL
A written request for redemption must be received by the Group, at the address
shown on the front page of this Prospectus, in order to honor the request. The
Transfer Agent will require a signature guarantee by an eligible guarantor
institution. The signature guarantee requirement will be waived if the following
conditions apply: (1) the redemption check is payable to the Shareholder(s) of
record, and (2) the redemption check is mailed to the Shareholder(s) at the
address of record or mailed or wired to a commercial bank account previously
designated on the Account Registration Form. There is no charge for having
redemption proceeds mailed to a designated bank account. To change the address
to which a redemption check is to be mailed, a written request therefor must be
received by the Transfer Agent. In connection with such request, the Transfer
Agent will require a signature guarantee by an eligible guarantor institution.
For purposes of this policy, the term "eligible guarantor institution" shall
include banks, brokers, dealers, credit unions, securities exchanges and
associations, clearing agencies and savings associations as those terms are
defined in the Securities Exchange Act of 1934. The Transfer Agent reserves the
right to reject any signature guarantee if (1) it has
17
<PAGE> 25
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. 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 Group, the Fund nor their service providers will be liable for any
loss, damages, expense or cost arising out of any telephone redemption effected
in accordance with the Group's telephone redemption procedures, acting upon
instructions reasonably believed to be genuine. The Group will employ procedures
designed to provide reasonable assurance that instructions by telephone are
genuine; if these procedures are not followed, the Group, the Fund or their
service providers may be liable for any losses due to unauthorized or fraudulent
instructions. These procedures include recording all phone conversations,
sending confirmations to Shareholders within 72 hours of the telephone
transaction, verification of account name and account number or tax
identification number, and sending redemption proceeds only to the address of
record or to a previously authorized bank account. If, due to temporary adverse
conditions, Shareholders are unable to effect telephone transactions,
Shareholders may also mail the redemption request to the Group at the address
shown on the front page of this Prospectus.
AUTO WITHDRAWAL PLAN
The Auto Withdrawal Plan enables Shareholders of the Fund, with an account
balance in the Fund of $5,000 or more, to make regular monthly or quarterly
redemptions of Shares. With Shareholder authorization, the Transfer Agent will
automatically redeem Shares at the net asset value on the dates of the
withdrawal and have a check in the amount specified mailed to the Shareholder.
The required minimum withdrawal is $50 monthly. To participate in the Auto
Withdrawal Plan, Shareholders should call (800) 766-3960 for more information.
Purchases of additional Shares, including use of the Auto Invest Plan described
above, concurrent with withdrawals may be disadvantageous to certain
Shareholders because of tax liabilities and sales charges. For a Shareholder to
change the Auto Withdrawal instructions, the request must be made in writing to
the Group.
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per share next
determined after the Shares are properly tendered for redemption, as described
above. Payment to Shareholders for Shares redeemed will be made within seven
days after receipt by the Distributor of the request for redemption. However, to
the greatest extent possible, the Fund will attempt to honor requests from
Shareholders for next day payments upon redemption of Shares if the
18
<PAGE> 26
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 Group
reserves the right to redeem, at net asset value, the Shares of the Fund of any
Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder (but not as a result of a decrease in the market price of such
Shares, the deduction of any sales charge or the establishment of an account
with less than $1,000 using the Auto Invest Plan), the account of such
Shareholder has a value of less than $1,000 ($250 if the Shareholder is an
employee of the Adviser or one of its affiliates). Accordingly, an investor
purchasing Shares of the Fund in only the minimum investment amount may be
subject to such involuntary redemption if he or she thereafter redeems some of
his or her Shares. Before the Group exercises its right to redeem such Shares
and to send the proceeds to the Shareholder, the Shareholder will be given
notice that the value of the Shares in his or her account is less than the
minimum amount and will be allowed at least 60 days to make an additional
investment in an amount which will increase the value of the account to at least
$1,000 ($250 if the Shareholder is an employee of the Adviser or one of its
affiliates).
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION" in the Statement of
Additional Information for examples of when the Group may suspend the right of
redemption.
DIVIDENDS AND TAXES
DIVIDENDS
A dividend for the Fund is declared quarterly at the close of business on the
day of declaration consisting of an amount of accumulated undistributed net
income, if any, of the Fund as determined necessary or appropriate by the
appropriate officers of the Group. Such dividend is generally paid quarterly.
Shareholders will automatically receive all income dividends and capital gains
distributions in additional full and fractional Shares of the Fund at the net
asset value as of the date of payment, unless the Shareholder elects to receive
dividends or distributions in cash. Such election, or any revocation thereof,
must be made in writing to the Transfer Agent at 3435 Stelzer Road, Columbus,
Ohio 43219, and will become effective with respect to dividends and
distributions having record dates after its receipt by the Transfer Agent.
Distributable net realized capital gains, if any, for the Fund are distributed
at least annually. Dividends are paid in cash not later than seven Business Days
after a Shareholder's complete redemption of his or her Shares in the Fund.
If a Shareholder elects to receive distributions in cash, and checks (1) are
returned and marked as "undeliverable" or (2) remain uncashed for six months,
the Shareholder's cash
19
<PAGE> 27
election will be changed automatically and future dividend and capital gains
distributions will be reinvested in the Fund at the per share net asset value
determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
FEDERAL TAXES
The Fund is treated as a separate entity for federal income tax purposes and
intends to qualify as a "regulated investment company" under the Internal
Revenue Code of 1986 (the "Code") for so long as such qualification is in the
best interest of the Fund's Shareholders. Qualification as a regulated
investment company under the Code requires, among other things, that the
regulated investment company distribute to its shareholders at least 90% of its
investment company taxable income. The Fund contemplates declaring as dividends
all or substantially all of its investment company taxable income (before
deduction of dividends paid).
A non-deductible 4% excise tax is imposed on regulated investment companies
that do not distribute in each calendar year (regardless of having a
non-calendar taxable year) an amount equal to 98% of their ordinary income for
the calendar year plus 98% of their capital gain net income for the one-year
period ending on October 31 of such calendar year. If distributions during a
calendar year were less than the required amount, the Fund would be subject to a
nondeductible 4% excise tax on the deficiency.
It is expected that the Fund will distribute annually to its Shareholders all
or substantially all of the Fund's net ordinary income and net realized capital
gains and that such distributed net ordinary income and distributed net realized
capital gains will be taxable income to Shareholders for federal income tax
purposes, even if paid in additional Shares of the Fund and not in cash. The
dividends received deduction for corporations will apply to the aggregate of
such ordinary income distributions in the same proportion as the aggregate
dividends eligible for the dividends deduction, if any, received by the Fund
bear to its gross income.
Distribution by the Fund of the excess of net long-term capital gain, if any,
over net short-term capital loss is taxable to Shareholders as long-term capital
gain in the year in which it is received, regardless of how long the Shareholder
has held the Shares. Such distributions are not eligible for the dividends
received deduction.
If the net asset value of a Share is reduced below the Shareholder's cost of
that Share by the distribution of income or gain realized on the sale of
securities, the distribution, from a practical standpoint, is a return of
invested principal, although taxable as described above.
Prior to purchasing Shares, the impact of dividends or capital gains
distributions which are expected to be declared or have been declared, but have
not been paid, should be carefully considered. Any such dividends or capital
gains distributions paid shortly after a purchase of Shares prior to the record
date will have the effect of reducing the per share net asset value of the
Shares by the amount of the dividends or distributions. All or a portion of such
dividends or distributions, although in effect a return of capital, is subject
to tax.
Additional information regarding federal taxes is contained in the Statement
of Additional Information under the heading "ADDITIONAL
INFORMATION -- Additional General Tax Information." However, the information
contained in this Prospectus and the additional material in the Statement of
Additional Information are only brief summaries of some of the important tax
considerations generally affecting the Fund and its Shareholders. Accordingly,
potential investors are urged to consult their own tax advisers concerning the
application of federal, state and local taxes as
20
<PAGE> 28
such laws and regulations affect their own tax situation.
Shareholders will be advised at least annually as to the federal income tax
consequences of distributions made to them during the year.
MANAGEMENT OF THE GROUP
TRUSTEES OF THE GROUP
Overall responsibility for management of the Group rests with its Board of
Trustees. Unless so required by the Group's Declaration of Trust or By-Laws or
by Ohio law, at any given time all of the Trustees may not have been elected by
the shareholders of the Group. The Group will be managed by the Trustees in
accordance with the laws of Ohio governing business trusts. The Trustees, in
turn, elect the officers of the Group to supervise its day-to-day operations.
The Trustees of the Group receive fees and are reimbursed for their expenses
in connection with each meeting of the Board of Trustees they attend. However,
no officer or employee of BISYS Fund Services Inc., the sole general partner of
BISYS, or BISYS receives any compensation from the Group for acting as a Trustee
of the Group. The officers of the Group receive no compensation directly from
the Group for performing the duties of their offices. BISYS receives fees from
the Fund for acting as Administrator, may receive fees under the Administrative
Services Plan discussed below and may retain all or a portion of any sales load
imposed upon purchases of Shares. BISYS Fund Services, Inc. receives fees from
the Fund for acting as Transfer Agent and for providing certain fund accounting
services.
INVESTMENT ADVISER
Martindale Andres & Company, Inc., Four Falls Corporate Center, Suite 200,
West Conshohocken, Pennsylvania 19428, is the investment adviser of the Fund and
has served as such since the Fund's inception. The Adviser is a wholly owned
subsidiary of Keystone Financial, Inc., 1 Keystone Plaza, Harrisburg,
Pennsylvania 17101 ("Keystone"). The Adviser was organized in 1989 and was
acquired by Keystone in December 1995. Except with respect to the KeyPremier
Load Funds and The KeyPremier Prime Money Market Fund, the Adviser has not
previously served as the investment adviser to a registered open-end management
investment company. However, the Adviser has managed since its founding the
investment portfolio of high net worth individuals, endowments, pension and
common trust funds. The Adviser currently has over $1.6 billion under
management.
Subject to the general supervision of the Board of Trustees of the Group and
in accordance with the investment objective and restrictions of the Fund, the
Adviser manages the Fund, makes decisions with respect to and places orders for
all purchases and sales of its portfolio securities, and maintains the Fund's
records relating to such purchases and sales.
William C. Martindale, Jr. is responsible for the day-to-day management of the
Fund's portfolio, has managed the CIFs since July 1, 1994, and has over 25 years
of equity investment experience. Mr. Martindale co-founded the Adviser in 1989
and serves as its Chief Investment Officer. Prior to 1989, Mr. Martindale served
in various investment-related capacities with Dean Witter Reynolds.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Group, the Adviser receives a fee from the Fund,
computed daily and paid monthly, at the annual rate of one percent (1.00%) 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 reimburse-
21
<PAGE> 29
ment of such voluntarily reduced fees after the end of the fiscal year in which
the fees were reduced. The reduction of such fee will cause the total return of
the Fund to be higher than it would otherwise be in the absence of such a
reduction.
ADMINISTRATOR AND DISTRIBUTOR
BISYS is the administrator for the Fund and also acts as the Fund's principal
underwriter and distributor (the "Administrator" or the "Distributor," as the
context indicates). BISYS and its affiliated companies, including BISYS Fund
Services, Inc., are wholly owned by The BISYS Group, Inc., a publicly-held
company which is a provider of information processing, loan servicing and 401(k)
administration and recordkeeping services to and through banking and other
financial organizations.
The Administrator generally assists in all aspects of the Fund's
administration and operation. For expenses assumed and services provided as
administrator pursuant to its management and administration agreement with the
Group, the Administrator receives a fee from the Fund, computed daily and paid
periodically, calculated at an annual rate of eleven and one-half one-hundredths
of one percent (.115%) of the Fund's average daily net assets. The Administrator
may periodically voluntarily reduce all or a portion of its administration fee
with respect to the Fund to increase the net income of the Fund available for
distribution as dividends. The Administrator may not seek reimbursement of such
reduced fees after the end of the fiscal year in which the fees were reduced.
The voluntary reduction of such fee will cause the total return of the Fund to
be higher than it would otherwise be in the absence of such a fee reduction.
The Distributor acts as agent for the Fund in the distribution of its Shares
and, in such capacity, solicits orders for the sale of Shares, advertises, and
pays the costs of advertising, office space and its personnel involved in such
activities. The Distributor receives no compensation under its Distribution
Agreement with the Group, but may retain all or a portion of any sales charge
imposed upon the purchase of Shares. See "HOW TO PURCHASE AND REDEEM
SHARES--Sales Charges."
EXPENSES
The Adviser and the Administrator each bear all expenses in connection with
the performance of their services as investment adviser and administrator,
respectively, other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund. The Fund will bear the following
expenses relating to its operations: organizational expenses, taxes, interest,
any brokerage fees and commissions, fees and expenses of the Trustees of the
Group, Commission fees, state securities qualification fees, costs of preparing
and printing prospectuses for regulatory purposes and for distribution to the
Fund's current shareholders, outside auditing and legal expenses, advisory fees,
fees and out-of-pocket expenses of the custodian, fund accountant and Transfer
Agent, costs for independent pricing services, certain insurance premiums, costs
of maintenance of the Group's existence, costs of shareholders' reports and
meetings, expenses incurred under the Administrative Services Plan described
below and any extraordinary expenses incurred in the Fund's operation.
ADMINISTRATIVE SERVICES PLAN
The Group has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which the Fund is authorized to pay compensation to banks and other
financial institutions (each a "Service Organization"), which may include the
Adviser, Entities, and BISYS, which agree to provide certain ministerial, record
keeping and/or administrative support services for their customers or account
holders (collectively, "customers") who are the beneficial or record owner of
Shares of the Fund. In consideration for such services, a Service Organiza-
22
<PAGE> 30
tion 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/or 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 on behalf of the Fund.
BANKING LAWS
The Adviser believes that it possesses the legal authority to perform the
investment advisory services for the Fund contemplated by its investment
advisory agreement with the Group, as described in this Prospectus, without
violation of applicable banking laws and regulations, and has so represented in
its investment advisory agreement with the Group. Future changes in Federal or
state statutes and regulations relating to permissible activities of banks or
bank holding companies and their subsidiaries and affiliates as well as further
judicial or administrative decisions or interpretations of present and future
statutes and regulations could change the manner in which the Adviser could
continue to perform such services for the Fund. See "MANAGEMENT OF THE
GROUP--Glass-Steagall Act" in the Statement of Additional Information for
further discussion of applicable law and regulations.
GENERAL INFORMATION
DESCRIPTION OF THE GROUP AND ITS SHARES
The Group was organized as an Ohio business trust on April 25, 1988. The Group
consists of seventeen funds, each having its own class of shares. Each share
represents an equal proportionate interest in a fund with other shares of the
same fund, and is entitled to such dividends and distributions out of the income
earned on the assets belonging to the fund as are declared at the discretion of
the Trustees (see "Miscellaneous" below). The other funds of the Group are The
KeyPremier Prime Money Market Fund, The KeyPremier Pennsylvania Municipal Bond
Fund, The KeyPremier Established Growth Fund, The KeyPremier Intermediate Term
Income Fund, 1st Source Monogram U.S. Treasury Obligations Money Market Fund,
1st Source Monogram Diversified Equity Fund, 1st Source Monogram Income Equity
Fund, 1st Source Monogram Special Equity Fund, 1st Source Monogram Income Fund,
1st Source Monogram Intermediate Tax-Free Bond Fund, Riverside Capital Money
Market Fund, Riverside Capital Value Fund, Riverside Capital Fixed Income Fund,
Riverside Capital Growth Fund, Riverside Capital Tennessee Municipal Obligations
Fund and Riverside Capital Low Duration Government Securities Fund.
Shareholders are entitled to one vote for each dollar of value invested and a
proportionate fractional vote for any fraction of a dollar invested, and will
vote in the aggregate and not by fund except as otherwise expressly required by
law. For example, Shareholders of the Fund will vote in the aggregate with other
shareholders of the Group with respect to the election of Trustees. However,
Shareholders of the Fund will vote as a fund, and not in the aggregate with
other shareholders of the Group, for pur-
23
<PAGE> 31
poses of approval or amendment of the Group's investment advisory agreement as
it relates to the Fund.
Overall responsibility for the management of the Fund is vested in the Board
of Trustees of the Group. See "MANAGEMENT OF THE GROUP--Trustees of the Group."
Individual Trustees are elected by the shareholders of the Group, although
Trustees may, under certain circumstances, fill vacancies, including vacancies
created by expanding the size of the Board. Trustees 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, to amend the Declaration
of Trust, the investment advisory agreement or the Fund's fundamental policies
and to satisfy certain other requirements. To the extent that such a meeting is
not required, the Group does not intend to have an annual or special meeting of
shareholders.
The Group has represented to the Commission that the Trustees will call a
special meeting of shareholders for the purpose 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, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, serves as
the Fund's transfer agent pursuant to a Transfer Agency Agreement with the Group
and receives a fee for such services. BISYS Fund Services, Inc. also provides
certain accounting services for the Fund pursuant to the Fund Accounting
Agreement and receives a fee from the Fund for such services equal to the
greater of (a) a fee computed at an annual rate of 0.03% of the Fund's average
daily net assets or (b) the annual fee of $30,000. See "MANAGEMENT OF THE
GROUP--Transfer Agency and Fund Accounting Services" in the Statement of
Additional Information for further information.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants.
As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to the fund" means the consideration received by a fund upon
the issuance or sale of shares in the fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof, including any
proceeds from the sale, exchange, or liquidation of such investments, and any
funds or amounts derived from any reinvestment of such proceeds, and any general
assets of the Group not readily identified as belonging to a particular fund
that are allocated to such fund by the Group's Board of Trustees. The Board of
Trustees may allocate such general assets in any manner it deems fair and
equitable. Determinations by
24
<PAGE> 32
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) 766-3960.
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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 LLP
65 East State Street
Columbus, Ohio 43215
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUMMARY.................... 2
FEE TABLE............................. 3
PERFORMANCE INFORMATION............... 4
INVESTMENT OBJECTIVES AND
POLICIES............................ 4
INVESTMENT RESTRICTIONS............... 11
VALUATION OF SHARES................... 12
HOW TO PURCHASE AND REDEEM
SHARES.............................. 12
REDEMPTION OF SHARES.................. 17
DIVIDENDS AND TAXES................... 19
MANAGEMENT OF THE GROUP............... 21
GENERAL INFORMATION................... 23
</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.
[KEYPREMIER FUNDS(SM) LOGO]
THE
KEYPREMIER
AGGRESSIVE
GROWTH FUND
MARTINDALE
ANDRES & COMPANY, INC.
INVESTMENT ADVISER
Prospectus
dated January 29, 1997
<PAGE> 36
THE KEYPREMIER AGGRESSIVE GROWTH FUND
One Investment Portfolio of
THE SESSIONS GROUP
Statement of Additional Information
August 1, 1997
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the prospectus (the "Prospectus") of The
KeyPremier Aggressive Growth Fund (the "Fund"), dated as of the date hereof. The
Fund is one of nineteen funds of The Sessions Group, an Ohio business trust (the
"Group"). This Statement of Additional Information is incorporated in its
entirety into the Prospectus. Copies of the Prospectus may be obtained by
writing the Group at 3435 Stelzer Road, Columbus, Ohio 43219, or by telephoning
toll free (800) 766-3960.
<PAGE> 37
TABLE OF CONTENTS
-----------------
Page
THE SESSIONS GROUP............................................... B-1
INVESTMENT OBJECTIVE AND POLICIES................................ B-1
Additional Information on Portfolio Instruments......... B-1
Investment Restrictions................................. B-9
Portfolio Turnover...................................... B-10
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................... B-10
MANAGEMENT OF THE GROUP.......................................... B-11
Trustees and Officers................................... B-11
Investment Adviser...................................... B-13
Portfolio Transactions.................................. B-15
Glass-Steagall Act...................................... B-17
Administrator........................................... B-18
Distributor............................................. B-19
Administrative Services Plan............................ B-20
Custodian............................................... B-21
Transfer Agency and Fund Accounting Services............ B-21
Auditors................................................ B-22
Legal Counsel........................................... B-22
ADDITIONAL INFORMATION........................................... B-23
Description of Shares................................... B-23
Vote of a Majority of the Outstanding Shares............ B-24
Additional General Tax Information...................... B-24
Calculation of Total Return............................. B-28
Performance Comparisons................................. B-29
Miscellaneous........................................... B-30
FINANCIAL STATEMENTS............................................. B-31
APPENDIX......................................................... A-1
- i -
<PAGE> 38
STATEMENT OF ADDITIONAL INFORMATION
THE SESSIONS GROUP
The Sessions Group (the "Group") is an open-end management investment
company which currently offers nineteen separate investment portfolios. This
Statement of Additional Information deals with one of those portfolios, The
KeyPremier Aggressive Growth Fund (the "Fund"), which is considered to be a
diversified portfolio.
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus. Capitalized terms
not defined herein are defined in the Prospectus. No investment in Shares of the
Fund should be made without first reading the Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
Additional Information on Portfolio Instruments
- -----------------------------------------------
The following policies supplement the investment objective and policies
of the Fund as set forth in the Prospectus.
BANK OBLIGATIONS. The Fund may invest in bank obligations such as
bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange
typically drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by the 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.
COMMERCIAL PAPER. Commercial paper consists of unsecured
promissory notes issued by corporations. Issues of commercial
<PAGE> 39
paper normally have maturities of less than nine months and fixed rates of
return.
The Fund will purchase commercial paper consisting of issues rated at
the time of purchase by one or more appropriate nationally recognized
statistical rating organizations ("NRSRO") (e.g., Standard & Poor's Corporation
and Moody's Investors Service, Inc.) in one of the two highest rating categories
for short-term debt obligations. The Fund may also invest in commercial paper
that is not rated but that is determined by the Adviser to be of comparable
quality to instruments that are so rated by an NRSRO that is neither
controlling, controlled by, or under common control with the issuer of, or any
issuer, guarantor, or provider of credit support for, the instruments. For a
description of the rating symbols of the NRSROs, see the Appendix.
FOREIGN INVESTMENT. Investments in securities issued by foreign
issuers, including ADRs, may subject the Fund to investment risks that differ in
some respects from those related to investment in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
possible seizure, nationalization, or expropriation of foreign investments, less
stringent disclosure requirements, the possible establishment of exchange
controls or taxation at the source, or the adoption of other foreign
governmental restrictions. The Fund will acquire such securities only when the
Adviser believes the risks associated with such investments are minimal.
U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the U.S. Treasury; others are
supported by the right of the issuer to borrow from the Treasury; others are
supported by the discretionary authority of the U.S. Government to purchase the
agency's obligations; and still others are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored agencies or
instrumentalities if it is not obligated to do so by law.
The Fund may also invest in the following types of U.S. Treasury
securities: direct obligations issued by the U.S. Treasury including bills,
notes and bonds which differ from each other only in interest rates, maturities
and times of issuance; U.S. Treasury securities that have been stripped of their
unmatured interest coupons (which typically provide for interest payments
semi-annually); interest coupons that have been stripped from such U.S. Treasury
securities; receipts and certificates for such stripped debt obligations and
stripped coupons (collectively, "Stripped Treasury Securities"); and in
repurchase agreements
B-2
<PAGE> 40
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 Principal of Securities" ("STRIPS") or through a program
entitled "Coupon Under Book-Entry Safekeeping" ("CUBES").
Treasury bills have maturities of one year or less; Treasury notes have
maturities of one to ten years and Treasury bonds generally have maturities of
greater than ten years. Stripped Treasury Securities are sold at a deep discount
because the buyer of those securities receives only the right to receive a
future fixed payment (representing principal or interest) on the security and
does not receive any rights to periodic interest payments on the security.
REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in equity REITs.
REITs pool investors' funds for investment primarily in commercial real estate
properties. Investment in REITs may subject the Fund to certain risks. REITs may
be affected by changes in the value of the underlying property owned by the
trust. REITs are dependent upon specialized management skill, may not be
diversified and are subject to the risks of financing projects. REITs are also
subject to heavy cash flow dependency, defaults by borrowers, self liquidation
and the possibility of failing to qualify for the beneficial tax treatment
available to REITs under the Internal Revenue Code and to maintain its exemption
from the 1940 Act. As a shareholder in a REIT, the Fund would bear, along with
other shareholders, its pro rata portion of the REIT's operating expenses. These
expenses would be in addition to the advisory and other expenses the Fund bears
directly in connection with its own operations.
RESTRICTED SECURITIES. Securities in which the Fund may invest include
securities issued by corporations without registration under the Securities Act
of 1933, as amended (the "1933 Act"), such as securities issued in reliance on
the so-called "private placement" exemption from registration which is afforded
by Section 4(2) of the 1933 Act ("Section 4(2) securities"). Section 4(2)
securities are restricted as to disposition under the Federal securities laws,
and generally are sold to institutional investors such as the Fund who agree
that they are purchasing the securities for investment and not with a view to
public distribution. Any resale must also generally be made in an exempt
transaction. Section 4(2) securities are normally resold to other institutional
investors through or with the assistance of the issuer or investment dealers who
make a market in such Section 4(2) securities, thus providing liquidity. Any
such restricted securities will be considered to be illiquid for purposes of the
Fund's limitations on investments in illiquid securities unless, pursuant to
procedures adopted by the Board of Trustees of the
B-3
<PAGE> 41
Group, the Adviser has determined such securities to be liquid because such
securities are eligible for resale under Rule 144A under the 1933 Act and are
readily saleable. The Fund will limit its investment in Section 4(2) securities
to not more than 5% of its net assets.
WHEN-ISSUED SECURITIES. As discussed in the Prospectus, the Fund may
purchase securities on a "when-issued" basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When the Fund agrees to
purchase securities on a "when-issued" basis, the Fund's custodian will set
aside cash or liquid portfolio securities equal to the amount of the commitment
in a separate account. Normally, the Fund's custodian will set aside portfolio
securities to satisfy the purchase commitment, and in such a case, the Fund may
be required subsequently to place additional assets in the separate account in
order to assure that the value of the account remains equal to the amount of the
Fund's commitment. It may be expected that the Fund's net assets will fluctuate
to a greater degree when it sets aside portfolio securities to cover such
purchase commitments than when it sets aside cash. In addition, because the Fund
will set aside cash or liquid portfolio securities to satisfy its purchase
commitments in the manner described above, the Fund's liquidity and the ability
of the Adviser to manage it might be affected in the event its commitments to
purchase "when-issued" securities ever exceeded 25% of its total assets. Under
normal market conditions, however, the Fund's commitment to purchase
"when-issued" or "delayed-delivery" securities will not exceed 25% of its total
assets.
When the Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund's incurring a loss or missing the opportunity to obtain a price considered
to be advantageous. The Fund will engage in "when-issued" transactions only for
the purpose of acquiring portfolio securities consistent with the Fund's
investment objective and policies and not for investment leverage.
REPURCHASE AGREEMENTS. Securities held by the Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, the Fund would
acquire securities from banks and registered broker-dealers which the Adviser
deems creditworthy under guidelines approved by the Group's Board of Trustees,
subject to the seller's agreement to repurchase such securities at a mutually
agreed-upon date and price. The repurchase price would generally equal the price
paid by the Fund plus interest negotiated on the basis of current short-term
rates, which may be more or less than the rate on the underlying portfolio
securities. The seller under a repurchase agreement will be required to maintain
continually the value of collateral held pursuant to the agreement at not less
than the repurchase price (including accrued interest). This requirement will be
continually monitored by the Adviser. If
B-4
<PAGE> 42
the seller were to default on its repurchase obligation or become insolvent, the
Fund would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price under the
agreement, or to the extent that the disposition of such securities by the Fund
were delayed pending court action. Additionally, there is no controlling legal
precedent confirming that the Fund would be entitled, as against a claim by such
seller or its receiver or trustee in bankruptcy, to retain the underlying
securities. Securities subject to repurchase agreements will be held by the
Fund's custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system.
REVERSE REPURCHASE AGREEMENTS. As discussed in the Prospectus, the Fund
may borrow funds by entering into reverse repurchase agreements in accordance
with its investment restrictions. Pursuant to such agreements, the Fund would
sell portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase the securities at a 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 securities consistent with the Fund's investment
restrictions having a value equal to the repurchase price (including accrued
interest), and will subsequently continually monitor the account to ensure that
such equivalent value is maintained at all times. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Fund may
decline below the price at which the Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered to be borrowings by the
Fund under the 1940 Act and therefore a form of leveraging.
HEDGING TRANSACTIONS. Hedging transactions, including the use of
options and futures, in which the Fund is authorized to engage as described in
the Prospectus, have risks associated with them including possible default by
the other party to the transaction, illiquidity and, to the extent the Adviser's
view as to certain market movements is incorrect, the risk that the use of such
hedging transactions could result in losses greater than if they had not been
used.
Use of put and call options may result in losses to the Fund, force the
sale or purchase of portfolio securities at inopportune times or for prices
higher than (in the case of put options) or lower than (in the case of call
options) current market values, limit the amount of appreciation the Fund can
realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of options and futures transactions entails certain
other risks. In particular, the variable degree of correlation between price
movements of futures contracts and price movements in
B-5
<PAGE> 43
the related portfolio position of the Fund create the possibility that losses on
the hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and options markets may not be liquid in all
circumstances. As a result, in certain markets, the Fund might not be able to
close out a transaction without incurring substantial losses, if at all.
Although the use of futures and options transactions for hedging should tend to
minimize the risk of loss due to a decline in the value of the hedged position,
at the same time they tend to limit any potential gain which might result from
an increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of hedging
transactions would reduce net asset value, and possible income, and such losses
can be greater than if the hedging transactions had not been utilized.
GENERAL CHARACTERISTICS OF OPTIONS. Put options and call options
typically have similar structural characteristics and operational mechanics
regardless of the underlying instrument on which they are purchased or sold.
Thus, the following general discussion relates to each of the particular types
of options discussed in the Prospectus and in greater detail below. In addition,
many hedging transactions involving options require segregation of the Fund's
assets in special accounts, as described further below.
With certain exceptions, exchange-listed options generally settle by
physical delivery of the underlying security or currency, although in the future
cash settlement may become available. Index options are cash settled for the net
amount, if any, by which the option is "in-the-money" (i.e., where the value of
the underlying instrument exceeds, in the case of a call option, or is less
than, in the case of a put option, the exercise price of the option) at the time
the option is exercised. Frequently, rather than taking or making delivery of
the underlying instrument through the process of exercising the option, listed
options are closed by entering into offsetting purchase or sale transactions
that do not result in ownership of the new option. The Fund's ability to close
out its position as a purchaser or seller of a put or call option is dependent
in part, upon the liquidity of the option market. In addition, the hours of
trading for listed options may not coincide with the hours during which the
underlying financial instruments are traded. To the extent that the options
markets close before the markets for the underlying financial instruments,
significant price and rate movements can take place in the underlying markets
that cannot be reflected in the option markets.
Exchange-traded options generally have standardized terms and
performance mechanics unlike over-the-counter traded options. The
B-6
<PAGE> 44
Fund currently expects to purchase and sell only exchange-traded options.
Exchange-traded options generally are guaranteed by the clearing agency which is
the issuer or counterparty to such options. This guarantee usually is supported
by a daily payment system (i.e., variation margin requirements) operated by the
clearing agency in order to reduce overall credit risk. As a result, unless the
clearing agency defaults, there is relatively little counterparty credit risk
associated with options purchased on an exchange.
All options written by the Fund must be "covered" (i.e., the Fund must
own the securities or futures contract subject to a call option or must meet the
asset segregation requirements) as long as the call is outstanding. Even though
the Fund will receive the option premium to help protect it against loss, a call
option written by the Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a security or
instrument which it might otherwise have sold. With respect to put options
written by the Fund, the Fund will place liquid securities in a segregated
account to cover its obligations under such put option and will monitor the
value of the assets in such account and its obligations under the put option
daily.
FUTURES CONTRACTS. As discussed in the Prospectus, the Fund may enter
into futures contracts. This investment technique is designed primarily to act
as a substitute for a position in the underlying security and to hedge against
anticipated future changes in market conditions which otherwise might adversely
affect the value of securities which the Fund holds or intends to purchase. For
example, when market values of portfolio securities are expected to fall, the
Fund can seek through the sale of futures contracts to offset a decline in the
value of its portfolio securities. When market values are expected to rise, the
Fund, through the purchase of such contracts, can attempt to secure better
prices for the Fund than might later be available in the market when it effects
anticipated purchases.
The acquisition of put and call options on futures contracts will,
respectively, give the Fund the right (but not the obligation), for a specified
price, to sell or to purchase the underlying futures contract, upon exercise of
the option, at any time during the option period.
Futures transactions involve brokerage costs and require the Fund to
segregate liquid assets, such as cash, U.S. Government securities or other
liquid securities, to cover its performance under such contracts. The Fund may
lose the expected benefit of futures transactions if securities prices or
foreign exchange rates move in an unanticipated manner. Such unanticipated
changes may also result in poorer overall performance than if the Fund had not
B-7
<PAGE> 45
entered into any futures transactions. In addition, the value of the Fund's
futures positions may not prove to be perfectly or even highly correlated with
the value of its portfolio securities, limiting the Fund's ability to hedge
effectively against market risk and giving rise to additional risks. There is no
assurance of liquidity in the secondary market for purposes of closing out
futures positions.
REGULATORY RESTRICTIONS. To the extent required to comply with
Securities and Exchange Commission Release No. IC-10666, when purchasing a
futures contract or writing a put option, the Fund will maintain in a segregated
account cash or liquid high-grade securities equal to the value of such
contracts.
To the extent required to comply with Commodity Futures Trading
Commission Regulation 4.5 and thereby avoid being classified as a "commodity
pool operator," the Fund will not enter into a futures contract or purchase an
option thereon if immediately thereafter the initial margin deposits for futures
contracts held by the Fund plus premiums paid by it for open options on futures
would exceed 5% of the liquidation value of the Fund's total assets after taking
into account unrealized profits and unrealized losses on any contracts entered
into. The Fund will not engage in transactions in futures contracts or options
thereon for speculation, but only to attempt to hedge against changes in market
conditions affecting the values of securities which the Fund holds or intends to
purchase.
SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
securities issued by other investment companies, including money market funds
advised by the Adviser. The Fund currently intends to limit its investments so
that, as determined immediately after a securities purchase is made: (a) not
more than 5% of the value of its total assets will be invested in the securities
of any one investment company; (b) not more than 10% of the value of its total
assets will be invested in the aggregate in securities of investment companies
as a group; and (c) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund. As a shareholder of another
investment company, the Fund would bear, along with other shareholders, its pro
rata portion of that company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that the Fund bears
directly in connection with its own operations. Investment companies in which
the Fund may invest may also impose a sales or distribution charge in connection
with the purchase or redemption of their shares and other types of commissions
or charges. Such charges will be payable by the Fund and, therefore, will be
borne directly by shareholders of the Fund.
B-8
<PAGE> 46
Investment Restrictions
- -----------------------
The Fund's investment objective is a non-fundamental policy and may be
changed without a vote of the shareholders of the Fund. In addition to the
fundamental investment policies listed in the Prospectus, the following
investment restrictions may be changed only by a vote of the majority of the
outstanding Shares of the Fund (as defined under "ADDITIONAL INFORMATION - Vote
of a Majority of the Outstanding Shares").
In addition to the investment restrictions set forth in the Prospectus,
the Fund may not:
1. Purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases of portfolio securities and except as may
be necessary to make margin payments in connection with derivative securities
transactions;
2. Underwrite the securities issued by other persons, except to the
extent that the Fund may be deemed to be an underwriter under certain securities
laws in the disposition of "restricted securities;"
3. Purchase or sell real estate (although investments in marketable
securities of companies engaged in such activities and securities secured by
real estate or interests therein are not prohibited by this restriction); and
4. Purchase or sell commodities or commodities contracts, except to the
extent disclosed in the current Prospectus of the Fund.
The following additional investment restrictions may be changed without
the vote of a majority of the outstanding Shares of the Fund. The Fund may not:
1. Purchase securities of other investment companies, except (a) in
connection with a merger, consolidation, acquisition or reorganization, and (b)
to the extent permitted by the 1940 Act, or pursuant to any exemptions
therefrom;
2. Engage in any short sales; and
3. Mortgage or hypothecate the Fund's assets in excess of one-third of
the Fund's total assets.
If any percentage restriction or requirement described above is
satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in asset value will not constitute a
violation of such restriction or requirement. However, should a change in net
asset value or other external
B-9
<PAGE> 47
events cause the Fund's investments in illiquid securities, repurchase
agreements with maturities in excess of seven days and other instruments in the
Fund which are not readily marketable to exceed the limit set forth in the
Fund's Prospectus for its investment in illiquid securities, the Fund will act
to cause the aggregate amount of such securities to come within such limit as
soon as reasonably practicable. In such an event, however, the Fund would not be
required to liquidate any portfolio securities where the Fund would suffer a
loss on the sale of such securities.
Portfolio Turnover
- ------------------
The portfolio turnover rate for the Fund is calculated by dividing the
lesser of the Fund's purchases or sales of portfolio securities for the year by
the monthly average value of the portfolio securities. The Commission requires
that the calculation exclude all securities whose remaining maturities at the
time of acquisition were one year or less.
The annual portfolio turnover rate for the Fund is estimated to be less
than 50%. The portfolio turnover rate for the Fund may vary greatly from year to
year as well as within a particular year, and may also be affected by cash
requirements for redemptions of Shares. High portfolio turnover rates will
generally result in higher transaction costs, including brokerage commissions,
to the Fund and may result in additional tax consequences to the Fund's
Shareholders. Portfolio turnover will not be a limiting factor in making
investment decisions.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund are sold on a continuous basis by BISYS, and BISYS
has agreed to use appropriate efforts to solicit all purchase orders. In
addition to purchasing Shares directly from BISYS, Shares may be purchased
through procedures established by BISYS in connection with the requirements of
accounts at the Adviser or the Adviser's affiliated entities (collectively,
"Entities"). Customers purchasing Shares of the Fund may include officers,
directors, or employees of the Adviser or the Entities.
The Group may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the Exchange is
restricted by applicable rules and regulations of the Commission, (b) the
Exchange is closed for other than customary weekend and holiday closings, (c)
the Commission has by order permitted such suspension, or (d) an emergency
exists as a result of which (i) disposal by the Group of securities owned by it
is not reasonably practical, or (ii) it is not reasonably practical for the
Group to determine the fair value of its net assets.
B-10
<PAGE> 48
MANAGEMENT OF THE GROUP
Trustees and Officers
- ---------------------
Overall responsibility for management of the Group rests with its Board
of Trustees. The Trustees elect the officers of the Group to supervise actively
its day-to-day operations.
The names of the Trustees and officers of the Group, their addresses,
and principal occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name, Age and Address With the Group During Past 5 Years
- --------------------- -------------- -------------------
<S> <C> <C>
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: 51
Nancy E. Converse* Trustee and Since July, 1990, employee of
3435 Stelzer Road Assistant BISYS Fund Services Limited
Columbus, Ohio 43219 Secretary Partnership or BISYS Fund
Age: 47 Services Ohio, Inc.
Maurice G. Stark Trustee Consultant; from 1979 to
7662 Cloister Drive December, 1994, Vice
Columbus, Ohio 43235 President-Finance and Chief
Age: 61 Financial Officer, Battelle
Memorial Institute (scientific
research and development service
corporation).
James H. Woodward, Ph.D. Trustee Since July 1991, Chancellor
The University of North of The University of North
Carolina at Charlotte Carolina at Charlotte.
Charlotte, NC 28223
Age: 56
Chalmers P. Wylie Trustee From April, 1993 to present, Of
754 Stonewood Court Counsel with Kegler, Brown, Hill
Columbus, Ohio 43235 & Ritter (law firm); from
Age: 75 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, President
3435 Stelzer Road of BISYS Fund Services Limited
Columbus, Ohio 43219 Partnership; from June, 1987 to
Age: 50 December, 1995, employee of
BISYS Fund Services Limited
Partnership; from September,
1988 to present, Vice President of
</TABLE>
B-11
<PAGE> 49
<TABLE>
<CAPTION>
<S> <C> <C>
BISYS Fund Services Ohio,
Inc.
William J. Tomko Vice President From April, 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services
Columbus, Ohio 43219 Limited Partnership.
Age: 37
Stephen G. Mintos Treasurer From January, 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services
Columbus, Ohio 43219 Limited Partnership.
Age: 42
George L. Stevens Secretary From September, 1996 to present,
3435 Stelzer Road employee of BISYS Fund Services
Columbus, Ohio 43219 Limited Partnership; from
Age: 45 September, 1995 to August, 1996,
consultant on bank investment
products and activities; from
June, 1980 to September, 1995,
employee of AmSouth Bank.
Alaina V. Metz Assistant From June, 1995 to present,
3435 Stelzer Road Secretary employee of BISYS Fund Services
Columbus, Ohio 43219 Limited Partnership; prior to
Age: 29 June, 1995, supervisor at
Alliance Capital Management,
L.P. (investment management
</TABLE>
- -------------------
*Mr. Grimm and Ms. Converse are each considered to be an "interested
person" of the Group as defined in the 1940 Act.
As of the date of this Statement of Additional Information, the Group's
officers and trustees, as a group, own less than 1% of the Fund's Shares.
No officer or employee of BISYS or BISYS Fund Services, Inc. receives
any compensation from the Group for acting as trustee of the Group. The officers
of the Group receive no compensation directly from the Group for performing the
duties of their offices. BISYS receives fees from the Fund for acting as
Administrator, may receive fees pursuant to the Administrative Services Plan
described below and may retain all or a portion of any sales load imposed upon
purchases of Shares. BISYS Fund Services, Inc. receives fees from the Fund for
acting as transfer agent and for providing certain fund accounting services.
Messrs. Grimm, Huber, Mintos, Tomko and Stevens, Ms. Converse and Ms. Metz are
employees of BISYS.
B-12
<PAGE> 50
The following table sets forth information regarding all compensation
paid by the Group to its Trustees for their services as trustees during the
fiscal year ended June 30, 1996. The Group has no pension or retirement plans.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Aggregate Total Compensation
Name and Position Compensation From the Group
With the Group From the Group and the Fund Complex*
- -------------- -------------- ---------------------
<S> <C> <C>
Walter B. Grimm $0 $0
Trustee
Nancy E. Converse $0 $0
Trustee
Maurice G. Stark $7,772.17 $7,772.17
Trustee
Michael M. VanBuskirk(1) $7,772.17 $7,772.17
Trustee
James H. Woodward, Ph.D. $0 $0
Trustee
Chalmers P. Wylie $7,772.17 $7,772.17
Trustee
- ---------------
<FN>
*For purposes of this Table, Fund Complex means one or more mutual
funds, including the Funds, which have a common investment adviser or affiliated
investment advisers or which hold themselves out to the public as being related.
(1) Mr. VanBuskirk resigned his position as a trustee of the Group
effective May 3, 1996.
</TABLE>
Ms. Converse and Dr. Woodward were elected trustees of the Group on June
28, 1996.
Investment Adviser
- ------------------
Investment advisory and management services are provided to the Fund by
Martindale Andres & Company, Inc. (the "Adviser"), pursuant to an Investment
Advisory Agreement dated as of July 9, 1996, as amended as of June 30, 1997.
Under the Investment Advisory Agreement, the Adviser has agreed to provide
investment advisory services as described in the Prospectus. For the services
provided and expenses assumed pursuant to the Investment Advisory Agreement, the
Fund pays the Adviser a fee, computed daily and paid monthly, at the annual rate
of one percent (1.00%) of the average daily net assets of the Fund. Pursuant to
such Investment Advisory Agreement, the Adviser also provides investment
advisory and management services to six other funds of the Group: The KeyPremier
B-13
<PAGE> 51
Prime Money Market Fund (the "Prime Money Market Fund"), The KeyPremier
Pennsylvania Municipal Bond Fund (the "Pennsylvania Bond Fund"), The KeyPremier
Established Growth Fund (the "Growth Fund"), The KeyPremier Intermediate Term
Income Fund (the "Income Fund"), The KeyPremier U.S. Treasury Obligations Money
Market Fund (the "Treasury Money Market Fund") and The KeyPremier Limited
Duration Government Securities Fund (the "Government Securities Fund"). The
Prime Money Market Fund and the Treasury Money Market Fund each pay 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 such
Fund. The Pennsylvania Bond Fund, the Income Fund and the Government Securities
Fund each pay the Adviser a fee, computed daily and paid monthly, at the annual
rate of sixty one-hundredths of one percent (.60%) of the average daily net
assets of such Fund. The Growth Fund pays the Adviser a fee, computed daily and
paid monthly, at the annual rate of seventy-five one-hundredths of one percent
(.75%) of the average daily net assets of the Growth Fund. The Adviser may from
time to time voluntarily reduce all or a portion of its advisory fee with
respect to a Fund to increase the net income of that Fund available for
distribution as dividends.
For the year ended June 30, 1996, the Adviser had not received any
compensation under the Investment Advisory Agreement with respect to the Fund
since the Fund had not yet commenced operations.
Unless sooner terminated, the Investment Advisory Agreement will
continue in effect with respect to the Fund until July 9, 1998, and from year to
year thereafter, for successive annual periods ending on July 9th, if, as to the
Fund, such continuance is approved at least annually by the Group's Board of
Trustees or by vote of a majority of the outstanding Shares of the Fund (as
defined under "GENERAL INFORMATION - Miscellaneous" in the Prospectus), and a
majority of the Trustees who are not parties to the Investment Advisory
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Investment Advisory Agreement by votes cast in person at a meeting called for
such purpose. The Investment Advisory Agreement is terminable as to the Fund at
any time on 60 days' written notice without penalty by the Trustees, by vote of
a majority of the outstanding Shares of the Fund, or by the Adviser. The
Investment Advisory Agreement also terminates automatically in the event of any
assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that the Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of the Investment Advisory
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
B-14
<PAGE> 52
misfeasance, bad faith, or gross negligence on the part of the Adviser in the
performance of its duties, or from reckless disregard by the Adviser of its
duties and obligations thereunder.
The Adviser has agreed that the Fund and the Group may use the name
"KeyPremier" on a royalty-free basis and the Adviser has reserved to itself the
right to grant the non-exclusive right to use the name "KeyPremier" to any other
person. At such time as the Investment Advisory Agreement is no longer in
effect, the Adviser may require the Fund to cease using the name "KeyPremier."
Portfolio Transactions
- ----------------------
Pursuant to the Investment Advisory Agreement, the Adviser determines,
subject to the general supervision of the Board of Trustees of the Group and in
accordance with the Fund's investment objective and restrictions, which
securities are to be purchased and sold by the Fund, and which brokers and
dealers are to be eligible to execute the Fund's portfolio transactions.
Purchases and sales of portfolio securities with respect to the Fund usually are
effected on a national securities exchange or in the over-the-counter market.
Transactions on stock exchanges involve the payment of negotiated brokerage
commissions. Transactions in the over-the-counter market are generally principal
transactions with dealers. With respect to the over-the-counter market, the
Group, where possible, will deal directly with dealers who make a market in the
securities involved except in those circumstances where better price and
execution are available elsewhere.
Allocation of transactions, including their frequency, to various
brokers and dealers is determined by the Adviser in its best judgment and in a
manner deemed fair and reasonable to Shareholders. The primary consideration is
prompt execution of orders in an effective manner at the most favorable price.
Subject to this consideration, brokers and dealers who provide supplemental
investment research to the Adviser may receive orders for transactions on behalf
of the Fund. The Adviser is authorized to pay a broker-dealer who provides such
brokerage and research services a commission for executing the Fund's brokerage
transactions which is in excess of the amount of commission another broker would
have charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker viewed in
terms of that particular transaction or in terms of all of the accounts over
which it exercises investment discretion. Any such research and other
statistical and factual information provided by brokers to the Fund or to the
Adviser is considered to be in addition to and not in lieu of services required
to be performed by the Adviser under its agreement regarding management of the
Fund. The cost, value and specific application of such information are
B-15
<PAGE> 53
indeterminable and hence are not practicably allocable among the Fund and other
clients of the Adviser who may indirectly benefit from the availability of such
information. Similarly, the Fund may indirectly benefit from information made
available as a result of transactions effected for such other clients. Under the
Investment Advisory Agreement, the Adviser is permitted to pay higher brokerage
commissions for brokerage and research services in accordance with Section 28(e)
of the Securities Exchange Act of 1934. In the event the Adviser does follow
such a practice, it will do so on a basis which is fair and equitable to the
Group and the Fund.
The Adviser may direct brokerage transactions on behalf of the Fund to
Boston Institutional in return for research services relating to equity
securities including equity universe analysis from Chicago Investment Analysis,
market information from Bloomberg Financial Markets, equity analysis from
Financial Statement Alert Service and Zacks Software for equity analysis.
While the Adviser generally seeks competitive commissions, the Group may
not necessarily pay the lowest commission available on each brokerage
transaction, for reasons discussed above. Information so received is in addition
to and not in lieu of services required to be performed by the Adviser and does
not reduce the advisory fees payable to the Adviser by the Fund. Such
information may be useful to the Adviser in serving both the Fund and other
clients and, conversely, supplemental information obtained by the placement of
business of other clients may be useful to the Adviser in carrying out its
obligations to the Fund.
Except as otherwise disclosed to the Shareholders of the Fund and as
permitted by applicable laws, rules and regulations, the Group will not, on
behalf of the Fund, execute portfolio transactions through, acquire portfolio
securities issued by, make savings deposits in, or enter into repurchase or
reverse repurchase agreements with the Adviser, Keystone, BISYS, or their
affiliates, and will not give preference to the Adviser's or Keystone's
correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.
Investment decisions for the Fund are made independently from those for
other funds of the Group or any other investment company or account managed by
the Adviser. Any such other fund, investment company or account may also invest
in the same securities as the Group on behalf of the Fund. When a purchase or
sale of the same security is made at substantially the same time on behalf of
the Fund and another fund of the Group, investment company or account, the
transaction will be averaged as to price and available investments will be
allocated as to amount in a manner which the Adviser believes to be equitable to
the Fund and such other fund, investment company or account. In some instances,
this investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained by the Fund. To the extent permitted
by law, the Adviser may aggregate the securities to be sold or purchased for the
Fund with those to be sold or purchased for other funds of the Group, investment
companies or accounts in order to obtain best execution. As provided by the
B-16
<PAGE> 54
Investment Advisory Agreement, in making investment recommendations for the
Fund, the Adviser will not inquire or take into consideration whether an issuer
of securities proposed for purchase or sale by the Group is a customer of the
Adviser, its parent or its subsidiaries or affiliates and, in dealing with its
customers, the Adviser, its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of such customers are held
by the Fund or any other fund of the Group.
Glass-Steagall Act
- ------------------
In 1971, the United States Supreme Court held in INVESTMENT COMPANY
INSTITUTE V. CAMP that the Federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a mutual fund for
the collective investment of managing agency accounts. Subsequently, the Board
of Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM V.
INVESTMENT COMPANY INSTITUTE that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the BOARD
OF GOVERNORS case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
The Adviser believes that it possesses the legal authority to perform
the services for the Fund contemplated by the Prospectus, this Statement of
Additional Information and the Investment Advisory Agreement without violation
of applicable statutes and regulations. Future changes in either Federal or
state statutes and regulations relating to the permissible activities of banks
or bank holding companies and the subsidiaries or affiliates of those entities,
as well as further judicial or administrative decisions or interpretations of
present and future statutes and regulations, could prevent or restrict the
Adviser from continuing to perform such services for the Group. In addition,
current state securities laws on the issue of the registration of banks as
brokers or
B-17
<PAGE> 55
dealers may differ from the interpretation of federal law, and banks and
financial institutions may be required to register as dealers pursuant to the
laws of a specific state. Depending upon the nature of any changes in the
services which could be provided by the Adviser, the Board of Trustees of the
Group would review the Group's relationship with the Adviser and consider taking
all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of the Adviser and/or the Adviser's
affiliated and correspondent banks in connection with Customer purchases of
Shares of the Fund, those banks might be required to alter materially or
discontinue the services offered by them to Customers. It is not anticipated,
however, that any change in the Group's method of operations would affect its
net asset value per share or result in financial losses to any Customer.
Administrator
- -------------
BISYS serves as administrator (the "Administrator") to the Fund pursuant
to a Management and Administration Agreement dated July 9, 1996, as amended as
of June 30, 1997 (the "Administration Agreement"). The Administrator assists in
supervising all operations of the Fund (other than those performed by the
Adviser under the Investment Advisory Agreement, by The Bank of New York under
the Custody Agreement and by BISYS Fund Services, Inc. under the Transfer Agency
Agreement and Fund Accounting Agreement). The Administrator is a broker-dealer
registered with the Commission, and is a member of the National Association of
Securities Dealers, Inc. The Administrator provides financial services to
institutional clients.
Under the Administration Agreement, the Administrator has agreed to
maintain office facilities; furnish statistical and research data, clerical,
certain bookkeeping services and stationery and office supplies; prepare the
periodic reports to the Commission on Form N-SAR or any replacement forms
therefor; compile data for, prepare for execution by the Fund and file all of
the Fund's federal and state tax returns and required tax filings other than
those required to be made by the Fund's custodian and Transfer Agent; prepare
compliance filings pursuant to state securities laws with the advice of the
Group's counsel; assist to the extent requested by the Group with the Group's
preparation of its Annual and Semi-Annual Reports to Shareholders and its
Registration Statement (on Form N-1A or any replacement therefor); compile data
for, prepare and file timely Notices to the Commission required pursuant to Rule
24f-2 under the 1940 Act; keep and maintain the financial accounts and records
of the Fund, including calculation of daily expense accruals; and generally
assist in all aspects of the Fund's operations other than those performed by the
Adviser under the Investment Advisory Agreement, by The Bank of New York
B-18
<PAGE> 56
under the Custody Agreement and by BISYS Fund Services, Inc. under the Transfer
Agency Agreement and Fund Accounting Agreement. Under the Administration
Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
The Administrator receives a fee from the Fund for its services as
Administrator and expenses assumed pursuant to the Administration Agreement,
equal to a fee, calculated daily and paid periodically, at the annual rate equal
to eleven and one-half one-hundredths of one percent (.115%) of the Fund's
average daily net assets.
For the fiscal year ended June 30, 1996, the Administrator had not
received any compensation under the Administration Agreement with respect to the
Fund since the Fund had not yet commenced operations.
Unless sooner terminated as provided therein, the Administration
Agreement has an initial term expiring on July 9, 1999, and thereafter shall be
renewed automatically for successive one-year terms, unless written notice not
to renew is given by the non-renewing party to the other party at least 60 days
prior to the expiration of the then-current term. The Administration Agreement
is terminable with respect to the Fund upon mutual agreement of the parties to
the Administration Agreement; through a failure to renew at the end of a
one-year term; upon 180 days' written notice by the Group after the initial term
but only in connection with the reorganization of the Fund into another
registered management investment company; and for cause (as defined in the
Administration Agreement) by the party alleging cause, on not less than 60 days'
notice by the Group's Board of Trustees or by the Administrator.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered by
the Fund in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or
negligence in the performance of its duties, or from the reckless disregard by
the Administrator of its obligations and duties thereunder.
Distributor
- -----------
BISYS serves as agent for the Fund in the distribution of its Shares
pursuant to a Distribution Agreement dated July 9, 1996, as amended as of June
30, 1997 (the "Distribution Agreement"). Unless otherwise terminated, the
Distribution Agreement has an initial term expiring on July 9, 1998, and
thereafter shall be renewed automatically for successive annual periods ending
July 9th if approved at least annually (i) by the Group's Board of Trustees or
by the vote of a majority of the outstanding Shares of the Fund, and (ii) by the
vote of a majority of the Trustees of the Group who
B-19
<PAGE> 57
are not parties to the Distribution Agreement or interested persons (as defined
in the 1940 Act) of any party to the Distribution Agreement, cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement also terminates automatically in the event of any assignment, as
defined in the 1940 Act.
In its capacity as Distributor, BISYS solicits orders for the sale of
Shares, advertises and pays the costs of advertising, office space and the
personnel involved in such activities. BISYS receives no compensation under the
Distribution Agreement with the Group but retain all or a portion of any sales
charge imposed upon a purchase of the Shares.
Administrative Services Plan
- ----------------------------
As described in the Prospectus, the Group has also adopted an
Administrative Services Plan (the "Services Plan") under which the Fund is
authorized to pay certain financial institutions, including the Adviser, its
affiliates and their correspondent banks, and BISYS (a "Service Organization"),
to provide certain ministerial, record keeping, and administrative support
services to their customers who own of record or beneficially Shares in the
Fund. Payments to such Service Organizations are made pursuant to Servicing
Agreements between the Group and the Service Organization. The Services Plan
authorizes the Fund to make payments to Service Organizations in an amount, on
an annual basis, of up to 0.25% of the average daily net asset value of the
Fund. The Services Plan has been approved by the Board of Trustees of the Group,
including a majority of the Trustees who are not interested persons of the Group
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of the Services Plan or in any Servicing Agreements
thereunder (the "Disinterested Trustees"). The Services Plan may be terminated
as to the Fund by a vote of a majority of the Disinterested Trustees. The
Trustees review quarterly a written report of the amounts expended pursuant to
the Services Plan and the purposes for which such expenditures were made. The
Services Plan may be amended by a vote of the Trustees, provided that any
material amendments also require the vote of a majority of the Disinterested
Trustees. For so long as the Services Plan is in effect, selection and
nomination of those Disinterested Trustees shall be committed to the discretion
of the Group's Disinterested Trustees. All Servicing Agreements may be
terminated at any time without the payment of any penalty by a vote of a
majority of the Disinterested Trustees. The Services Plan will continue in
effect for successive one-year periods, provided that each such continuance is
specifically approved by a majority of the Board of Trustees, including a
majority of the Disinterested Trustees.
B-20
<PAGE> 58
As of the date hereof, no Servicing Agreement has been entered into by
the Group with respect to the Fund.
Custodian
- ---------
The Bank of New York, 48 Wall Street, New York, New York, 10286, serves
as custodian (the "Custodian") to the Fund pursuant to the Custody Agreement
dated as of July 9, 1996, as amended as of June 30, 1997. The Custodian's
responsibilities include safeguarding and controlling the Fund's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Fund's investments.
Transfer Agency and Fund Accounting Services
- --------------------------------------------
BISYS Fund Services, Inc. serves as transfer agent and dividend
disbursing agent (the "Transfer Agent") for the Fund pursuant to the Transfer
Agency Agreement dated July 9, 1996, as amended as of June 30, 1997. Pursuant to
such Agreement, the Transfer Agent, among other things, performs the following
services in connection with the Fund's Shareholders of record: maintenance of
shareholder records for each of the Fund's Shareholders of record; processing
Shareholder purchase and redemption orders; processing transfers and exchanges
of Shares of the Fund on the shareholder files and records; processing dividend
payments and reinvestments; and assistance in the mailing of Shareholder reports
and proxy solicitation materials. For such services the Transfer Agent receives
a fee based on the number of shareholders of record. For the fiscal year ended
June 30, 1996, the Transfer Agent received no compensation from the Group for
services as transfer agent for the Fund since the Fund had not yet commenced
operations.
In addition, BISYS Fund Services, Inc. provides certain fund accounting
services to the Fund pursuant to the Fund Accounting Agreement dated July 9,
1996, as amended as of January 29, 1997. BISYS Fund Services, Inc. receives a
fee from the Fund for such services equal to the greater of (a) a fee computed
at an annual rate of three one-hundredths of one percent (.03%) of the Fund's
average daily net assets, or (b) the annual fee of $30,000. Under such
Agreement, BISYS Fund Services, Inc. maintains the accounting books and records
for the Fund, including journals containing an itemized daily record of all
purchases and sales of portfolio securities, all receipts and disbursements of
cash and all other debits and credits, general and auxiliary ledgers reflecting
all asset, liability, reserve, capital, income and expense accounts, including
interest accrued and interest received, and other required separate ledger
accounts; maintains a monthly trial balance of all ledger accounts; performs
certain accounting services for the Fund, including calculation of the net asset
value per share, calculation of the dividend and capital gain distributions, if
any, and of yield, reconciliation of cash
B-21
<PAGE> 59
movements with the Fund's custodian, affirmation to the Fund's custodian of all
portfolio trades and cash settlements, verification and reconciliation with the
Fund's custodian of all daily trade activity; provides certain reports; obtains
dealer quotations, prices from a pricing service or matrix prices on all
portfolio securities in order to mark the portfolio to the market; and prepares
an interim balance sheet, statement of income and expense, and statement of
changes in net assets for the Fund.
Unless sooner terminated as provided therein, the Fund Accounting
Agreement has an initial term expiring on July 9, 1999, and thereafter shall be
renewed automatically for successive one-year terms, unless written notice not
to renew is given by the non-renewing party to the other party at least 60 days
prior to the expiration of the then-current term. The Fund Accounting Agreement
is terminable with respect to the Fund upon mutual agreement of the parties to
the Fund Accounting Agreement; upon 180 days' written notice by the Group after
the initial term but only in connection with the reorganization of the Fund into
another registered management investment company; and for cause (as defined in
the Fund Accounting Agreement) by the party alleging cause, on not less than 60
days' notice by the Group's Board of Trustees or by BISYS Fund Services, Inc.
The Fund Accounting Agreement provides that BISYS Fund Services, Inc.
shall not be liable for any error of judgment or mistake of law or any loss
suffered by the Fund in connection with the matters to which the Fund Accounting
Agreement relates, except a loss resulting from willful misfeasance, bad faith,
or negligence in the performance of its duties, or from the reckless disregard
by BISYS Fund Services, Inc. of its obligations and duties thereunder.
For the fiscal year ended June 30, 1996, BISYS Fund Services, Inc.
earned no fees with respect to its fund accounting services to the Fund since
the Fund had not yet commenced operations.
Auditors
- --------
KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio 43215, has
been selected as the independent auditors for the Fund and as such will audit
the financial statements of the Fund.
Legal Counsel
- -------------
Baker & Hostetler LLP, 65 East State Street, Columbus, Ohio 43215 is
counsel to the Group and will pass upon the legality of the Shares offered
hereby.
B-22
<PAGE> 60
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 nineteen series
of shares, one of which represents interests in the Fund. The other eighteen
series are Riverside Capital Money Market Fund, Riverside Capital Value Equity
Fund, Riverside Capital Fixed Income Fund, Riverside Capital Tennessee Municipal
Obligations Fund, Riverside Capital Low Duration Government Securities Fund,
Riverside Capital Growth Fund, the Money Market Fund, the Pennsylvania Bond
Fund, the Growth Fund, the Income Fund, the Treasury Money Market Fund, the
Government Securities Fund, 1st Source Monogram U.S. Treasury Obligations Money
Market Fund, 1st Source Monogram Diversified Equity Fund, 1st Source Monogram
Income Equity Fund, 1st Source Monogram Special Equity Fund, 1st Source Monogram
Income Fund and 1st Source Monogram Intermediate Tax-Free Bond Fund. The Group's
Declaration of Trust authorizes the Board of Trustees to divide or redivide any
unissued shares of the Group into one or more additional series by setting or
changing in any one or more respects their respective preferences, conversion or
other rights, voting power, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Trustees may grant in its
discretion. When issued for payment as described in the Prospectus and this
Statement of Additional Information, the Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Group,
shareholders of a fund are entitled to receive the assets available for
distribution belonging 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
B-23
<PAGE> 61
interest of the fund. Under Rule 18f-2, the approval of an investment advisory
agreement or any change in a fundamental investment policy would be effectively
acted upon with respect to a fund only if approved by a majority of the
outstanding shares of such fund. However, Rule 18f-2 also provides that the
election of Trustees may be effectively acted upon by shareholders of the Group
voting without regard to series.
As of July 16, 1997, the following is the only entity known to the Group
who owns of record or beneficially 5% or more of the outstanding Shares of the
Fund: Keystone Financial, Inc., 1315 Eleventh Avenue, P. O. Box 2450, Altoona,
Pennsylvania 16601 owned beneficially and of record 99.99% of the issued and
outstanding Shares of the Fund.
Vote of a Majority of the Outstanding Shares
- --------------------------------------------
As used in the Prospectus and this Statement of Additional Information,
a "vote of a majority of the outstanding Shares" of the Fund means the
affirmative vote, at a meeting of Shareholders duly called, of the lesser of (a)
67% or more of the votes of Shareholders of the Fund present at a meeting at
which the holders of more than 50% of the votes attributable to Shareholders of
record of the Fund are represented in person or by proxy, or (b) the holders of
more than 50% of the outstanding votes of Shareholders of the Fund.
Additional General Tax Information
- ----------------------------------
Each of the nineteen funds of the Group is treated as a separate entity
for federal income tax purposes and intends to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), for so long as such qualification is in the best interest of that
fund's shareholders. In order to qualify as a regulated investment company, the
Fund must, among other things: derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies; derive less than 30% of its gross income from the
sale or other disposition of stock, securities, options, future contracts or
foreign currencies held less than three months; and diversify its investments
within certain prescribed limits. In addition, to utilize the tax provisions
specially applicable to regulated investment companies, the Fund must distribute
to its Shareholders at least 90% of its investment company taxable income for
the year. In general, the Fund's investment company taxable income will be its
taxable income subject to certain adjustments and excluding the excess of any
net long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year.
B-24
<PAGE> 62
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
ordinary income for the calendar year plus 98% of their capital gain net income
for the one-year period ending on October 31 of such calendar year. The balance
of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, the
Fund would be subject to a non-deductible excise tax equal to 4% of the
deficiency.
Although the Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located, or
in which it is otherwise deemed to be conducting business, the Fund may be
subject to the tax laws of such states or localities. In addition, if for any
taxable year the Fund does not qualify for the special tax treatment afforded
regulated investment companies, all of its taxable income will be subject to
federal tax at regular corporate rates (without any deduction for distributions
to its Shareholders). In such event, dividend distributions would be taxable to
Shareholders to the extent of earnings and profits, and would be eligible for
the dividends received deduction for corporations.
It is expected that the Fund will distribute annually to Shareholders
all or substantially all of the Fund's net ordinary income and net realized
capital gains and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to Shareholders for federal income
tax purposes, even if paid in additional Shares of the Fund and not in cash.
Distribution by the Fund of the excess of net long-term capital gain
over net short-term capital loss, if any, is taxable to Shareholders as
long-term capital gain in the year in which it is received, regardless of how
long the Shareholder has held the Shares. Such distributions are not eligible
for the dividends-received deduction.
Federal taxable income of individuals is subject to graduated tax rates
of 15%, 28%, 31%, 36% and 39.6%. Further, the marginal tax rate may be in excess
of 39.6%, because adjustments reduce or eliminate the benefit of the personal
exemption and itemized deductions for individuals with gross income in excess of
certain threshold amounts.
Capital gains of individuals are subject to tax at the same rates
applicable to ordinary income; however, the tax rate on long- term capital gains
of individuals cannot exceed 28%. Capital
B-25
<PAGE> 63
losses may be used to offset capital gains. In addition, individuals may deduct
up to $3,000 of net capital loss each year to offset ordinary income. Excess net
capital loss may be carried forward and deducted in future years.
Federal taxable income of corporations in excess of $75,000 up to $10
million is subject to a 34% tax rate; however, because the benefit of lower tax
rates on a corporation's taxable income of less than $75,000 is phased out for
corporations with income in excess of $100,000 but lower than $335,000, a
maximum marginal tax rate of 39% may result. Federal taxable income of
corporations in excess of $10 million is subject to a tax rate of 35%. Further,
a corporation's federal taxable income in excess of $15 million is subject to an
additional tax equal to 3% of taxable income over $15 million, but not more than
$100,000.
Capital gains of corporations are subject to tax at the same rates
applicable to ordinary income. Capital losses may be used only to offset capital
gains and excess net capital loss may be carried back three years and forward
five years.
Certain corporations are entitled to a 70% dividends received deduction
for distributions from certain domestic corporations. The Fund will designate
the portion of any distributions which qualify for the 70% dividends received
deduction. The amount so designated may not exceed the amount received by the
Fund for its taxable year that qualifies for the dividends received deduction.
Foreign taxes may be imposed on the Fund by foreign countries with
respect to its income from foreign securities. Since less than 50% in value of
the Fund's total assets at the end of its fiscal year are expected to be
invested in stocks or securities of foreign corporations, the Fund will not be
entitled under the Code to pass through to its Shareholders their pro rata share
of the foreign taxes paid by the Fund. These taxes will be taken as a deduction
by the Fund.
Under Section 1256 of the Code, gain or loss realized by the Fund from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. Gain or
loss will arise upon exercise or lapse of such futures and options as well as
from closing transactions. In addition, any such futures and options remaining
unexercised at the end of the Fund's taxable year will be treated as sold for
their then fair market value, resulting in additional gain or loss to the Fund
characterized in the manner described above.
Offsetting positions held by the Fund involving certain futures
contracts or options transactions may be considered, for tax purposes, to
constitute "straddles." Straddles are defined to
B-26
<PAGE> 64
include "offsetting positions" in actively traded personal property. The tax
treatment of straddles is governed by Sections 1092 and 1258 of the Code, which,
in certain circumstances, overrides or modifies the provisions of Section 1256.
As such, all or a portion of any short or long-term capital gain from certain
straddle and/or conversion transactions may be recharacterized as ordinary
income.
If the Fund were treated as entering into straddles by reason of its
engaging in futures or options transactions, such straddles would be
characterized as "mixed straddles" if the futures or options comprising a part
of such straddles were governed by Section 1256 of the Code. The Fund may make
one or more elections with respect to mixed straddles. If no election is made,
to the extent the straddle rules apply to positions established by the Fund,
losses realized by the Fund will be deferred to the extent of unrealized gain in
any offsetting positions. Moreover, as a result of the straddle and conversion
transaction rules, short-term capital losses on straddle positions may be
recharacterized as long-term capital losses and long-term capital gains may be
recharacterized as short-term capital gain or ordinary income.
The Fund may be required by federal law to withhold and remit to the
U.S. Treasury 31% of taxable dividends, if any, and capital gain distributions
to any Shareholder, and the proceeds of redemption or the values of any
exchanges of Shares of the Fund, if such Shareholder (1) fails to furnish the
Fund with a correct taxpayer identification number, (2) under-reports dividend
or interest income, or (3) fails to certify to the Fund that he or she is not
subject to such withholding. An individual's taxpayer identification number is
his or her Social Security number.
Information set forth in the Prospectus and this Statement of Additional
Information which relates to Federal taxation is only a summary of some of the
important Federal tax considerations generally affecting purchasers of Shares of
the Fund. No attempt has been made to present a detailed explanation of the
Federal income tax treatment of the Fund or its Shareholders and this discussion
is not intended as a substitute for careful tax planning. Accordingly, potential
purchasers of Shares of the Fund are urged to consult their tax advisers with
specific reference to their own tax situation. In addition, the tax discussion
in the Prospectus and this Statement of Additional Information is based on tax
laws and regulations which are in effect on the date of the Prospectus and this
Statement of Additional Information; such laws and regulations may be changed by
legislative or administrative action.
As of the date hereof, several proposals have been introduced by the
105th Congress, which if enacted, could affect much of the information contained
in this section. However, it is not possible
B-27
<PAGE> 65
at this time to assess which, if any, of such proposals will be acted upon and
the effect thereof, if any, on this information.
Information as to the federal income tax status of all distributions
will be mailed annually to each Shareholder.
Calculation of Total Return
- ---------------------------
As summarized in the Prospectus under the heading "PERFORMANCE
INFORMATION," average annual total return is a measure of the change in value of
an investment in the Fund over the period covered, which assumes any dividends
or capital gains distributions are reinvested in the Fund immediately rather
than paid to the investor in cash. Average annual total return will be
calculated by: (1) adding to the total number of Shares purchased by a
hypothetical $1,000 investment in the Fund (less the maximum sales charge) all
additional Shares which would have been purchased if all dividends and
distributions paid or distributed during the period had been immediately
reinvested; (2) calculating the value of the hypothetical initial investment of
$1,000 as of the end of the period by multiplying the total number of Shares
owned at the end of the period by the net asset value per share on the last
trading day of the period; (3) assuming redemption at the end of the period; and
(4) dividing this account value for the hypothetical investor by the initial
$1,000 investment and annualizing the result for periods of less than one year.
For the one year period ended May 31, 1997, and the period from
commencement of operations to May 31, 1997, the average annual total returns for
the Fund, including the Fund's predecessor CIFs which have been restated to
reflect the estimated fees for the Fund for the current fiscal year, are as
follows:
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
With Maximum Sales Load(1) Without Sales Load
-------------------------- ------------------
Since Since
1 Year Inception 1 Year Inception
------ --------- ------ ---------
<S> <C> <C> <C>
3.29% 18.41% 8.20% 20.28%
<FN>
1 The maximum sales load for the Fund is 4.50%.
2 Commenced operations July 1, 1994.
</TABLE>
Such performance figures for periods prior to February 3, 1997, are for
the Fund's predecessor CIFs and are not those of the Fund. And, of course, past
performance is no guarantee as to future performance.
B-28
<PAGE> 66
Performance Comparisons
- -----------------------
Investors may judge the performance of the Fund by comparing it to the
performance of other mutual funds or mutual fund portfolios with comparable
investment objectives and policies through various mutual fund or market indices
such as those prepared by Dow Jones & Co., Inc. and Standard & Poor's
Corporation and to data prepared by Lipper Analytical Services, Inc., a widely
recognized independent service which monitors the performance of mutual funds.
Comparisons may also be made to indices or data published in Money Magazine,
Forbes, Barron's, The Wall Street Journal, Morningstar, Inc., Ibbotson
Associates, CDA/Wiesenberger, The New York Times, Business Week, U.S.A. Today
and local periodicals. In addition to performance information, general
information about the Fund that appears in a publication such as those mentioned
above may be included in advertisements, sales literature and reports to
shareholders. The Fund may also include in advertisements and reports to
shareholders information discussing the performance of the Adviser in comparison
to other investment advisers and to other institutions.
From time to time, the Group may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principles (such
as the effects of inflation, the power of compounding and the benefits of dollar
cost averaging); (2) discussions of general economic trends; (3) presentations
of statistical data to supplement such discussions; (4) descriptions of past or
anticipated portfolio holdings for the Fund; (5) descriptions of investment
strategies for the Fund; (6) descriptions or comparisons of various investment
products, which may or may not include the Fund; (7) comparisons of investment
products (including the Fund) with relevant market or industry indices or other
appropriate benchmarks; (8) discussions of fund rankings or ratings by
recognized rating organizations; and (9) testimonials describing the experience
of persons that have invested in the Fund. The Group may also include
calculations, such as hypothetical compounding examples, which describe
hypothetical investment results in such communications. Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of the Fund.
Current total return will fluctuate from time to time and is not
necessarily representative of future results. Accordingly, the Fund's total
return may not provide for comparison with bank deposits or other investments
that pay a fixed return for a stated period of time. Total return is a function
of the Fund's quality, composition, as well as expenses allocated to the Fund.
Fees imposed upon Customer accounts by the Adviser, its affiliates or its
affiliated or correspondent banks for cash management services
B-29
<PAGE> 67
or other services will reduce the Fund's effective total return to Customers.
Miscellaneous
- -------------
Individual Trustees are generally elected by the shareholders and,
subject to removal by the vote of two-thirds of the Board of Trustees, serve for
a term lasting until the next meeting of shareholders at which Trustees are
elected. Such meetings are not required to be held at any specific intervals.
Generally, shareholders owning not less than 20% of the outstanding shares of
the Group entitled to vote may cause the Trustees to call a special meeting.
However, the Group has represented to the Commission that the Trustees will call
a special meeting for the purpose of considering the removal of one or more
Trustees upon written request therefor from shareholders owning not less than
10% of the outstanding votes of the Group entitled to vote. At such a meeting, a
quorum of shareholders (constituting a majority of votes attributable to all
outstanding shares of the Group), by majority vote, has the power to remove one
or more Trustees.
The Group is registered with the Commission as a management investment
company. Such registration does not involve supervision by the Commission of the
management or policies of the Group.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
B-30
<PAGE> 68
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following unaudited financial statements for the period ended May
31, 1997, reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods presented.
Of course, there can be no guarantee that such results will be reflected in the
financial statements as of June 30, 1997.
B-31
<PAGE> 69
THE SESSIONS GROUP
KeyPremier Funds
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
May 31, 1997
(Unaudited)
Aggressive
Growth
Fund
ASSETS: --------------
<S> <C>
Investments, at value (cost $70,132,097)
$ 102,838,512
-------------
Total Investments 102,838,512
Cash ---
Interest and dividends receivable 63,423
Receivable from brokers for investments sold 3,631
Unamortized organization costs 5,313
Prepaid expenses and other assets 1,327
-------------
Total Assets 102,912,206
-------------
LIABILITIES:
Dividends payable ---
Payable to brokers for investments purchased ---
Accrued expenses and other payables:
Investment advisory fees 42,047
Administration fees 1,290
Custodian and accounting fees 7,250
Trustees' fees 542
Legal and audit fees 10,276
Printing 1,838
Transfer agent fees 6,953
Registration and filing fees 8,328
Other 1,350
-------------
Total Liabilities 79,874
-------------
NET ASSETS:
Capital 69,364,506
Distribution in excess of net investment income (2,791)
Net unrealized appreciation on investments 32,706,415
Accumulated undistributed net
realized gains on investment transactions 764,203
-------------
Net Assets $ 102,832,332
=============
Outstanding units of beneficial interest (shares) 10,284,001
=============
Net asset value - redemption price per share $ 10.00
=============
Maximum Sales Charge 4.50%
=============
Maximum Offering Price (100%/(100%-Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share $ 10.47
=============
</TABLE>
See notes to financial statements.
B-32
<PAGE> 70
THE SESSIONS GROUP
KeyPremier Funds
<TABLE>
<CAPTION>
Statements of Operations
For Period Ended May 31, 1997
(Unaudited)
Aggressive
Growth
Fund (a)
INVESTMENT INCOME: -----------
<S> <C>
Interest income $ ---
Dividend income 262,653
---------
Total Income 262,653
---------
EXPENSES:
Investment advisory fees 305,187
Administration fees 34,803
Custodian and accounting fees 20,424
Legal and audit fees 14,153
Organization costs 1,652
Trustees' fees and expenses 2,025
Transfer agent fees 9,017
Registration and filing fees 10,758
Printing costs 12,868
Other 1,389
---------
Total Expenses 412,277
Less: Expenses voluntarily reduced (226,387)
---------
Net Investment Income 76,763
---------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains (losses) on investment
transactions 764,203
Change in unrealized appreciation (depreciation)
on investments 157,416
---------
Net realized/unrealized gains (losses) on investments 921,619
---------
Change in net assets resulting from
operations $ 998,382
=========
</TABLE>
(a) Commencement of the Fund began February 3, 1997.
See notes to financial statements.
B-33
<PAGE> 71
THE SESSIONS GROUP
KeyPremier Funds
<TABLE>
<CAPTION>
Statement of Change in Net Assets
(Unaudited)
Aggressive Growth
-------------
For Period
Ended
May 31,
1997 (a)
-------------
(Unaudited)
<S> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 76,763
Net realized gains
on investments transactions 764,203
Increase in unrealized appreciation
on investments 157,416
-------------
Net increase in net assets resulting
from operations 998,382
-------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (76,763)
In excess of net investment income (2,791)
-------------
Change in net assets from
shareholder distributions (79,554)
-------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 105,757,845
Dividends reinvested 1,009
Cost of shares redeemed (3,845,351)
-------------
Change in net assets
from capital transactions 101,913,504
-------------
Change in net assets 102,832,332
NET ASSETS:
Beginning of period ---
-------------
End of period $ 102,832,332
=============
SHARE TRANSACTIONS:
Issued 10,684,331
Reinvested 113
Redeemed (400,443)
-------------
Change in shares 10,284,001
=============
<FN>
(a) Commencement of the Fund began February 3, 1997.
</TABLE>
See notes to financial statements.
B-34
<PAGE> 72
THE SESSIONS GROUP
KEYPREMIER AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAY 31, 1997
(UNAUDITED)
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ------------------ ------------------------------------------- -------------
<S> <C>
COMMON STOCKS (94.1%):
Aerospace (1.5%):
60,000 Liposome Company Inc. $ 1,530,000
-----------
Apparel (1.2%):
60,000 Mascotech Incorporated (b) 1,342,500
-----------
Automotive Parts (1.3%):
72,000 Gentex Corporation 1,449,000
-----------
Banking (2.2%):
66,000 First American Corp. - Tenn 2,409,000
-----------
Building Materials (0.4%):
15,000 Watsco Incorporated (b) 435,000
-----------
Business Services (5.1%):
54,000 Devon Group Incorporated 1,660,500
130,000 Devry Incoporated 3,591,250
-----------
5,251,750
-----------
Chemicals (4.9%):
128,000 Airgas Incoporated 2,176,000
65,000 Lesco Incorporated (b) 1,161,875
60,000 Valspar Corp. (b) 1,680,000
-----------
5,017,875
-----------
Coal (0.7%):
55,000 Pittston Mineral Group (b) 756,250
-----------
Communication Equipment (0.3%):
27,000 Transcrypt International Inc. 334,125
-----------
Computer Hardware (4.3%):
160,000 Hutchinson Technology 4,400,000
-----------
Computer Networks (3.4%):
130,000 Computer Network Technology Corp. 625,625
70,000 Seagate Technology, Inc. 2,843,750
-----------
3,469,375
-----------
Computer Software (9.3%):
71,000 Computer Data Systems Incorporated (b) 1,988,000
120,000 Compuware Corp. 5,565,000
35,000 Dialogic Corporation 1,023,750
150,000 PSC Incorporated 1,012,500
-----------
9,589,250
-----------
Construction Materials (1.3%):
50,000 Fleetwood Enterprises (b) 1,350,000
-----------
Defense (2.6%):
37,000 Thiokol Corporation (b) 2,659,375
-----------
Diversified Products (0.5%):
60,000 Quixote Corporation (b) 465,000
-----------
Electrical Equipment (0.6%):
30,000 C-Cube Microsystems Incorporated 615,000
-----------
Electronic Components (2.4%):
80,000 Integrated Circuit Systems 1,420,000
30,000 Lam Research Corporation 1,091,250
-----------
2,511,250
-----------
Electronic Instruments (7.8%):
45,000 CFM Technologies Inc. 1,366,875
100,000 Credence Systems Corporation 2,950,000
74,000 Logicon Incorporated (b) 3,718,500
-----------
8,035,375
-----------
Environment Services (1.7%):
76,000 Lydall Incorporated 1,738,500
-----------
Financial Services (3.6%):
48,000 Legg Mason Incorporated (b) 2,214,000
55,000 United Asset Management Corp. (b) 1,533,125
-----------
3,747,125
-----------
Food Processing & Packaging (2.1%):
55,000 Amrion Inc. 1,278,750
30,000 JP Foodservice Incoporated 870,000
-----------
2,148,750
-----------
</TABLE>
B-35
<PAGE> 73
THE SESSIONS GROUP
KEYPREMIER AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAY 31, 1997
(UNAUDITED)
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ------------------ ------------------------------------------- -------------
<S> <C>
COMMON STOCKS, CONTINUED:
Furniture & Furnishings (3.9%):
100,000 Bush Industries (b) $ 2,250,000
46,000 Legget & Platt, Inc. (b) 1,736,500
-----------
3,986,500
-----------
Homebiulders - Mobile Homes (0.6%):
85,000 Winnebago Industries (b) 584,375
-----------
Hotel Management & Related Services (1.9%):
85,000 La Quinta Inns Incorporated (b) 1,955,000
-----------
Household Products/Wares (1.9%):
30,000 Premark International, Inc. (b) 817,500
30,000 Tupperware Corporation (b) 1,087,500
-----------
1,905,000
-----------
Insurance (2.6%):
30,000 Gallagher (Arthur J.) & Co. (b) 952,500
30,000 United Healthcare Corp. (b) 1,695,000
-----------
2,647,500
-----------
Machinery & Equipment (0.8%):
100,000 Flow International Corporation 825,000
-----------
Medical - Biotechnology (0.7%):
250,000 Integra Lifesciences Corp. 750,000
-----------
Medical Equipment & Supplies (5.8%):
20,000 Arrow International, Inc. (b) 645,000
90,000 Mentor Corp./ Minn (b) 2,373,750
34,000 Respironics Inc. 688,500
50,000 St. Jude Medical Incorporated 1,693,750
60,000 Syncor International Corp. - Del 547,500
-----------
5,948,500
-----------
Medical & Hospital Management Services (3.6%):
45,000 Cerner Corporation 877,500
85,000 Genesis Health Ventures 2,794,375
-----------
3,671,875
-----------
Oil & Gas (4.1%):
50,000 Triton Energy Ltd. 2,237,500
50,000 Forest Oil Corporation 700,000
70,000 Lomak Petroleum Inc. (b) 1,242,500
-----------
4,180,000
-----------
Pharmaceuticals (0.5%):
30,000 Interneuron Pharmaceuticals 487,500
-----------
Retail & General Merchandise (1.2%):
70,000 Fingerhut Cos. (b) 1,233,750
-----------
Telecommunications (1.3%):
70,000 Glenayre Technologies Inc. 1,028,125
20,000 Mosaix Incorporated 282,500
-----------
1,310,625
-----------
Telecommunication - Equipment (2.1%):
60,000 ECI Telecommunications (b) 1,387,500
80,000 Digi International, Inc. 730,000
-----------
2,117,500
-----------
Textile (3.1%):
100,000 Unifi, Inc. (b) 3,225,000
-----------
Utilities-Electric (1.4%):
60,000 Trigen Energy Corporation (b) 1,425,000
-----------
</TABLE>
B-36
<PAGE> 74
THE SESSIONS GROUP
KEYPREMIER AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAY 31, 1997
(UNAUDITED)
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ------------------ ------------------------------------------- -------------
<S> <C>
COMMON STOCKS, CONTINUED:
Utilities - Telephone (1.2%):
100,000 Picturetel Corporation $ 1,262,500
------------
Total Common Stocks 96,770,125
------------
MUTUAL FUNDS (5.9%):
3,181,079 Federated Government Obligation Fund Number 5 3,181,079
2,887,308 Federated Government Obligation Fund Number 10 2,887,308
------------
Total Mutual Funds 6,068,387
------------
Total (Cost--$70,132,097)(a) $102,838,512
============
- ---------------
<FN>
Percentages indicated are based on net assets of $102,832,332.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation $ 38,875,352
Unrealized depreciation (6,168,937)
------------
Net unrealized appreciation $ 32,706,415
============
(b) Represents non-income producing securities.
</TABLE>
See notes to financial statements.
B-37
<PAGE> 75
THE SESSIONS GROUP
KEYPREMIER
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997
(UNAUDITED)
1. ORGANIZATION:
The Sessions Group (the "Group") was organized on April 25, 1988 as an
Ohio business trust, and is registered under the Investment Company Act
of 1940, as amended, (the "1940 Act"), as an open-end management
investment company. The Group is authorized to issue an unlimited
number of shares which are units of beneficial interest, without par
value. The Group offers shares of a number of different series or
portfolios, including the following series for which Martindale Andres
& Company, Inc. serves as investment adviser: shares of the KeyPremier
Aggressive Growth Fund.
The investment objective for the Aggressive Growth Fund is growth of
capital.
Shares of the Fund may be sold to customers by the Group's distributor,
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services (the
"Distributor") and its affiliates, to all accounts of correspondent
banks of Keystone Financial, Inc. and to the general public. Martindale
Andres & Company, Inc. serves as investment adviser to the Funds.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed
by the Group in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting
principles. The preparation of financial statements requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses for the period. Actual results
could differ from those estimates.
SECURITIES VALUATION:
Investments in common and preferred stock, corporate bonds, commercial
paper, municipal securities and U.S. Government securities of the Fund
are valued based upon their current available prices in the principal
market in which such securities are normally traded. Investments in
investment companies are valued at their net asset values as reported
by such companies. Other securities for which quotations are not
readily available are valued at their fair value under procedures
established by the Group's Board of Trustees. The differences between
the cost and market values of investments held by the Fund are
reflected as either unrealized appreciation or depreciation.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the amortization of
premium or discount. Dividend income is recorded on the ex-dividend
date. Gains or losses realized on sales of securities are determined by
comparing the identified cost of the security lot sold with the net
sales proceeds.
REPURCHASE AGREEMENTS:
(CONTINUED)
B-38
<PAGE> 76
The Fund may acquire repurchase agreements from financial institutions
such as banks and broker dealers which Martindale Andres & Company,
Inc. deems creditworthy under guidelines approved by the Board of
Trustees, subject to the seller's agreement to repurchase such
securities at a mutually agreed-upon date and price. The repurchase
price generally equals the price paid by Fund plus interest negotiated
on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. The seller, under
a repurchase agreement, is required to maintain the value of collateral
held pursuant to the agreement at not less than the repurchase price
(including accrued interest). Securities subject to repurchase
agreements are held by the Funds' custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system.
Repurchase agreements are considered to be loans by the Fund under the
1940 Act.
REVERSE REPURCHASE AGREEMENTS:
The Fund may borrow for temporary purposes by entering into reverse
repurchase agreements. Pursuant to such agreements, the Fund would sell
portfolio securities to financial institutions such as banks and
broker-dealers, and agree to repurchase them at a mutually agreed-upon
date and price. At the time the Fund enters into a reverse repurchase
agreement, it places in a segregated custodial account assets having a
value equal to the repurchase price (including accrued interest), and
will continually monitor the account to ensure such equivalent value is
maintained at all times. Reverse repurchase agreements are considered
to be borrowing by the Fund under the 1940 Act.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared and paid quarterly
for the Fund. Distributable net realized capital gains, if any, are
declared and distributed annually for the Fund.
Dividends from net investment income and net realized capital gains are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for net operating losses,
expiring capital loss carry forwards, and deferral of certain losses.
FEDERAL INCOME TAXES:
It is the policy of the Fund to qualify or continue to qualify as a
regulated investment company by complying with the provisions available
to certain investment companies, as defined in applicable sections of
the Internal Revenue Code, and to make distributions of net investment
income and net realized capital gains sufficient to relieve it from
all, or substantially all, Federal income taxes.
ORGANIZATION COSTS:
All expenses in connection with the Fund's organization and
registration under the 1940 Act and the Securities Act of 1933 were
paid by the Fund. Such expenses are amortized over a period of five
years commencing with the date of the initial public offering.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of portfolio securities (excluding short-term
securities) for the Fund for the period ended May 31, 1997, are as
follows (commencement of operations of the Fund was February 3, 1997:
(CONTINUED)
B-39
<PAGE> 77
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
<S> <C> <C>
Aggressive Growth Fund $5,071,859 $1,375,435
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Fund by Martindale
Andres & Company, Inc. Under the terms of the investment advisory
agreement, Martindale Andres & Company, Inc. is entitled to receive
fees based on a percentage of the daily average net assets of the Fund.
Martindale Andres & Company, Inc. has agreed that if the aggregate
expenses of the Fund, as defined, for any fiscal year exceed
limitations of any state having jurisdiction over the Fund, Martindale
Andres & Company, Inc. will refund to the Fund, or otherwise bear, such
excess. Such limitation did not affect the calculation of the
investment advisory fees during the period ended May 31, 1997.
BISYS, with whom certain officers and trustees of the Group are
affiliated, serves the Fund as administrator and distributor. Such
officers and trustees are paid no fees directly by the Fund for serving
as officers and trustees of the Group. Under the terms of the
administration agreement, BISYS fees are computed daily as a percentage
of the average net assets of the Fund. BISYS Fund Services, Inc. serves
the Fund as transfer agent and mutual fund accountant.
The Group has adopted an Administrative Services Plan, pursuant to
which the Fund is authorized to pay compensation to banks and other
financial institutions, which may include Martindale Andres & Company,
Inc., its correspondent and affiliated banks and BISYS, for providing
ministerial, recordkeeping and/or administrative support services to
their customers who are the beneficial or record owners of the Fund.
The compensation which may be paid under the Administrative Services
Plan is a fee computed daily at an annual rate of up to 0.25% of the
average daily net asset value of a Fund. The Group has not implemented
such a Plan as of May 31, 1997, with respect to the Fund.
BISYS is also entitled to receive commissions on sales of shares of the
Fund. For the period ended May 31, 1997, BISYS received no commissions
on sales of shares of the Fund.
Fees may be voluntarily reduced to assist the Fund in maintaining
competitive expense ratios.
Information regarding these transactions is as follows for the period
ended May 31, 1997:
<TABLE>
<CAPTION>
Aggressive
Growth
Fund
<S> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets) 1.00%
Voluntary fee reductions $226,387
</TABLE>
(CONTINUED)
B-40
<PAGE> 78
<TABLE>
<CAPTION>
<S> <C>
ADMINISTRATION FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets) .115%
Voluntary fee reductions ---
FUND ACCOUNTANT FEES $12,483
TRANSFER AGENT FEES $9,017
</TABLE>
5. ACQUISITION OF COMMON COLLECTIVE TRUST FUNDS
On February 3, 1997, the Fund acquired all of the assets of various common
and collective trust funds maintained by affiliates of Keystone Financial, Inc.
The following is a summary of shares issued, net assets acquired, net asset
value per shares and unrealized appreciation as of the dates acquired:
<TABLE>
<CAPTION>
Aggressive
Growth
Fund
----
<S> <C>
Shares 9,409,050
Net Assets $94,090,501
Net Asset Value $ 10.00
Unrealized Appreciation (Depreciation) $32,548,998
</TABLE>
B-41
<PAGE> 79
<TABLE>
<CAPTION>
THE SESSIONS GROUP
KeyPremier Funds
Financial Highlights
Aggressive Growth
---------------------
For Period
Ended
May 31,
1997 (a)
---------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period $ 10.00
--------
Investment Activities
Net investment income 0.01
Net realized and unrealized
gains (losses) on investments --
--------
Total from Investment Activities 0.01
--------
Distributions
Net investment income (0.01)
--------
Net realized gains --
Total Distributions (0.01)
========
Net Asset Value, End of Period $ 10.00
========
Total Return (excludes sales charge) 0.10%(b)
Ratios/Supplemental Data:
Net Assets, at end of period (000) $102,832
Ratio of expenses to
average net assets 0.61%(c)
Ratio of net investment income
to average net assets 0.25%(c)
Ratio of expenses to
average net assets* 1.35%(c)
Ratio of net investment income
to average net assets* -0.49%(c)
Portfolio Turnover 1.54%
Average Commission Rate Paid $0.073(d)
<FN>
- -------------------------
-----------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occured, the ratios would have been as indicated.
(a) Commencement of the Fund began February 3, 1997.
(b) Not Annualized
(c) Annualized
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by
the Fund for which commissions were charged.
</TABLE>
See notes to financial statements.
B-42
<PAGE> 80
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
A-1
<PAGE> 81
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 supported by good fundamental
protection factors. Risk factors are minor. Duff 1- is regarded as having a high
certainty of timely payment. Liquidity factors are strong and supported by good
fundamental protection factors. Risk factors are minor. Duff 2 is regarded as
having a good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
Commercial paper rated A1 by IBCA Limited and its affiliate, IBCA Inc.
(collectively "IBCA") is regarded by IBCA as obligations supported by the
highest capacity for timely repayment. Where issues possess a particularly
strong credit feature, a rating of A1+ is assigned. Obligations rated A2 are
supported by a good capacity for timely repayment.
The following summarizes the description of the two highest short-term
ratings of Thomson BankWatch, Inc. ("Thomson"). TBW-1 is the highest category
and indicates a very high likelihood that principal and interest will be paid on
a timely basis. TBW-2 is the second highest category indicating that while the
degree of safety regarding timely repayment of principal and interest is strong,
the relative degree of safety is not as high as for issues rated "TBW-1."
The plus (+) sign is used after a rating symbol to designate the
relative position of an issuer within the rating category.
Definitions of Certain Money Market Instruments
- -----------------------------------------------
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in
A-2
<PAGE> 82
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 Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as those
of the Government National Mortgage Association, are supported by the full faith
and credit of the U.S. Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Student Loan Marketing Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; still others, such as those of the Federal Farm Credit
Banks, are supported only by the credit of the instrumentality. No assurance can
be given that the U.S. Government would provide financial support to U.S.
Government- sponsored instrumentalities if it is not obligated to do so by law.
A-3
<PAGE> 83
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
Financial Highlights
(viii) KeyPremier Pennsylvania Municipal Bond Fund
Financial Highlights
C-1
<PAGE> 84
(ix) 1st Source Monogram U.S. Treasury Obligations Money
Market Fund
None
(x) 1st Source Monogram Diversified Equity Fund
Financial Highlights
(xi) 1st Source Monogram Income Equity Fund
Financial Highlights
(xii) 1st Source Monogram Special Equity Fund
Financial Highlights
(xiii) 1st Source Monogram Income Fund
Financial Highlights
(xiv) 1st Source Monogram Intermediate Tax-Free Bond Fund
None
(xv) KeyPremier Established Growth Fund
Financial Highlights
(xvi) KeyPremier Intermediate Term Income Fund
Financial Highlights
(xvii) KeyPremier Aggressive Growth Fund
Financial Highlights
(xviii) KeyPremier U.S. Treasury Obligations Money Market
Fund
None
(xix) KeyPremier Limited Duration Government Securities
Fund
None
Included in Part B:
(i) Riverside Capital Money Market Fund
Independent Auditors' Report dated August 26, 1996.
C-2
<PAGE> 85
Statements of Assets and Liabilities dated June 30,
1996.
Statements of Operations for the year ended June 30,
1996.
Statements of Changes in Net Assets for the years
ended June 30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30,
1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30,
1996, 1995, 1994, 1993 and 1992.
(ii) Riverside Capital Value Equity Fund
Independent Auditors' Report dated August 26, 1996.
Statements of Assets and Liabilities dated June 30,
1996.
Statements of Operations for the year ended June 30,
1996.
Statements of Changes in Net Assets for the years
ended June 30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30,
1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30,
1996, 1995, 1994 and 1993, and the period from
commencement of operations (October 31, 1991) to June
30, 1992.
(iii) Riverside Capital Fixed Income Fund
Independent Auditors' Report dated August 26, 1996.
Statements of Assets and Liabilities dated June 30,
1996.
Statements of Operations for the year ended June 30,
1996.
Statements of Changes in Net Assets for the years
ended June 30, 1996 and 1995.
C-3
<PAGE> 86
Schedule of Portfolio Investments as of June 30,
1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30,
1996, 1995, 1994 and 1993, and the period from
commencement of operations (October 31, 1991) to June
30, 1992.
(iv) Riverside Capital Tennessee Municipal Obligations
Fund
Independent Auditors' Report dated August 26, 1996.
Statements of Assets and Liabilities at June 30,
1996.
Statements of Operations for the year ended June 30,
1996.
Statements of Changes in Net Assets for the years
ended June 30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30,
1996.
Notes to Financial Statements.
Financial Highlights for the years ended June 30,
1996, 1995 and 1994, and for the period from
commencement of operations (November 4, 1992) to June
30, 1993.
(v) Riverside Capital Low Duration Government Securi-
ties Fund
Independent Auditor's Report dated August 26, 1996.
Statements of Assets and Liabilities at June 30,
1996.
Statements of Operations for the year ended June 30,
1996.
Statements of Changes in Net Assets for the years
ended June 30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30,
1996.
C-4
<PAGE> 87
Notes to Financial Statements.
Financial Highlights for the year ended June 30, 1996
and 1995, and for the period from commencement of
operations (April 18, 1994) to June 30, 1994.
(vi) Riverside Capital Growth Fund
Independent Auditor's Report dated August 26, 1996.
Statements of Assets and Liabilities at June 30,
1996.
Statements of Operations for the year ended June 30,
1996.
Statements of Changes in Net Assets for the years
ended June 30, 1996 and 1995.
Schedule of Portfolio Investments as of June 30,
1996.
Notes to Financial Statements.
Financial Highlights for the year ended June 30, 1996
and 1995, and for the period from commencement of
operations (April 18, 1994) to June 30, 1994.
(vii) KeyPremier Prime Money Market Fund
Statements of Assets and Liabilities at December 31,
1996 (unaudited).
Statements of Operations for the period ended
December 31, 1996 (unaudited).
Statements of Change in Net Assets for the period
ended December 31, 1996 (unaudited).
Schedule of Portfolio Investments as of December 31,
1996 (unaudited).
Notes to Financial Statements as of December 31, 1996
(unaudited).
Financial Highlights for the period from commencement
of operations (October 7, 1996) to December 31, 1996
(unaudited).
(viii) KeyPremier Pennsylvania Municipal Bond Fund
C-5
<PAGE> 88
Statements of Assets and Liabilities at December 31,
1996 (unaudited).
Statements of Operations for the period ended
December 31, 1996 (unaudited).
Statements of Changes in Net Assets for the period
ended December 31, 1996 (unaudited).
Schedule of Portfolio Investments as of December 31,
1996 (unaudited).
Notes to Financial Statements as of December 31, 1996
(unaudited).
Financial Highlights for the period from commencement
of operations (October 1, 1996) to December 31, 1996
(unaudited).
(ix) 1st Source Monogram U.S. Treasury Obligations Money
Market Fund
To be filed by amendment.
(x) 1st Source Monogram Diversified Equity Fund
Statements of Assets and Liabilities at December 31,
1996 (unaudited).
Statements of Operations for the period ended
December 31, 1996 (unaudited).
Statements of Changes in Net Assets for the period
ended December 31, 1996 (unaudited).
Schedule of Portfolio Investments as of December 31,
1996 (unaudited).
Notes to Financial Statements as of December 31, 1996
(unaudited).
Financial Highlights for the period from commencement
of operations (September 20, 1996) to December 31,
1996 (unaudited).
(xi) 1st Source Monogram Income Equity Fund
Statements of Assets and Liabilities at December 31,
1996 (unaudited).
Statements of Operations for the period ended
December 31, 1996 (unaudited).
C-6
<PAGE> 89
Statements of Changes in Net Assets for the period
ended December 31, 1996 (unaudited).
Schedule of Portfolio Investments as of December 31,
1996 (unaudited).
Notes to Financial Statements as of December 31, 1996
(unaudited).
Financial Highlights for the period from commencement
of operations (September 24, 1996) to December 31,
1996 (unaudited).
(xii) 1st Source Monogram Special Equity Fund
Statements of Assets and Liabilities at December 31,
1996 (unaudited).
Statements of Operations for the period ended
December 31, 1996 (unaudited).
Statements of Changes in Net Assets for the period
ended December 31, 1996 (unaudited).
Schedule of Portfolio Investments as of December 31,
1996 (unaudited).
Notes to Financial Statements as of December 31, 1996
(unaudited).
Financial Highlights for the period from commencement
of operations (September 19, 1996) to December 31,
1996 (unaudited).
(xiii) 1st Source Monogram Income Fund
Statements of Assets and Liabilities at December 31,
1996 (unaudited).
Statements of Operations for the period ended
December 31, 1996 (unaudited).
Statements of Changes in Net Assets for the period
ended December 31, 1996 (unaudited).
Schedule of Portfolio Investments as of December 31,
1996 (unaudited).
Notes to Financial Statements as of December 31, 1996
(unaudited).
C-7
<PAGE> 90
Financial Highlights for the period from commencement
of operations (September 23, 1996) to December 31,
1996 (unaudited).
(xiv) 1st Source Monogram Intermediate Tax-Free Bond Fund
To be filed by amendment.
(xv) KeyPremier Established Growth Fund
Statements of Assets and Liabilities at March 31,
1997 (unaudited).
Statements of Operations for the period ended March
31, 1997 (unaudited).
Statements of Changes in Net Assets for the period
ended March 31, 1997 (unaudited).
Schedule of Portfolio Investments as of March 31,
1997 (unaudited).
Notes to Financial Statements as of March 31, 1997
(unaudited).
Financial Highlights for the period from commencement
of operations (December 2, 1996) to March 31, 1997
(unaudited).
(xvi) KeyPremier Intermediate Term Income Fund
Statements of Assets and Liabilities at March 31,
1997 (unaudited).
Statements of Operations for the period ended March
31, 1997 (unaudited).
Statements of Changes in Net Assets for the period
ended March 31, 1997 (unaudited).
Schedule of Portfolio Investments as of March 31,
1997 (unaudited).
Notes to Financial Statements as of March 31, 1997
(unaudited).
Financial Highlights for the period from commencement
of operations (December 2, 1996) to March 31, 1997
(unaudited).
(xvii) KeyPremier Aggressive Growth Fund
C-8
<PAGE> 91
Statements of Assets and Liabilities at May 31, 1997
(unaudited).
Statement of Operations for the period ended May 31,
1997 (unaudited).
Statement of Changes in Net Assets for the period
ended May 31, 1997 (unaudited).
Schedule of Portfolio Investments as of May 31, 1997
(unaudited).
Notes to Financial Statements as of May 31, 1997
(unaudited).
Financial Highlights for the period from commencement
of operations (February 3, 1997) to May 31, 1997
(unaudited).
(xviii) KeyPremier U.S. Treasury Obligations Money Market
Fund
To be filed by amendment.
(xix) KeyPremier Limited Duration Government Securities
Fund
To be filed by amendment.
(xx) All required financial statements are included in
Part B hereof. All other financial statements and
schedules are inapplicable.
(b) Exhibits:
<TABLE>
<S> <C> <C> <C>
(1) (a) Declaration of Trust, dated as of April 25,
1988, is incorporated by reference to Exhibit
(1)(a) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(b) Amendment of Article IV, Section 4.2 of
Declaration of Trust adopted August 15, 1989,
is incorporated by reference to Exhibit (1)(b)
of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(c) Amendment of Article V, Section 5.3 of
Declaration of Trust adopted October 23, 1989,
is incorporated by reference to Exhibit (1)(c)
of Post-Effective Amendment No. 34 to
</TABLE>
C-9
<PAGE> 92
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(d) Amendment of Article IV, Section 4.2 of
Declaration of Trust adopted July 23, 1991, is
incorporated by reference to Exhibit (1)(d) of
Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(e) Amendment of Article IV, Section 4.2 of
Declaration of Trust as adopted August 13,
1992, is incorporated by reference to Exhibit
(1)(e) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(f) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted October 28,
1992, is incorporated by reference to Exhibit
(1)(f) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(g) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted February 18,
1994, is incorporated by reference to Exhibit
(1)(g) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(h) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted May 16, 1994,
is incorporated by reference to Exhibit (1)(h)
of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(i) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted April 10,
1996, is incorporated by reference to Exhibit
(1)(i) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(j) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted May 16, 1996,
is incorporated by reference to Exhibit (1)(j)
of Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No.
33-21489) filed on June 6, 1996.
C-10
<PAGE> 93
(k) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted August 15,
1996, is incorporated by reference to Exhibit
(1)(k) of Post-Effective Amendment No. 36 to
Registrant's Registration Statement (No.
33-21489) filed on August 16, 1996.
(l) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted September 27,
1996 is incorporated by reference to Exhibit
(1)(l) of Post-Effective Amendment No. 38 to
Registrant's Registration Statement (No. 33-
21489) filed on November 15, 1996.
(m) Amendment to Article IV, Section 4.2 of
Declaration of Trust as adopted as of
January 14, 1997, is incorporated by reference
to Exhibit (l)(m) of Post-Effective Amendment
No. 39 to Registrant's Registration Statement
(No. 33-21489) filed on March 18, 1997.
(2) By-Laws are incorporated by reference to Exhibit
(2) of Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No. 33-21489)
filed on April 25, 1996.
(3) None.
(4) Certificates for Shares are not issued. Articles IV,
V, VI and VII of the Declaration of Trust, filed as
Exhibit 1 hereto, define rights of holders of Shares.
(5) (a) Investment Advisory Agreement dated as of
July 19, 1988, between Registrant and National
Bank of Commerce (with respect to Riverside
Capital Money Market Fund) is incorporated by
reference to Exhibit (5)(a) of Post-Effective
Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25,
1996.
(b) Investment Advisory Agreement dated as of
September 20, 1991, between Registrant and
National Bank of Commerce (with respect to
Riverside Capital Value Equity Fund and
Riverside Capital Fixed Income Fund) is
incorporated by reference to Exhibit (5)(b) of
Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
C-11
<PAGE> 94
(c) Investment Advisory Agreement dated as of
October 27, 1992, between Registrant and
National Bank of Commerce (with respect to
Riverside Capital Tennessee Municipal
Obligations Fund) is incorporated by reference
to Exhibit (5)(c) of Post-Effective Amendment
No. 34 to Registrant's Registration Statement
(No. 33-21489) filed on April 25, 1996.
(d) Investment Advisory Agreement dated April 5,
1994, as amended June 3, 1994, between
Registrant and National Bank of Commerce (with
respect to Riverside Capital Low Duration
Government Securities Fund and Riverside
Capital Growth Fund) is incorporated by
reference to Exhibit (5)(d) of Post-Effective
Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25,
1996.
(e) Investment Advisory Agreement dated July 9,
1996, as amended as of June 30, 1997, between
Registrant and Martindale Andres & Company,
Inc. (with respect to the KeyPremier Funds).
(f) Investment Advisory Agreement dated August 20,
1996, between Registrant and 1st Source Bank
(with respect to the 1st Source Monogram
Funds) is incorporated by reference to Exhibit
(5)(f) of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(g) Sub-Investment Advisory Agreement dated
August 20, 1996, between 1st Source Bank and
Miller, Anderson and Sherrerd, LLP (with
respect to 1st Source Monogram Diversified
Equity Fund) is incorporated by reference to
Exhibit (5)(g) of Post-Effective Amendment No.
37 to Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(h) Sub-Investment Advisory Agreement dated
August 20, 1996, between 1st Source Bank and
Loomis Sayles & Company, L.P. (with respect to
1st Source Monogram Diversified Equity Fund)
is incorporated by reference to Exhibit (5)(h)
of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
C-12
<PAGE> 95
(i) Sub-Investment Advisory Agreement dated
August 20, 1996, between 1st Source Bank and
Columbus Circle Investors (with respect to 1st
Source Monogram Diversified Equity Fund) is
incorporated by reference to Exhibit (5)(i) of
Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(6) (a) Distribution Agreement dated October 1, 1993,
as amended as of June 3, 1994, between
Registrant and The Winsbury Company Limited
Partnership is incorporated by reference to
Exhibit (6)(a) of Post-Effective Amendment
No. 30 to Registrant's Registration Statement
(No. 33-21489) filed on August 24, 1994.
(b) Form of Selected Dealer Agreement is
incorporated by reference to Exhibit (6)(b) of
Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(c) Distribution Agreement dated as of July 9,
1996, as amended as of June 30, 1997,
between Registrant and BISYS Fund Services
Limited Partnership (relating to the
KeyPremier Funds).
(d) Form of Shareholder Services Agreement is
incorporated by reference to Exhibit (6)(d) of
Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996.
(e) Distribution Agreement dated as of August 20,
1996, between Registrant and BISYS Fund
Services Limited Partnership (relating to the
1st Source Monogram Funds) is incorporated by
reference to Exhibit (6)(e) of Post-Effective
Amendment No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21,
1996.
(7) None.
(8) (a) Custodial Services Agreement dated as of
March 1, 1995, between Registrant and National
City Bank (with respect to the Riverside
Capital Funds) is incorporated by reference to
Exhibit (8) of Post-Effective Amendment No. 33
C-13
<PAGE> 96
to Registrant's Registration Statement (No.
33-21489) filed on October 30, 1995.
(b) Custody Agreement dated July 9, 1996, as
amended as of June 30, 1997, between
Registrant and The Bank of New York (with
respect to the KeyPremier Funds).
(c) Custody Agreement dated August 20, 1996,
between Registrant and The Fifth Third Bank
(with respect to the 1st Source Monogram
Funds) is incorporated by reference to Exhibit
(8)(c) of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(d) Cash Management and Related Services Agreement
dated September 24, 1996, as amended as of
June 30, 1997, between Registrant and The Bank
of New York.
(9) (a) Management and Administration Agreement dated
August 23, 1990, as amended October 27, 1992,
between Registrant and The Winsbury Company
Limited Partnership (with respect to Riverside
Capital Money Market Fund, Riverside Capital
Value Equity Fund, Riverside Capital Fixed
Income Fund and Riverside Capital Tennessee
Municipal Obligations Fund) is incorporated by
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
C-14
<PAGE> 97
to Exhibit (9)(h) of Post-Effective Amendment
No. 25 to Registrant's Registration Statement
(No. 33-21489) filed on April 27, 1993.
(r) Administrative Services Plan effective
October 19, 1993 is incorporated by reference
to Exhibit (9)(r) of Post-Effective Amendment
No. 28 to Registrant's Registration Statement
(No. 33-21489) filed on February 4, 1994.
(s) Servicing Agreement to Administrative Services
Plan dated as of October 19, 1993, between
Registrant and National Bank of Commerce (with
respect to Riverside Capital Money Market
Fund, Riverside Capital Equity Fund, Riverside
Capital Fixed Income Fund and Riverside
Capital Tennessee Municipal Obligations Fund)
is incorporated by reference to Exhibit (9)(s)
of Post-Effective Amendment No. 29 to
Registrant's Registration Statement (No.
33-21489) filed on April 4, 1994.
(u) Management and Administration Agreement
between Registrant and The Winsbury Company
Limited Partnership dated April 5, 1994, as
amended as of June 3, 1994 (with respect to
Riverside Capital Low Duration Government
Securities Fund and Riverside Capital Growth
Fund) is incorporated by reference to Exhibit
(9)(u) of Post-Effective Amendment No. 30 to
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
C-15
<PAGE> 98
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(x) Management and Administration Agreement
dated July 9, 1996, as amended as of June
30, 1997, between Registrant and BISYS Fund
Services Limited Partnership (with respect
to the KeyPremier Funds).
(y) Fund Accounting Agreement dated July 9, 1996,
as amended as of June 30, 1997, between
Registrant and BISYS Fund Services, Inc. (with
respect to the KeyPremier Funds).
(z) Transfer Agency Agreement dated July 9, 1996,
as amended as of June 30, 1997, between
Registrant and BISYS Fund Services, Inc. (with
respect to the KeyPremier Funds).
(aa) Management and Administration Agreement dated
August 20, 1996, between Registrant and BISYS
Fund Services Limited Partnership (with
respect to the 1st Source Monogram Funds) is
incorporated by reference to Exhibit (9)(aa)
of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(ab) Fund Accounting Agreement dated August 20,
1996, between Registrant and BISYS Fund
Services, Inc. (with respect to the 1st Source
Monogram Funds) is incorporated by reference
to Exhibit (9)(ab) of Post-Effective Amendment
No. 37 to Registrant's Registration Statement
(No. 33-21489) filed on October 21, 1996.
(ac) Transfer Agency Agreement dated August 20,
1996, between Registrant and BISYS Fund
Services, Inc. (with respect to the 1st Source
Monogram Funds) is incorporated by reference
to Exhibit (9)(ac) of Post-Effective Amendment
No. 37 to Registrant's Registration Statement
(No. 33-21489) filed on October 21, 1996.
(ad) Form of Servicing Agreement to Administrative
Services Plan is incorporated by reference to
Exhibit (9)(ad) of Post-Effective Amendment
No. 35 to Registrant's Registration Statement
(No. 33-21489) filed on June 6, 1996.
(10) (a) Opinion of Counsel with respect to shares of
the Riverside Capital Funds registered
C-16
<PAGE> 99
pursuant to Rule 24e-2 is incorporated by
reference to Exhibit (10)(a) of
Post-Effective Amendment No. 41 to
Registrant's Registration Statement (No.
33-21489) filed on May 21, 1997. Opinion of
Counsel with respect to shares of KeyPremier
U.S. Treasury Obligations Money Market Fund
and KeyPremier Limited Duration Government
Securities Fund is incorporated by reference
to Exhibit (10)(a) of Post-Effective
Amendment No. 40 to Registrant's
Registration Statement (No. 33-21489) filed
on April 16, 1997. Opinion of Counsel with
respect to shares of KeyPremier Aggressive
Growth Fund is incorporated by reference to
Exhibit (10)(a) of Post-Effective Amendment
No. 38 to Registrant's Registration
Statement (No. 3321489) filed on November
15, 1996. Opinion of Counsel with respect to
shares of KeyPremier Established Growth Fund
and KeyPremier Intermediate Term Income Fund
is incorporated by reference to Exhibit
(10)(a) of Post-Effective Amendment No. 36
to Registrant's Registration Statement (No.
33-21489) filed on August 16, 1996. Opinion
of Counsel with respect to Shares of 1st
Source Monogram U.S. Treasury Obligations
Money Market Fund, 1st Source Monogram
Diversified Equity Fund, 1st Source Monogram
Income Equity Fund, 1st Source Monogram
Special Equity Fund, 1st Source Monogram
Income Fund and 1st Source Monogram
Intermediate Tax-Free Bond Fund is
incorporated by reference to Exhibit (10)(a)
of Post-Effective Amendment No. 35 to
Registrant's Registration Statement (No.
33-21489) filed on June 6, 1996. Opinion of
Counsel with respect to Shares of the
KeyPremier Prime Money Market Fund and the
KeyPremier Pennsylvania Municipal Bond Fund
is incorporated by reference to Exhibit
(10)(a) of Post-Effective Amendment No. 34
to Registrant's Registration Statement (No.
33-21489) filed on April 25, 1996. An
Opinion of Counsel with respect to Shares of
Riverside Capital Money Market Fund,
Riverside Capital Value Equity Fund,
Riverside Capital Fixed Income Fund,
Riverside Capital Tennessee Municipal
Obligations Fund, Riverside Capital Low
Duration Government Securities Fund and
Riverside Capital Growth Fund was filed with
Registrant's Notice filed on August 28,
1996, pursuant to Rule 24f-2.
C-17
<PAGE> 100
(b) Opinion of Special Counsel with respect to
Riverside Capital Tennessee Municipal
Obligations Fund is incorporated by reference
to Exhibit (10)(b) of Post-Effective Amendment
No. 23 to Registrant's Registration Statement
(No. 33-21489) filed on October 30, 1992.
(11) (a) Consent of KPMG Peat Marwick LLP.
(b) Consent of Burch, Porter & Johnson is
incorporated by reference to Exhibit (11)(b)
of Post-Effective Amendment No. 23 to
Registrant's Registration Statement (No.
33-21489) filed on October 30, 1992.
(c) Consent of Coopers & Lybrand L.L.P. is
incorporated by reference to Exhibit (11)(c)
of Post-Effective Amendment No. 39 to
Registrant's Registration Statement (No. 33-
21489) filed on March 18, 1997.
(12) None.
(13) Purchase Agreement dated as of July 19, 1988,
between Registrant and Winsbury Associates is
incorporated by reference to Exhibit (13) of
Pre-Effective Amendment No. 2 to Registrant's
Registration Statement (No. 33-21489) filed on
July 21, 1988.
(14) None.
(15) (a) Rule 12b-1 Plan (with respect to the Riverside
Capital Funds) is incorporated by reference to
Exhibit (15)(a) of Pre-Effective Amendment No.
2 to Registrant's Registration Statement (No.
33-21489) filed on July 21, 1988.
(c) Rule 12b-1 Plan (with respect to the 1st
Source Monogram Funds) is incorporated by
reference to Exhibit (15)(c) of Post-Effective
Amendment No. 35 to Registrant's Registration
Statement (No. 33-21489) filed on June 6,
1996.
(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)
C-18
<PAGE> 101
is incorporated by reference to Exhibit
(15)(h) of Post-Effective Amendment No. 27 to
Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(m) Rule 12b-1 Agreement dated October 1, 1993,
between The Winsbury Company Limited 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
C-19
<PAGE> 102
the Riverside Capital Funds) is incorporated
by reference to Exhibit (15)(s) of
Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(t) Rule 12b-1 Agreement dated as of May 16, 1994,
between Morgan, Keegan & Co. and The Winsbury
Company Limited Partnership (with respect to
the Riverside Capital Funds) is incorporated
by reference to Exhibit (15)(t) of
Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No.
33-21489) filed on August 24, 1994.
(u) Rule 12b-1 Agreement dated as of August 1,
1994, between J.J.B. Hilliard, W.L. Lyons,
Inc. and The Winsbury Company Limited
Partnership (with respect to the Riverside
Capital Funds) is incorporated by reference to
Exhibit (15)(u) of Post-Effective Amendment
No. 31 to Registrant's Registration Statement
(No. 33-21489) filed on October 14, 1994.
(v) Rule 12b-1 Agreement dated as of August 31,
1994, between TrustMark Investments, Inc. and
The Winsbury Company Limited Partnership (with
respect to the Riverside Capital Funds) is
incorporated by reference to Exhibit (15)(v)
of Post-Effective Amendment No. 31 to
Registrant's Registration Statement (No.
33-21489) filed on October 14, 1994.
(16) (a) Computation of Performance Quotations for
Riverside Capital Money Market Fund is
incorporated by reference to Exhibit (16)(a)
of Post-Effective Amendment No. 27 to
Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(b) Computation of Performance Quotations for
Riverside Capital Value Equity Fund and
Riverside Capital Fixed Income Fund is
incorporated by reference to Exhibit (16)(b)
of Post-Effective Amendment No. 27 to
Registrant's Registration Statement (No.
33-21489) filed on October 19, 1993.
(f) Computation of Performance Quotations for
Riverside Capital Tennessee Municipal Obliga-
tions Fund is incorporated by reference to
Exhibit (16)(f) of Post-Effective Amendment
C-20
<PAGE> 103
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) Computations of Performance Quotations for
KeyPremier Aggressive Growth Fund.
Computations of Performance Quotations for
KeyPremier Established Growth Fund, KeyPremier
Intermediate Term Income Fund, and KeyPremier
Limited Duration Government Securities Fund
are incorporated by reference to Exhibit
(16)(i) of Post-Effective Amendment No. 41 to
Registrant's Registration Statement (No. 33-
21489) filed on May 21, 1997. Computations of
Performance Quotations for KeyPremier Prime
Money Market Fund and KeyPremier Pennsylvania
Municipal Bond Fund are incorporated by
reference to Exhibit (16)(i) of Post-Effective
Amendment No. 39 to Registrant's Registration
Statement (No. 33-21489) filed on March 18,
1997. Computation of Performance Quotations
for KeyPremier U.S. Treasury Obligations Money
Market Fund to be filed by amendment.
(j) Computations of Performance Quotations for
1st Source Monogram Diversified Equity Fund,
1st Source Monogram Income Equity Fund, 1st
Source Monogram Special Equity Fund and 1st
Source Monogram Income Fund are incorporated
by reference to Exhibit (16)(j) of Post-
Effective Amendment No. 39 to Registrant's
Registration Statement (No. 33-21489) filed on
March 18, 1997. Computation of Performance
Quotations for 1st Source Monogram U.S.
Treasury Obligations Money Market Fund and 1st
Source Monogram Intermediate Tax-Free Bond
Fund to be filed by amendment.
(17) Financial Data Schedules of KeyPremier
Aggressive Growth Fund. Financial Data
Schedules for KeyPremier Established Growth
Fund and KeyPremier Intermediate Term Income
Fund are incorporated by reference to Exhibit
(17) of Post-Effective Amendment No. 41 to
Registrant's Registration Statement (No. 33-
21489) filed on May 21, 1997. Financial Data
Schedules for KeyPremier Prime Money Market
Fund, KeyPremier Pennsylvania Municipal Bond
Fund, 1st Source Monogram Diversified Equity
C-21
<PAGE> 104
Fund, 1st Source Monogram Income Equity Fund,
1st Source Monogram Special Equity Fund and
1st Source Monogram Income Fund are
incorporated by reference to Exhibit (17) of
Post-Effective Amendment No. 39 to
Registrant's Registration Statement (No. 33-
21489) filed on March 18, 1997. Financial
Data Schedules for the Riverside Capital Funds
are incorporated by reference to Exhibit (17)
of Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996. Financial
Data Schedules for the other KeyPremier Funds
and the other 1st Source Monogram Funds to be
filed by amendment.
(18) None.
(19) (a) Powers of Attorney of Stephen G. Mintos,
Chalmers P. Wylie, Walter B. Grimm and
Maurice G. Stark are incorporated by reference
to Exhibit (17)(a) of Post-Effective Amendment
No. 30 to Registrant's Registration Statement
(No. 33-21489) filed on August 24, 1994.
(b) Consent of Baker & Hostetler LLP.
(c) Power of Attorney of Nancy E. Converse is
incorporated by reference to Exhibit
(19)(c) of Post-Effective Amendment No.
36 to Registrant's Registration Statement
(No. 33-21489) filed on August 16, 1996.
(d) Power of Attorney of James H. Woodward is
incorporated by reference to Exhibit
(19)(d) of Post-Effective Amendment No.
37 to Registrant's Registration Statement
(No. 33-21489) filed on October 21, 1996.
(e) Power of Attorney of Thresa Dewar is
incorporated by reference to Exhibit
(19)(e) of Post-Effective Amendment No.
41 to Registrant's Registration Statement
(No. 33-21489) filed on May 21, 1997.
Item 25. Persons Controlled By or Under Common Control with
--------------------------------------------------
Registrant
----------
None.
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<PAGE> 105
Item 26. Number of Holders of Securities
-------------------------------
As of July 1, 1997, the number of record holders of each
series of shares of the Registrant were as follows:
<TABLE>
<CAPTION>
Title of Series Number of Record Holders
--------------- ------------------------
<S> <C>
Riverside Capital Money
Market Fund 25
Riverside Capital
Value Equity Fund 145
Riverside Capital
Fixed Income Fund 25
Riverside Capital Tennessee Municipal
Obligations Fund 19
Riverside Capital Low Duration
Government Securities Fund 6
Riverside Capital Growth Fund 51
KeyPremier Prime
Money Market Fund 18
KeyPremier Pennsylvania
Municipal Bond Fund 10
1st Source Monogram U.S. Treasury
Obligations Money Market Fund 0
1st Source Monogram Diversified
Equity Fund 30
1st Source Monogram Income Equity Fund 23
1st Source Monogram Special Equity Fund 43
1st Source Monogram Income Fund 10
1st Source Monogram Intermediate Tax-Free
Bond Fund 0
KeyPremier Established Growth Fund 89
KeyPremier Intermediate Term
Income Fund 24
KeyPremier Aggressive Growth Fund 91
KeyPremier U.S. Treasury Obligations
Money Market Fund 1
KeyPremier Limited Duration Government
Securities Fund 1
</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), 6(c) and 6(e) hereto, Section 8 of the
Custodial Services Agreement filed as Exhibit 8(a) hereto,
Article XVII, Section 14 of the
C-23
<PAGE> 106
Custody Agreement filed as Exhibit 8(b) hereto, Article VIII,
Section 8.1 of the Custody Agreement filed as Exhibit 8(c)
hereto, Section 8 of the Investment Advisory Agreements filed
as Exhibits 5(a), 5(b), 5(c), 5(d), 5(e) and 5(f) hereto,
Section 4 of the Management and Administration Agreements filed
as Exhibits 9(a), 9(u), 9(x) and 9(aa) hereto, Section 9 of the
Transfer Agency Agreements filed as Exhibits 9(g), 9(z) and
9(ac) hereto, and Section 6 of the Fund Accounting Agreements
filed as Exhibits 9(h), 9(v), 9(y) and 9(ab) hereto. As of the
effective date of this Registration Statement, the Group will
have obtained from a major insurance carrier a trustees' and
officers' liability policy covering certain types of errors and
omissions. In no event will Registrant indemnify any of its
trustees, officers, employees or agents against any liability
to which such person would otherwise be subject by reason of
his willful misfeasance, bad faith, or gross negligence in the
performance of his duties, or by reason of his reckless
disregard of the duties involved in the conduct of his office
or under his agreement with Registrant. Registrant will comply
with Rule 484 under the Securities Act of 1933 and Release
11330 under the Investment Company Act of 1940 in connection
with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a
trustee, officer, or controlling person of Registrant in the
successful defense of any action, suit, or proceeding) is
asserted by such trustee, officer, or controlling person in
connection with the securities 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
C-24
<PAGE> 107
Fund, Riverside Capital Value Equity Fund, Riverside Capital
Fixed Income Fund, Riverside Capital Tennessee Municipal
Obligations Fund, Riverside Capital Low Duration Government
Securities Fund and Riverside Capital Growth Fund. NBC is a
wholly owned subsidiary of National Commerce Bancorporation. In
addition to serving as investment adviser of such Funds, NBC
and its affiliates hold and manage, on behalf of their clients,
assets which as of September 30, 1996, totalled $3.9 billion,
and of which approximately $989 million are managed in a
variety of balanced, equity and fixed income portfolios.
To the knowledge of Registrant, none of the directors or
officers of NBC, except those set forth below, is or has been
at any time during the past two fiscal years engaged in any
other business, profession, vocation or employment of a
substantial nature, except that certain officers and directors
of NBC also hold positions with NBC's parent, National Commerce
Bancorporation. Set forth below are the names and principal
businesses of the directors of NBC who are engaged in any other
business, profession, vocation, or employment of a substantial
nature.
<TABLE>
<CAPTION>
Position
Name with NBC Principal Occupation
---- -------- --------------------
<S> <C> <C>
Frank G. Barton, Jr. Director Chairman of the Board
Barton Group, Inc.
2620 Thousand Oaks Blvd., Suite 1200
Memphis, Tennessee 38118
(Retail Equipment Sales)
Jack R. Blair Director Smith & Nephew North America
1450 East Brooks Road
Memphis, Tennessee 38116
(Medical Devices)
R. Grattan Brown, Jr. Director Partner, law firm of
Glankler, Brown, Gilliland, Chase,
Robinson & Raines
One Commerce Square
Memphis, Tennessee 38103
Bruce E. Campbell, Jr. Director Former Chairman
National Bank of Commerce
and National Commerce
Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Christopher W. Canale Director President
D. Canale Beverages, Inc.
45 E.H. Crumps Blvd.
Memphis, Tennessee 38106
(Distribution)
</TABLE>
C-25
<PAGE> 108
<TABLE>
<S> <C> <C>
John D. Canale III Director President
D. Canale Food Services, Inc.
7 West Georgia
Memphis, Tennessee 38103
(Distribution)
Edmond D. Cicala Director President
Edmond Enterprises, Inc.
1213 Park Place Center
Suite 200
Memphis, Tennessee 38119
(Consulting)
John S. Evans Director Former President
National Bank of Commerce
One Commerce Square
Memphis, Tennessee 38150
Thomas C. Farnsworth, Jr. Director Farnsworth Investment Co.
2175 Business Center Drive
Suite 11
Memphis, Tennessee 38134-5621
(Real Estate)
Thomas M. Garrott Chairman Chairman of the Board and
Chief Executive Officer
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Mackie H. Gober President/ President
Director National Bank of Commerce
One Commerce Square
Memphis, Tennessee 38150
Lewis E. Holland Director Executive Vice President and
Chief Financial Officer
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
prior thereto -
Partner
Ernst & Young
One Commerce Square
Memphis, Tennessee 38103
(Accounting)
R. Lee Jenkins Director Retired
6075 Poplar, Suite 721
Memphis, Tennessee 38119
James E. McGehee, Jr. Director President
McGehee Realty & Development Company
675 Oakleaf Office Lane, Suite 102
Memphis, Tennessee 38117
(Real Estate)
W. Neely Mallory, Jr. Director President
Memphis Compress & Storage Company
P.O. Box 9436
Memphis, Tennessee 38109
(Cotton Warehousing)
</TABLE>
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<PAGE> 109
<TABLE>
<S> <C> <C>
Harry J. Phillips, Sr. Director Chairman of the Executive Committee
Browning-Ferris Industries
2750 One Commerce Square
Memphis, Tennessee 38103
(Waste Disposal Services)
William R. Reed, Jr. Director Executive Vice President
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Rudi E. Scheidt Director Retired
54 South White Station
Memphis, Tennessee 38117
Lucy Y. Shaw Director President
Common Denominator, Inc.
2195 Poplar Avenue, Suite 505
East Memphis, Tennessee 38104
prior thereto -
Chief Executive Officer
Regional Medical Center at Memphis
877 Jefferson Avenue
Memphis, Tennessee 38103
(Hospital)
Robert M. Solmson Director President
RFS Hotel Investors, Inc.
1213 Park Place Center, Suite 200
Memphis, Tennessee 38119
(Real Estate)
Sidney A. Stewart, Jr. Director Retired
5350 Poplar Avenue
Memphis, Tennessee 38119
R. Lee Taylor Director Private Investor
1755-A Lynnfield Drive
Suite 232
Memphis, Tennessee 38119
Henry M. Turley, Jr. Director President
Henry Turley Company
65 Union Avenue, Suite 1200
Memphis, Tennessee 38103
(Real Estate Management and Investment)
</TABLE>
(b) Martindale Andres & Company, Inc., West Conshohocken,
Pennsylvania ("Martindale Andres"), is the investment
adviser for KeyPremier Prime Money Market Fund,
KeyPremier Pennsylvania Municipal Bond Fund, KeyPremier
Established Growth Fund, KeyPremier Intermediate Term
Income Fund, KeyPremier Aggressive Growth Fund,
KeyPremier U.S. Treasury Obligations Money Market Fund
and KeyPremier Limited Duration Government Securities
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
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<PAGE> 110
high net worth individuals, endowments and pension and common
trust funds. Martindale Andres currently has over $960 million
under management, including over $400 million of municipal
securities.
To the knowledge of Registrant, none of the directors or
officers of Martindale Andres is or has been at any time
during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial
nature, except that certain officers and directors of
Martindale Andres also hold positions with Martindale Andres'
parent, Keystone Financial, Inc.
(c) 1st Source Bank, South Bend, Indiana ("FSB"), is the
investment adviser for 1st Source Monogram U.S. Treasury
Obligations Money Market Fund, 1st Source Monogram
Diversified Equity Fund, 1st Source Monogram Income
Equity Fund, 1st Source Monogram Special Equity Fund, 1st
Source Monogram Income Fund and 1st Source Monogram
Intermediate Tax-Free Bond Fund. FSB is a wholly-owned
subsidiary of 1st Source Corporation. In addition to
serving as investment adviser of such Funds, FSB and its
affiliates administer and manage, on behalf of their
clients, trust assets which as of December 31, 1996,
totalled approximately $1.25 billion. Of such amount,
approximately $512 million are managed on behalf of
personal trust customers and approximately $739 million
are managed on behalf of employee benefit plans. The
Adviser has over 60 years of banking experience and as of
December 31, 1996, on a consolidated basis with 1st
Source Corporation, had over $2.07 billion in assets.
To the knowledge of Registrant, none of the directors or
officers of FSB, except those set forth below, is or has been
at any time during the past two fiscal years engaged in any
other business, profession, vocation or employment of a
substantial nature, except that certain officers and directors
of FSB also hold positions with FSB's parent, First Source
Corporation. Set forth below are the names and principal
businesses of the directors of FSB who are engaged in any
other business, profession, vocation, or employment of a
substantial nature.
<TABLE>
<CAPTION>
Position
Name with FSB Principal Occupation
- ---- -------- --------------------
<S> <C> <C>
Rev. E. William Beauchamp Director Executive Vice President
University of Notre Dame
South Bend, IN 46556
</TABLE>
C-28
<PAGE> 111
<TABLE>
<S> <C> <C>
Paul R. Bowles Director Former Senior Vice
President
Clark Equipment Company
1202 East Jefferson
South Bend, IN 46617
(off-highway components
and construction machinery
manufacturing)
Philip J. Faccenda Director President
Bear Financial, Inc.
1222 E. Erskine
Manor Hill
South Bend, IN 46617
(venture capital)
Vice President and
General Counsel Emeritus
University of Notre Dame
South Bend, IN 46556
Daniel B. Fitzpatrick Director Chairman, President,
Chief Executive
Officer and Director
Quality Dining, Inc.
P. O. Box 416
South Band, IN 46624
(quick service and
casual dining
restaurant operator)
Terry L. Gerber Director President and Chief
Executive Officer
Gerber Manufacturing
Company, Inc.
1417 Olivia Circle
South Bend, IN 46614
(manufacturer of police
and emergency outerwear)
Lawrence E. Hiler Director President
Hiler Industries
P.O. Box 639
La Porte, IN 46350
(metal casting)
Anne M. Hillman Director Civic Leader
3904 Nall Court
South Bend, IN 46614
</TABLE>
C-29
<PAGE> 112
<TABLE>
<S> <C> <C>
Hollis E. Hughes, Jr. Director Executive Director
United Way of
St. Joseph County
3517 E. Jefferson
P.O. Box 6396
South Bend, IN 46660
H. Thomas Jackson Director Chairman
Bornemann Coated Fabrics
Bornemann Products
P. O. Box 208
Bremen, IN 46506
(vinyl sales)
William P. Johnson Director Chairman & CEO
Goshen Rubber Co., Inc.
1525 S. 10th
Goshen, IN 46527
(manufacturer of
automotive rubber parts)
Craig A. Kapson Director President
Jordan Ford, Toyota, Volvo,
Lincoln Mercury
609 E. Jefferson
Mishawaka, IN 46545
(automobile sales)
David L. Lerman Director President
Steel Warehouse Company,
Inc.
2722 West Tucker Drive
South Bend, IN 46624
(warehouse storage)
Richard J. Pfeil Director Chairman and President
Koontz-Wagner Electric Co.
3801 Voorde Drive
South Bend, IN 46628
(electrical equipment
repair, construction and
installation)
John T. Phair Director Vice President
The Holladay Corporation
220 Colfax, Suite 200
South Bend, IN 46601
(property management)
</TABLE>
C-30
<PAGE> 113
<TABLE>
<S> <C> <C>
Mark D. Schwabero Director Executive Vice President
Bosch Braking Systems Corp.
401 N. Bendix Drive
South Bend, IN 46634
(manufacturers of
automotive brakes and
brake components)
Elmer H. Tepe Director President
E.H. Tepe Co.
c/o 1st Source Corporation
100 North Michigan Street
South Bend, IN 46634
(holding company)
</TABLE>
(d) Miller Anderson and Sherrerd LLP, West Conshohocken,
Pennsylvania ("Miller Anderson") is a sub-investment
adviser for 1st Source Monogram Diversified Equity Fund.
Miller Anderson is wholly owned by Morgan Stanley Group,
Inc., 1585 Broadway, New York, New York 10036. In
addition to serving as sub-investment adviser of such
Fund, Miller Anderson provides advice primarily to
institutions, including other investment companies, and
currently has approximately $35 billion in assets under
management, of which approximately $2.4 billion is
managed using Miller Anderson's value style.
To the knowledge of Registrant, none of the directors or
officers of Miller Anderson, except those set forth below, is
or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or
employment of a substantial nature, except that certain
officers and directors of Miller Anderson also hold positions
with Miller Anderson's parent, Morgan Stanley Group, Inc. Set
forth below are the names and principal businesses of the
directors of Miller Anderson who are engaged in any other
business, profession, vocation, or employment of a substantial
nature.
<TABLE>
<CAPTION>
Partner Name and Address Nature of
of Miller Anderson of Business Connection
- ------------------ ----------- ----------
<S> <C> <C>
Dean Williams Shanghai Dazhong Taxi Director
Co., Ltd.
920 Nanjing Road
16th Floor
Shanghai, China 200041
Marna C. Whittington Rohm & Haas Company Director
Independence Mall West
Philadelphia, PA 19105
</TABLE>
C-31
<PAGE> 114
<TABLE>
<S> <C> <C>
Berwind Group Director
1500 Market Street
3000 Centre Square West
Philadelphia, PA 19102
Ellen D. Harvey, CFA Owosso Corporation Director
One Tower Bridge
14th Floor
W. Conshohocken, PA 19428
</TABLE>
(e) Loomis Sayles & Company, L.P., Chicago, Illinois
("Loomis") is a sub-investment adviser for 1st Source
Monogram Diversified Equity Fund. The sole general
partner of Loomis is Loomis Sayles & Company,
Incorporated, One Financial Center, Boston, Massachusetts
02111. In addition to serving as sub-investment adviser
of such Fund, Loomis provides investment advice to the
nine series of the Loomis Sayles Funds, nine series of
Loomis Sayles Investment Trust, six series of New England
Funds Trust I, one series of New England Funds Trust III,
and three series of New England Zenith Funds, all of
which are registered investment companies, and to other
organizations and individuals.
To the knowledge of Registrant, none of the directors or
officers of Loomis is or has been at any time during the past
two fiscal years engaged in any other business, profession,
vocation or employment of a substantial nature.
(f) Columbus Circle Investors ("Columbus") is a general
partnership formed on September 9, 1994, which is
registered as an investment adviser under the Investment
Advisers Act of 1940. PIMCO Advisors L.P. and Columbus
Circle Investors Management Inc. ("CCI, Inc."), a
wholly-owned subsidiary of PIMCO Advisors L.P., are the
general partners of Columbus. Columbus consists of the
personnel of the former Columbus Circle Investors
Division of Thomson Advisory Group L.P. ("TAGLP") and the
investment personnel of the former Mutual Funds Division
of TAGLP. Columbus acts as sub-adviser to other mutual
funds and also advises and manages individual accounts,
profit sharing and pension funds and institutional
accounts.
To the knowledge of Registrant, set forth below are the
substantial business engagements during at least the two past
fiscal years of each director or senior executive officer of
Columbus:
C-32
<PAGE> 115
<TABLE>
<CAPTION>
NAME AND POSITION BUSINESS AND
WITH COLUMBUS OTHER CONNECTIONS
- ------------- -----------------
<S> <C>
Irwin F. Smith Member of Equity and Operating Boards and
Chairman, Managing Operating Committee, PIMCO Advisors L.P.;
Director, Chief Director and Chairman, Columbus Circle
Executive Officer and Investors Management, Inc.; Director,
Chief Investment Columbus Circle Trust Company
Officer
Donald A. Chiboucas Member of Operating Board, PIMCO Advisors
President and L.P.; Director and President, Columbus
Managing Director Circle Investors Management, Inc.
Louis P. Celentano Director and Vice President, Columbus
Managing Director Circle Investors Management, Inc.;
Director and Chairman, Columbus
Circle Trust Company; Director and
Chairman, Columbus Circle Asset
Management, Ltd.
Daniel S. Pickett Member of Operating Board, PIMCO Advisors
Managing Director L.P. (1995); Director, Columbus Circle
Investors Management, Inc.
Amy M. Hogan Member of Operating Board, PIMCO Advisors
Managing Director L.P. (1996); Director, Columbus Circle
Investors Management, Inc.
Robert W. Fehrmann Director, Columbus Circle Investors
Managing Director Management Inc.
C. Paul Tyborowski President, Columbus Circle Trust Company;
Managing Director President, Columbus Circle Asset
Management, Ltd.
</TABLE>
The address of Columbus, Columbus Circle Trust Company
and Columbus Circle Investors management Inc. is One
Station Place, Stamford, CT 06902.
PIMCO Advisors L.P. was organized as a limited
partnership under Delaware law in 1987 and is registered
as an investment adviser under the Investment Advisers
Act of 1940. In November 1994, PIMCO Advisors L.P. (then
known as Thomson Advisory Group, L.P. ("TAGLP")) combined
its investment advisory business with the investment
advisory business of several subsidiaries of Pacific
Mutual Life Insurance Company and changed its name to
PIMCO Advisors L.P. PIMCO Advisors L.P. manages three
mutual fund complexes. PIMCO Advisors L.P. also has
various subsidiary partnerships, including Columbus,
which advise and manage mutual funds, individual
accounts, profit-sharing and pension funds and
C-33
<PAGE> 116
institutional accounts and act as sub-advisers to certain
mutual funds.
PIMCO Partners, G.P. ("PIMCO GP"), PIMCO Advisors L.P.'s
general partner, is a general partnership with two partners:
(i) an indirect wholly-owned subsidiary of Pacific Mutual Life
Insurance Company; and (ii) PIMCO Partners, L.L.C. ("LLC"), a
limited liability company, all of the interests of which are
held directly by the Managing Directors of Pacific Investment
Management Company who are William H. Gross, Dean S. Meiling,
James F. Muzzy, William F. Podlich, III, Frank B. Rabinovitch,
Brent R. Harris, John L. Hague, William S. Thompson, Jr.,
William C. Powers, David H. Edington and Benjamin L. Trosky
(collectively, the "Managing Directors"). PIMCO Partners, G.P.
has substantially delegated its management and control of
PIMCO Advisors L.P. to an Equity Board and an Operating board
of PIMCO Advisors L.P. The activities of PIMCO Advisors L.P.
are controlled by its Operating Board except that certain
non-routine or extraordinary actions may not be effected by
the Operating Board without the approval of PIMCO Advisors
L.P.'s Equity Board. The Operating Board has in turn delegated
the authority to manage day-to-day operations and policies to
an Operating Committee. The Operating Board is composed of
twelve members, of which seven (including the chairman) are
designated by Pacific Investment Management Company, a
subsidiary general partnership of PIMCO Advisors L.P. and a
sub-adviser to several mutual funds. The Equity Board is
composed of twelve members including the chief executive
officer of PIMCO Advisors L.P., three members designated by
Pacific Financial Asset Management Company, the chairman of
the Operating Board, two members designated by LLC, two
members designated by holders of Series B Preferred Stock of
Thomson Advisory Group Inc., the former general partner of
PIMCO Advisors L.P., and three independent members. Because of
the ability to designate a majority of the Members of the
Operating Board, Pacific Investment Management Company and the
Managing Directors could be said to control PIMCO Advisors
L.P., although the Managing Directors disclaim such authority.
Item 29. Principal Underwriter
---------------------
(a) BISYS Fund Services Limited Partnership d/b/a BISYS Fund
Services ("BISYS") acts as distributor and administrator
for Registrant. BISYS also distributes the securities of
The Victory Portfolios, the 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, the Pacific
C-34
<PAGE> 117
Capital Funds, the MMA Praxis Mutual Funds, The Riverfront
Funds, Inc., the Summit Investment Trust, the Qualivest Funds,
Empire Builder Tax Free Bond Fund, First Choice Funds Trust,
Fountain Square Funds, Hirtle Callaghan Trust, HSBC Family of
Funds, The Infinity Mutual Funds, Inc., Intrust Funds, The
Kent Funds, Magna Funds, Marketwatch Funds, Meyers Sheppard
Investment Trust, Minerva Funds, The Parkstone Advantage
Funds, Pegasus Funds, The Republic Funds Trust, The Republic
Advisors Funds Trust, SBSF Funds, Inc. dba Key Mutual Funds,
Sefton Funds, The Time Horizon Funds, and Variable Insurance
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
Name and Principal Positions and Offices Offices with
Business Address with BISYS Fund Services Registrant
---------------- ------------------------ ----------
<S> <C> <C>
BISYS Fund Services, Sole General Partner None
Inc.
3435 Stelzer Road
Columbus, Ohio 43219
WC Subsidiary Limited Partner None
Corporation
3435 Stelzer Rd.
Columbus, Ohio 43229
</TABLE>
(c) None.
Item 30. Location of Accounts and Records
--------------------------------
(1) National Bank of Commerce, One Commerce Square, Memphis,
Tennessee 38150 (records relating to its functions as
investment adviser for the Riverside Capital Funds).
(2) Martindale Andres & Company, Inc., 200 Four Falls Corporate
Center, West Conshohocken, Pennsylvania 19428 (records
relating to its functions as investment adviser for the
KeyPremier Funds).
(3) 1st Source Bank, 100 North Michigan Street, South Bend,
Indiana 46634 (records relating to its functions as investment
adviser for the 1st Source Monogram Funds).
(4) Miller Anderson and Sherrerd LLP, One Tower Bridge, Suite
1100, West Conshohocken, Pennsylvania 19428 (records relating
to its functions as sub-investment adviser for 1st Source
Monogram Diversified Equity Fund).
(5) Loomis Sayles & Company, L.P., 3 First National Plaza, Suite
5450, Chicago, Illinois 60600 (records relating to
C-35
<PAGE> 118
its functions as sub-investment adviser for 1st Source
Monogram Diversified Equity Fund).
(6) Columbus Circle Investors, #1 Metro Place, Stamford,
Connecticut 06902 (records relating to its functions as
sub-investment adviser for 1st Source Monogram Diversified
Equity Fund).
(7) BISYS Fund Services Limited Partnership, 3435 Stelzer Road,
Columbus, Ohio 43219 (records relating to its functions as
manager, administrator and distributor).
(8) BISYS Fund Services Ohio, Inc. and BISYS Fund Services,
Inc., 3435 Stelzer Road, Columbus, Ohio 43219 (records
relating to its functions as transfer agent and as fund
accountant).
(9) Baker & Hostetler LLP, 65 East State Street, Columbus,
Ohio 43215 (Declaration of Trust, By-Laws, and Minute
Books).
(10) National City Bank, 1900 East 9th Street, Cleveland, Ohio
44114 (records relating to its function as custodian for the
Riverside Capital Funds).
(11) The Bank of New York, 48 Wall Street, New York, New York 10286
(records relating to its function as custodian for the
KeyPremier Funds).
(12) The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati,
Ohio 45263 (records relating to its function as custodian for
the 1st Source Monogram Funds).
Item 31. Management Services
-------------------
None
Item 32. Undertakings
------------
None
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<PAGE> 119
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, thereto duly
authorized, in the City of Columbus, Ohio, on the 28th day of July, 1997.
Registrant hereby certifies that this Post-Effective Amendment to Registration
Statement meets all of the requirements for effectiveness pursuant to paragraph
(b) of Rule 485 under the Securities Act of 1933.
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 President (Principal July 28, 1997
- ----------------------------- Executive Officer) and
Walter B. Grimm Trustee
/s/*Thresa Dewar Treasurer (Principal July 28, 1997
- ----------------------------- Financial Officer and
Thresa Dewar Principal Accounting
Officer)
/s/*Nancy E. Converse Trustee July 28, 1997
- -----------------------------
Nancy E. Converse
/s/*Maurice G. Stark Trustee July 28, 1997
- -----------------------------
Maurice G. Stark
/s/*James H. Woodward Trustee July 28, 1997
- -----------------------------
James H. Woodward
/s/*Chalmers P. Wylie Trustee July 28, 1997
- -----------------------------
Chalmers P. Wylie
*By/s/ Walter B. Grimm July 28, 1997
-----------------------
Walter B. Grimm
Attorney-In-Fact
</TABLE>
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<PAGE> 120
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C>
1(a) Declaration of Trust dated as of April 25, 1988, was filed as
Exhibit (1)(a) to Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No. 33-21489) filed on
April 25, 1996.
(b) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted August 15, 1989, was filed as Exhibit (1)(b) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(c) Amendment of Article V, Section 5.3 of Declaration of Trust
adopted October 23, 1989, was filed as Exhibit (1)(c) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(d) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted July 23, 1991, was filed as Exhibit (1)(d) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(e) Amendment of Article IV, Section 4.2 of Declaration of Trust
adopted August 13, 1992, was filed as Exhibit (1)(e) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(f) Amendment of Article IV, Section 4.2 of Declaration of Trust
as adopted October 28, 1992, was filed as Exhibit (1)(f) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
</TABLE>
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<PAGE> 121
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(g) Amendment of Article IV, Section 4.2 of Declaration of Trust
as adopted February 18, 1994, was filed as Exhibit (1)(g) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(h) Amendment of Article IV, Section 4.2 of Declaration of Trust
as adopted May 16, 1994, was filed as Exhibit (1)(h) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(i) Amendment to Article IV, Section 4.2 of Declaration of Trust
as adopted April 10, 1996, was filed as Exhibit (1)(i) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(j) Amendment to Article IV, Section 4.2 of Declaration of Trust
as adopted May 16, 1996, was filed as Exhibit (1)(j) to
Post-Effective Amendment No. 35 to Registrant's Registration
Statement (No. 33-21489) filed on June 6, 1996.
(k) Amendment to Article IV, Section 4.2 of Declaration of Trust
as adopted August 15, 1996, was filed as Exhibit (1)(k) to
Post-Effective Amendment No. 36 to Registrant's Registration
Statement (No. 33-21489) filed on August 16, 1996.
(l) Amendment to Article IV, Section 4.2 of Declaration of Trust
as adopted September 27, 1996 was filed as Exhibit (1)(l) to
Post-Effective Amendment No. 38 to Registrant's Registration
Statement (No. 33-21489) filed on November 15, 1996.
</TABLE>
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<PAGE> 122
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(m) Amendment to Article IV, Section 4.2 of Declaration of Trust
as adopted as of January 14, 1997, was filed as Exhibit
(l)(m) to Post-Effective Amendment No. 39 to Registrant's
Registration Statement (No. 33-21489) filed on March 18,
1997.
2 By-Laws were filed as Exhibit (2) to Post-Effective Amendment
No. 34 to Registrant's Registration Statement (No. 33-21489)
filed on April 25, 1996.
5(a) Investment Advisory Agreement dated as of July 19, 1988,
between Registrant and National Bank of Commerce (with
respect to Riverside Capital Money Market Fund) was filed as
Exhibit (5)(a) to Post-Effective Amendment No. 34 to
Registrant's Registration Statement (No. 33-21489) filed on
April 25, 1996.
(b) Investment Advisory Agreement dated as of September 20, 1991,
between Registrant and National Bank of Commerce (with
respect to Riverside Capital Value Equity Fund and Riverside
Capital Fixed Income Fund) was filed as Exhibit (5)(b) to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement (No. 33-21489) filed on April 25, 1996.
(c) Investment Advisory Agreement dated as of October 27, 1992,
between Registrant and National Bank of Commerce (with
respect to Riverside Capital Tennessee Municipal Obligations
Fund) was filed as Exhibit (5)(c) to Post-Effective Amendment
No. 34 to Registrant's Registration Statement (No. 33-21489)
filed on April 25, 1996.
(d) Investment Advisory Agreement dated April 5, 1994, as amended
June 3, 1994, between Registrant and National Bank of
Commerce (with respect to Riverside Capital Low Duration
Government Securities Fund and Riverside Capital Growth
</TABLE>
C-40
<PAGE> 123
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
Fund) was filed as Exhibit (5)(d) to Post-Effective Amendment
No. 34 to Registrant's Registration Statement (No. 33-21489)
filed on April 25, 1996.
(e) Investment Advisory Agreement dated July 9, 1996, as amended
as of June 30, 1997, between Registrant and Martindale Andres
& Company, Inc. (with respect to the KeyPremier Funds).
(f) Investment Advisory Agreement dated August 20, 1996, between
Registrant and 1st Source Bank (with respect to 1st Source
Monogram Funds) was filed as Exhibit (5)(f) to Post-Effective
Amendment No. 37 to Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(g) Sub-Investment Advisory Agreement dated August 20, 1996,
between 1st Source Bank and Miller Anderson & Sherrerd LLP
(with respect to 1st Source Monogram Diversified Equity Fund)
was filed as Exhibit (5)(g) to Post-Effective Amendment No.
37 to Registrant's Registration Statement (No. 33-21489)
filed on October 21, 1996.
(h) Sub-Investment Advisory Agreement dated August 20, 1996,
between 1st Source Bank and Loomis Sayles & Company, L.P.
(with respect to 1st Source Monogram Diversified Equity Fund)
was filed as Exhibit (5)(h) to Post-Effective Amendment No.
37 to Registrant's Registration Statement (No. 33-21489)
filed on October 21, 1996.
(i) Sub-Investment Advisory Agreement dated August 20, 1996,
between 1st Source Bank and Columbus Circle Investors (with
respect to 1st Source Monogram Diversified Equity Fund) was
filed as Exhibit (5)(i) to Post-Effective Amendment No. 37 to
Registrant's
</TABLE>
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<PAGE> 124
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
Registration Statement (No. 33-21489) filed on October 21,
1996.
6(a) Distribution Agreement dated October 1, 1993, as amended as
of June 3, 1994, between Registrant and The Winsbury Company
Limited Partnership was filed as Exhibit (6)(a) to
Post-Effective Amendment No. 30 to Registrant's Registration
Statement (No. 33-21489) filed on August 24, 1994.
(b) Form of Selected Dealer Agreement was filed as Exhibit (6)(b)
to Post-Effective Amendment No. 34 to Registrant's
Registration Statement (No. 33-21489) filed on April 25,
1996.
(c) Distribution Agreement dated as of July 9, 1996, as amended
as of June 30, 1997, between Registrant and BISYS Fund
Services Limited Partnership (relating to the KeyPremier
Funds).
(d) Form of Shareholder Services Agreement was filed as Exhibit
(6)(d) to Post-Effective Amendment No. 34 to Registrant's
Registration Statement (No. 33-21489) filed on April 25,
1996.
(e) Distribution Agreement dated as of August 20, 1996, between
Registrant and BISYS Fund Services Limited Partnership
(relating to the 1st Source Monogram Funds) was filed as
Exhibit (6)(e) to Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No. 33-21489) filed on
October 21, 1996.
8(a) Custodial Services Agreement dated as of March 1, 1995,
between Registrant and National City Bank (with respect to
the Riverside Capital Funds) was filed as Exhibit (8) of
Post-Effective Amendment No. 33 to Registrant's Registration
Statement (No. 33-21489) filed on October 30, 1995.
</TABLE>
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<PAGE> 125
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(b) Custody Agreement dated July 9, 1996, as amended as of June
30, 1997, between Registrant and The Bank of New York (with
respect to the KeyPremier Funds).
(c) Custody Agreement dated August 20, 1996, between Registrant
and The Fifth Third Bank (with respect to the 1st Source
Monogram Funds) was filed as Exhibit (8)(c) to Post-Effective
Amendment No. 37 to Registrant's Registration Statement (No.
33-21489) filed on October 21, 1996.
(d) Cash Management and Related Services Agreement dated
September 24, 1996, as amended as of June 30, 1997, between
Registrant and The Bank of New York.
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-43
<PAGE> 126
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(h) Fund Accounting Agreement dated February 4, 1993, between
Registrant and The Winsbury Service Corporation (with respect
to Riverside Capital Money Market Fund, Riverside Capital
Equity Fund, Riverside Capital Fixed Income Fund and
Riverside Capital Municipal Obligations Fund) was filed as
Exhibit (9)(h) to Post-Effective Amendment No. 25 to
Registrant's Registration Statement (No. 33-21489) filed on
April 27, 1993.
(r) Administrative Services Plan of Registrant effective October
19, 1993 was filed as Exhibit (9)(r) to Post-Effective
Amendment No. 28 to Registrant's Registration Statement (No.
33-21489) filed on February 4, 1994.
(s) Servicing Agreement to Administrative Services Plan dated as
of October 19, 1993, between Registrant and National Bank of
Commerce (with respect to Riverside Capital Money Market
Fund, Riverside Capital Equity Fund, Riverside Capital Fixed
Income Fund and Riverside Capital Tennessee Municipal
Obligations Fund) was filed as Exhibit (9)(s) to
Post-Effective Amendment No. 29 to Registrant's Registration
Statement (No. 33-21489) filed on April 4, 1994.
(u) Management and Administration Agreement dated April 5, 1994,
as amended as of June 3, 1994, between Registrant and The
Winsbury Company Limited Partnership (with respect to
Riverside Capital Low Duration Government Securities Fund and
Riverside Capital Growth Fund) was filed as Exhibit (9)(u) to
Post-Effective Amendment No. 30 to Registrant's Registration
Statement (No. 33-21489) filed on August 24, 1994.
</TABLE>
C-44
<PAGE> 127
<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) Management and Administration Agreement dated July 9, 1996,
as amended as of June 30, 1997, between Registrant and BISYS
Fund Services Limited Partnership (with respect to the
KeyPremier Funds).
(y) Fund Accounting Agreement dated July 9, 1996, as amended as
of June 30, 1997, between Registrant and BISYS Fund Services,
Inc. (with respect to the KeyPremier Funds).
(z) Transfer Agency Agreement dated July 9, 1996, as amended as
of June 30, 1997, between Registrant and BISYS Fund Services,
Inc. (with respect to the KeyPremier Funds).
(aa) Management and Administration Agreement dated August 20,
1996, between Registrant and BISYS Fund Services Limited
Partnership (with respect to the 1st Source Funds) was filed
as Exhibit (9)(aa) to Post-Effective Amendment No. 37 to
Registrant's Registration Statement (No. 33-21489) filed on
October 21, 1996.
</TABLE>
C-45
<PAGE> 128
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(ab) Fund Accounting Agreement dated August 20, 1996, between
Registrant and BISYS Fund Services, Inc. (with respect to the
1st Source Monogram Funds) was filed as Exhibit (9)(ab) to
Post-Effective Amendment No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21, 1996.
(ac) Transfer Agency Agreement dated August 20, 1996, between
Registrant and BISYS Fund Services, Inc. (with respect to the
1st Source Monogram Funds) was filed as Exhibit (9)(ac) to
Post-Effective Amendment No. 37 to Registrant's Registration
Statement (No. 33-21489) filed on October 21, 1996.
(ad) Form of Servicing Agreement to Administrative Services Plan
was filed as Exhibit (9)(ad) to Post-Effective Amendment No.
35 to Registrant's Registration Statement (No. 33-21489)
filed on June 6, 1996.
10(a) Opinion of Counsel with respect to shares of the Riverside
Capital Funds registered pursuant to Rule 24e-2 was filed as
Exhibit (10)(a) to Post-Effective Amendment No. 41 to
Registrant's Registration Statement (No. 33-21489) filed on
May 21, 1997. Opinion of Counsel with respect to shares of
KeyPremier U.S. Treasury Obligations Money Market Fund and
KeyPremier Limited Duration Government Securities Fund was
filed as Exhibit (10)(a) to Post-Effective Amendment No. 40
to Registrant's Registration Statement (No. 33-21489) filed
on April 16, 1997. Opinion of Counsel with respect to Shares
of KeyPremier Aggressive Growth Fund was filed as Exhibit
(10)(a) to Post-Effective Amendment No. 38 to Registrant's
Registration Statement (No. 33-21489) filed on November 15,
1996. Opinion of Counsel with respect to Shares of
</TABLE>
C-46
<PAGE> 129
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
KeyPremier Established Growth Fund and KeyPremier
Intermediate Term Income Fund was filed as Exhibit (10)(a) to
Post-Effective Amendment No. 36 to Registrant's Registration
Statement (No. 33-21489) filed on August 16, 1996. Opinion of
Counsel with respect to Shares of 1st Source Monogram U.S.
Treasury Obligations Money Market Fund, 1st Source Monogram
Diversified Equity Fund, 1st Source Monogram Income Equity
Fund, 1st Source Monogram Special Equity Fund, 1st Source
Monogram Income Fund and 1st Source Monogram Intermediate
Tax-Free Bond Fund was filed as Exhibit (10)(a) to
Post-Effective Amendment No. 35 to Registrant's Registration
Statement (No. 33-21489) filed on June 6, 1996. Opinion of
Counsel with respect to Shares of the KeyPremier Prime Money
Market Fund and the KeyPremier Pennsylvania Municipal Bond
Fund was filed as Exhibit (10)(a) to Post-Effective Amendment
No. 34 to Registrant's Registration Statement (No. 33-21489)
filed on April 25, 1996. An Opinion of Counsel was filed by
Notice on August 28, 1996, pursuant to Rule 24f-2 (with
respect to Riverside Capital Money Market Fund, Riverside
Capital Value Equity Fund, Riverside Capital Fixed Income
Fund, Riverside Capital Tennessee Municipal Obligations Fund,
Riverside Capital Low Duration Government Securities Fund and
Riverside Capital Growth Fund).
(b) Opinion of Special Counsel with respect to Riverside Capital
Tennessee Municipal Obligations Fund was filed as Exhibit
(10)(b) to Post-Effective Amendment No. 23 to Registrant's
Registration Statement (No. 33-21489) filed on October 30,
1992.
11(a) Consent of KPMG Peat Marwick LLP.
</TABLE>
C-47
<PAGE> 130
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(b) Consent of Burch, Porter & Johnson was filed as Exhibit
(11)(b) to Post-Effective Amendment No. 23 to Registrant's
Registration Statement (No. 33-21489) filed on October 30,
1992.
(c) Consent of Coopers & Lybrand L.L.P. was filed as Exhibit
(11)(c) to Post- Effective Amendment No. 39 to Registrant's
Registration Statement (No. 33-21489) on March 18, 1997.
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 F respect to the Riverside Capital
Funds) was filed as Exhibit (15)(a) to Pre-Effective
Amendment No. 2 to Registrant's Registration Statement (No.
33-21489) filed on July 21, 1988.
(c) Rule 12b-1 Plan (with respect to the 1st Source Monogram
Funds) was filed as Exhibit (15)(c) to Post-Effective
Amendment No. 35 to Registrant's Registration Statement (No.
33-21489) filed on June 6, 1996.
(h) Rule 12b-1 Agreement dated October 1, 1993, between The
Winsbury Company Limited Partnership and National Bank of
Commerce (with respect to Riverside Capital Money Market
Fund, Riverside Capital Equity Fund, Riverside Capital Fixed
Income Fund and Riverside Capital Tennessee Municipal
Obligations Fund) was filed as Exhibit (15)(h) to
Post-Effective Amendment No. 27 to Registrant's Registration
Statement (No. 33-21489) filed on October 19, 1993.
(m) Rule 12b-1 Agreement dated October 1, 1993, between The
Winsbury Company
</TABLE>
C-48
<PAGE> 131
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
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
as Exhibit (15)(p) to Post-Effective Amendment No. 30 to
Registrant's Registration Statement (No. 33-21489) filed on
August 24, 1994.
</TABLE>
C-49
<PAGE> 132
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
(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.
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
</TABLE>
C-50
<PAGE> 133
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
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.
(i) Computations of Performance Quotations for KeyPremier
Aggressive Growth Fund. Computations of Performance
Quotations for KeyPremier Established Growth Fund, KeyPremier
Intermediate Term Income Fund and KeyPremier Limited Duration
Government Securities Fund were filed as Exhibit (16)(i) to
Post-Effective Amendment No. 41 to Registrant's Registration
Statement (No. 33-21489) filed on May 21, 1997. Computations
of Performance Quotations for KeyPremier Prime Money Market
Fund and KeyPremier Pennsylvania Municipal Bond Fund were
filed as Exhibit (16)(i) to Post-Effective Amendment No. 39
to Registrant's Registration Statement (No. 33-21489) filed
on March 18, 1997. Computation of Performance Quotations for
KeyPremier U.S. Treasury Obligations Money Market Fund to be
filed by amendment.
(j) Computations of Performance Quotations for 1st Source
Monogram Diversified Equity Fund, 1st Source Monogram Income
Equity Fund, 1st Source Monogram Special Equity Fund and 1st
Source Monogram Income Fund were filed as Exhibit (16)(j) to
Post-Effective Amendment No. 39 to Registrant's Registration
</TABLE>
C-51
<PAGE> 134
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
Statement (No. 33-21489) on March 18, 1997. Computation of
Performance Quotations for 1st Source Monogram U.S. Treasury
Obligations Money Market Fund and 1st Source Monogram
Intermediate Tax-Free Bond Fund to be filed by amendment.
17 Financial Data Schedule for KeyPremier Aggressive Growth
Fund. Financial Data Schedules for KeyPremier Established
Growth Fund and KeyPremier Intermediate Term Income Fund were
filed as Exhibit (17) to Post-Effective Amendment No. 41 to
Registrant's Registration Statement (No. 33-21489) filed on
May 21, 1997. Financial Data Schedules for KeyPremier Prime
Money Market Fund, KeyPremier Pennsylvania Municipal Bond
Fund, 1st Source Monogram Diversified Equity Fund, 1st Source
Monogram Income Equity Fund, 1st Source Monogram Special
Equity Fund, and 1st Source Monogram Income Fund were filed
as Exhibit (17) to Post-Effective Amendment No. 39 to
Registrant's Registration Statement (No. 33-21489) on March
18, 1997. Financial Data Schedules for the Riverside Capital
Funds were filed as Exhibit (17) to Post-Effective Amendment
No. 37 to Registrant's Registration Statement (No. 33-21489)
filed on October 21, 1996. Financial Data Schedules for the
other KeyPremier Funds and the other 1st Source Monogram
Funds to be filed by amendment.
18 None.
19(a) Powers of Attorney of Stephen G. Mintos, Maurice G. Stark and
Chalmers P. Wylie, Walter B. Grimm were filed as Exhibit
(17)(a) to Post-Effective Amendment No. 30 to Registrant's
Registration Statement (No. 33-21489) filed on August 24,
1994.
(b) Consent of Baker & Hostetler LLP
(c) Power of Attorney of Nancy E. Converse
</TABLE>
C-52
<PAGE> 135
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
was filed as Exhibit (19)(c) to Post-Effective Amendment No.
36 to Registrant's Registration Statement (No. 33-21489)
filed on August 16, 1996.
(d) Power of Attorney of James H. Woodward was filed as Exhibit
(19)(d) to Post-Effective Amendment No. 37 to Registrant's
Registration Statement (No. 33-21489) filed on October 21,
1996.
(e) Power of Attorney of Thresa Dewar was filed as Exhibit
(19)(e) to Post-Effective Amendment No. 41 to Registrant's
Registration Statement (No. 33-21489) filed on May 21, 1997.
</TABLE>
C-53
<PAGE> 136
As filed with the Securities and Exchange Commission July 30, 1997
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. 42 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT [X]
COMPANY ACT OF 1940
Amendment No. 44 [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 (5)(e)
<PAGE> 2
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of July 9, 1996, between THE SESSIONS GROUP,
an Ohio business trust (the "Trust"), and Martindale Andres & Company, Inc., a
Pennsylvania corporation (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to provide,
or to arrange for the provision of, investment advisory services to two newly
created investment portfolios of the Trust and may retain the Investment Adviser
to serve in such capacity to certain additional investment portfolios of the
Trust, all as now or hereafter may be identified in Schedule A hereto (such new
investment portfolios and any such additional investment portfolios together
called the "Funds") and the Investment Adviser represents that it is willing and
possesses legal authority to so furnish such services without violation of
applicable laws (including the Glass- Steagall Act) and regulations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
Section 1. APPOINTMENT. The Trust hereby appoints the Investment
Adviser to act as investment adviser to the Funds for the period and on the
terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. Additional investment portfolios may from time to
time be added to those covered by this Agreement by the parties executing a new
Schedule A which shall become effective upon its execution and shall supersede
any Schedule A having an earlier date.
Section 2. DELIVERY OF DOCUMENTS. The Trust has furnished the
Investment Adviser with copies properly certified or authenticated of each of
the following:
(a) the Trust's Declaration of Trust, executed as of April 25,
1988, and as filed with the Secretary of State of Ohio on April 25,
1988, as amended or restated to the date hereof (such Declaration, as
presently in effect and as it shall from time to time be amended or
restated, is herein called the "Declaration of Trust");
(b) the Trust's By-Laws and any amendments thereto;
<PAGE> 3
(c) resolutions of the Trust's Board of Trustees authorizing
the appointment of the Investment Adviser and approving this Agreement;
(d) the Trust's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission
on April 27, 1988 and all amendments thereto;
(e) all of the Trust's procedures and guidelines and all
resolutions of the Trust's Board relevant to the services to be
provided by the Investment Adviser hereunder;
(f) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act"), (File No. 33-21489),
and under the 1940 Act as filed with the Securities and Exchange
Commission and the most recent amendment thereto; and
(g) the most recent Prospectus and Statement of Additional
Information of each of the Funds (such Prospectus and Statement of
Additional Information, as presently in effect, and all amendments and
supplements thereto, are herein collectively called the "Prospectus").
The Trust will furnish the Investment Adviser from time to
time with copies of all amendments of or supplements to the foregoing.
Section 3. MANAGEMENT. Subject to the supervision of the Trust's Board
of Trustees, the Investment Adviser will provide a continuous investment program
for each of the Funds, including investment research and management with respect
to all securities and investments and cash equivalents in the Funds. The
Investment Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Trust with respect to the
Funds and will implement such determinations through the placement, in the name
of the Funds, of orders for the execution of portfolio transactions with or
through such brokers or dealers as it may select. The Investment Adviser will
provide the services under this Agreement in accordance with each of the Fund's
investment objectives, policies, and restrictions as stated in the Prospectus,
as the same may be amended, supplemented or restated from time to time, and
resolutions of the Trust's Board of Trustees.
In fulfilling its responsibilities hereunder, the Investment Adviser
further agrees that it will:
- 2 -
<PAGE> 4
(a) use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Investment Adviser;
(c) not make loans to any person to purchase or carry shares
of beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to its investment determinations for
the Funds either directly with the issuer or with any broker or dealer.
In placing orders with brokers and dealers, the Investment Adviser will
attempt to obtain prompt execution of orders in an effective manner at
the most favorable price. In assessing the best execution available for
any transaction, the Investment Adviser shall consider all factors it
deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution
capability of the broker-dealer and the reasonableness of the
commission, if any (for the specific transaction and on a continuing
basis). Consistent with this obligation, the Investment Adviser may, in
its discretion and to the extent permitted by law, purchase and sell
portfolio securities to and from brokers and dealers who provide
brokerage and research services (within the meaning of Section 28(e) of
the Securities Exchange Act of 1934) to or for the benefit of the Funds
and/or other accounts over which the Investment Adviser exercises
investment discretion. Subject to the review of the Trust's Board of
Trustees from time to time with respect to the extent and continuation
of the policy, the Investment Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for effecting a securities transaction for any of the Funds which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Investment
Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Investment Adviser
with respect to the accounts as to which it exercises investment
discretion. In placing orders with brokers and dealers, consistent with
applicable laws, rules and regulations, the Investment Adviser may
consider the sale
- 3 -
<PAGE> 5
of shares of the Trust. Except as otherwise permitted by applicable
laws, rules and regulations, in no instance will portfolio securities
be purchased from or sold to BISYS Fund Services Limited Partnership,
the Investment Adviser or any affiliated person of the Trust, BISYS
Fund Services Limited Partnership or the Investment Adviser;
(e) will maintain all books and records with respect to the
securities transactions of the Funds and will furnish the Trust's Board
of Trustees such periodic and special reports as the Board may request;
(f) will treat confidentially and as proprietary information
of the Trust all records and other information relative to the Trust
and the Funds and prior, present, or potential shareholders, and will
not use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld
where the Investment Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested
by the Trust; and
(g) will maintain its policy and practice of conducting its
fiduciary functions independently. In making investment recommendations
for the Funds, the Investment Adviser's personnel will not inquire or
take into consideration whether the issuers of securities proposed for
purchase or sale for the Trust's account are customers of the
Investment Adviser or of its parents, subsidiaries or affiliates. In
dealing with such customers, the Investment Adviser and its parents,
subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the
Trust.
Section 4. SERVICES NOT EXCLUSIVE. The investment management services
furnished by the Investment Adviser hereunder are not to be deemed exclusive,
and the Investment Adviser shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
Section 5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Funds are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Investment Adviser further agrees to preserve for the
periods
- 4 -
<PAGE> 6
prescribed by Rule 31a-2 under the 1940 Act, the records required to be
maintained by Rule 31a-1 under the 1940 Act.
Section 6. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Funds.
Section 7. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement, each of the Funds will pay the Investment
Adviser and the Investment Adviser will accept as full compensation therefor a
fee as set forth on Schedule A hereto. The obligations of the Funds to pay the
above-described fee to the Investment Adviser will begin as of the respective
dates of the initial public sale of shares in the Funds; provided, however, that
the Investment Adviser shall waive all such fees until such time as it notifies
the Trust that it has terminated such waiver. Thereafter, the Investment Adviser
may from time to time waive some or all of such fees until such time as it
notifies the Trust that it has terminated such waiver. Upon any termination of
this Agreement before the end of any month, the fee for such part of a month
shall be prorated according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of termination of this
Agreement.
For the purpose of determining fees payable to the Investment Adviser,
the value of the net assets of a particular Fund shall be computed in the manner
described in the Trust's Declaration of Trust or in the Prospectus or Statement
of Additional Information respecting that Fund as from time to time is in effect
for the computation of the value of such net assets in connection with the
determination of the liquidating value of the shares of such Fund.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, the Investment
Adviser will reimburse the Fund for a portion of such excess expenses equal to
such excess times the ratio of the fees otherwise payable by the Fund to the
Investment Adviser hereunder to the aggregate fees otherwise payable by the Fund
to the Investment Adviser hereunder and to BISYS Fund Services Limited
Partnership under the Administration Agreement between BISYS Fund Services
Limited Partnership and the Trust and to BISYS Fund Services, Inc. under the
Fund Accounting Agreement between BISYS Fund Services, Inc. and the Trust. The
obligation of the Investment Adviser to reimburse the Funds hereunder is limited
in any fiscal year to the amount of its fee hereunder for such fiscal year,
provided, however, that notwithstanding the foregoing, the Investment Adviser
shall
- 5 -
<PAGE> 7
reimburse the Funds for such proportion of such excess expenses regardless of
the amount of fees paid to it during such fiscal year to the extent that the
securities regulations of any state having jurisdiction over the Trust so
require. Such expense reimbursement, if any, will be estimated daily and
reconciled and paid on a monthly basis.
Section 8. LIMITATION OF LIABILITY. Notwithstanding anything herein to
the contrary, the Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Funds in connection
with the performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
Section 9. DURATION AND TERMINATION. This Agreement will become
effective as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date a registration statement relating to that
Fund becomes effective with the Securities and Exchange Commission and Schedule
A hereto is amended to add such Fund), provided that it shall have been approved
by vote of a majority of the outstanding voting securities of such Fund, in
accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until July 9, 1998.
Thereafter, if not terminated, this Agreement shall continue in effect
as to a particular Fund for successive periods of twelve months each ending on
July 9 of each year, provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Trust's Board of
Trustees who are not parties to this Agreement or interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the vote of a majority of the Trust's Board
of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of such Fund. Notwithstanding the foregoing, this Agreement
may be terminated as to a particular Fund at any time on sixty days' written
notice, without the payment of any penalty, by the Trust (by vote of the Trust's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Fund) or by the Investment Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meanings as ascribed to such terms in the 1940
Act.)
- 6 -
<PAGE> 8
Section 10. INVESTMENT ADVISER'S REPRESENTATIONS. The Investment
Adviser hereby represents that it is willing and possesses all requisite legal
authority to provide the services contemplated by this Agreement without
violation of applicable laws and regulations, including but not limited to the
Glass-Steagall Act and the regulations promulgated thereunder.
Section 11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
Section 12. NAME. The Trust hereby acknowledges that the name
"KeyPremier" is a property right of the Investment Adviser. The Investment
Adviser agrees that the Trust and the Funds may, so long as this Agreement
remains in effect, use "KeyPremier" as part of its name. The Investment Adviser
may permit other persons, firms or corporations, including other investment
companies, to use such name and may, upon termination of this Agreement, require
the Trust and the Funds to refrain from using the name "KeyPremier" in any form
or combination in its name or in its business or in the name of any of its
Funds, and the Trust shall, as soon as practicable following its receipt of any
such request from the Investment Adviser, so refrain from using such name.
Section 13. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the State of Ohio.
The Sessions Group is a business trust organized under
Chapter 1746, Ohio Revised Code and under a Declaration of Trust, to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of Ohio as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of "The Sessions Group"
entered into in the name or on behalf thereof by any of the Trustees, officers,
employees or agents are made not individually, but in such capacities, and are
not binding upon any of the Trustees, officers, employees, agents or
shareholders of the Trust personally, but bind only the assets of the Trust, as
set forth in Section 1746.13(A), Ohio Revised Code, and all persons dealing with
any of the Funds of the Trust must look solely to the assets of the Trust
belonging to such Fund for the enforcement of any claims against the Trust.
- 7 -
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE SESSIONS GROUP
By /S/ Walter B. Grimm
-----------------
Name Walter B. Grimm
----------------
Title President
----------------
MARTINDALE ANDRES & COMPANY,
INC.
By /S/ Robert P. Andres
-----------------
Name Robert P. Andres
-----------------
Title Chief Operating Officer
-----------------------
- 8 -
<PAGE> 10
Dated: June 30, 1997
Schedule A
to the
Investment Advisory Agreement
between The Sessions Group and
Martindale Andres & Company, Inc.
dated as of July 9, 1996
<TABLE>
<CAPTION>
NAME OF FUND COMPENSATION* DATE
- ------------ ------------- ----
<S> <C> <C>
The KeyPremier Annual Rate of forty one- July 9, 1996
Prime Money Market hundredth of one percent
Fund (0.40%) of such Fund's
average net assets
The KeyPremier Annual rate of sixty one- July 9, 1996
Pennsylvania hundredth of one percent
Municipal Bond (.60%) of such Fund's
Fund average daily net assets
The KeyPremier Annual rate of seventy-five October 30, 1996
Established Growth one-hundredth of one
Fund percent (.75%) of such
Fund's average daily net
assets
The KeyPremier Annual rate of sixty one- October 30, 1996
Intermediate Term hundredth of one percent
Income Fund (.60%) of such Fund's
average daily net assets
The KeyPremier Annual rate of one percent January 29, 1997
Aggressive Growth (1.00%) of such Fund's
Fund average daily net assets
The KeyPremier Annual rate of forty one- June 30, 1997
U.S. Treasury hundredth of one percent
Obligations Money (.40%) of such Fund's
Market Fund average daily net assets
The KeyPremier Annual rate of sixty one- June 30, 1997
Limited Duration hundredth of one percent
Government (.60%) of such Fund's
Securities Fund average daily net assets
</TABLE>
MARTINDALE ANDRES & COMPANY, INC. THE SESSIONS GROUP
By /S/ ROBERT P. ANDRES By /S/ WALTER B. GRIMM
---------------------------- ------------------------
Name ROBERT P. ANDRES Name WALTER B. GRIMM
------------------------- -----------------------
Title CHIEF OPERATING OFFICER Title PRESIDENT
------------------------ -----------------------
- -------------
*All Fees are computed daily and paid monthly.
A-1
<PAGE> 1
EXHIBIT (6)(c)
<PAGE> 2
DISTRIBUTION AGREEMENT
This Agreement is made this 9th day of July, 1996, between The Sessions
Group, an Ohio business trust (the "Trust"), 3435 Stelzer Road, Columbus, Ohio
43219, and BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services, an
Ohio limited partnership ("Distributor"), 3435 Stelzer Road, Columbus, Ohio
43219.
WHEREAS, the Trust is an open-end management investment company,
organized as an Ohio business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios of
the Trust identified on Schedule A hereto as such Schedule may be amended from
time to time (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS DISTRIBUTOR.
1.1 Distributor will act as agent for the distribution of the Shares
covered by the registration statement and prospectus of the Trust then in effect
under the Securities Act of 1933, as amended ("1933 Act"). As used in this
Agreement, the term "registration statement" shall mean Parts A (the
prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of prospectus and Statement of Additional Information used
by the Funds for delivery to shareholders and prospective shareholders after the
effective dates of the above referenced registration statements, together with
any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit orders for
the sale of the Shares and will undertake such advertising and promotion as it
believes reasonable in connection with such solicitation. The Trust understands
that Distributor is now and, in the future, may be the distributor of the shares
of several investment companies or series (together, "Companies") including
Companies having investment objectives similar to those of the Trust. The Trust
further understands that investors and potential investors in the Trust may
invest in shares of such other Companies. The Trust agrees that Distributor's
duties to such Companies shall not be deemed in conflict with its duties to the
Trust under this paragraph 1.2.
<PAGE> 3
Distributor shall, at its own expense, finance appropriate activities
which it deems reasonable which are primarily intended to result in the sale of
the Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current Shareholders, and the printing and mailing of
sales literature.
1.3 In its capacity as distributor of the Shares, all activities of
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all rules and regulations promulgated by the Commission thereunder and all
rules and regulations adopted by any securities association registered under the
Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5 Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent and
custodian for the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Trust warrants that the
statements contained in any such information shall fairly show or represent what
they purport to show or represent. The Trust shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Funds' books and
accounts prepared by the Trust, (b) a monthly itemized list of the securities in
the Funds, (c) monthly
- 2 -
<PAGE> 4
balance sheets as soon as practicable after the end of each month, and (d) from
time to time such additional information regarding the financial condition of
the Funds as Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Trust with the
Commission under the 1933 Act have been carefully prepared in conformity with
the requirements of said Act and rules and regulations of the Commission
thereunder and all statements of fact contained in any such registration
statement and prospectus will be true and correct when such registration
statement becomes effective. Furthermore, neither any registration statement nor
any prospectus when such registration statement becomes effective includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
to a purchaser of the Shares. The Trust may, but shall not be obligated to,
propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus as, in the light
of future developments, may, in the opinion of the Trust's counsel, be necessary
or advisable. If the Trust shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Trust of a
written request from Distributor to do so, Distributor may, at its option,
terminate this Agreement. The Trust shall not file any amendment to any
registration statement or supplement to any prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Trust's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.11 The Trust authorizes Distributor and dealers to use any prospectus
in the form furnished from time to time in connection with the sale of the
Shares. The Trust agrees to indemnify, defend and hold Distributor, its several
partners and employees, and any person who controls Distributor within the
meaning of Section 15 of the 1933 Act free and harmless from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor, its partners and
employees, or any such controlling person, may incur under the 1933 Act or under
common law or otherwise, arising out of or based upon any untrue statement, or
alleged untrue statement, of a material fact contained in any registration
statement or any prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact
- 3 -
<PAGE> 5
required to be stated in either any registration statement or any prospectus or
necessary to make the statements in either thereof not misleading; provided,
however, that the Trust's agreement to indemnify Distributor, its partners or
employees, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any statements or
representations as are contained in any prospectus and in such financial and
other statements as are furnished in writing to the Trust by Distributor and
used in the answers to the registration statement or in the corresponding
statements made in the prospectus, or arising out of or based upon any omission
or alleged omission to state a material fact in connection with the giving of
such information required to be stated in such answers or necessary to make the
answers not misleading; and further provided that the Trust's agreement to
indemnify Distributor and the Trust's representations and warranties
hereinbefore set forth in paragraph 1.10 shall not be deemed to cover any
liability to the Trust or its Shareholders to which Distributor would otherwise
be subject by reason of willful misfeasance, bad faith or negligence in the
performance of its duties, or by reason of Distributor's reckless disregard of
its obligations and duties under this Agreement. The Trust's agreement to
indemnify Distributor, its partners and employees, and any such controlling
person, as aforesaid, is expressly conditioned upon the Trust's being notified
of any action brought against Distributor, its partners or employees, or any
such controlling person, such notification to be given by letter or by telegram
addressed to the Trust at its principal office in Columbus, Ohio and sent to the
Trust by the person against whom such action is brought, within 10 days after
the summons or other first legal process shall have been served. The failure to
so notify the Trust of any such action shall not relieve the Trust from any
liability which the Trust may have to the person against whom such action is
brought by reason of any such untrue, or allegedly untrue, statement or
omission, or alleged omission, otherwise than on account of the Trust's
indemnity agreement contained in this paragraph 1.11. The Trust will be entitled
to assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of good
standing chosen by the Trust and approved by Distributor, which approval shall
not be unreasonably withheld. In the event the Trust elects to assume the
defense of any such suit and retain counsel of good standing approved by
Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse Distributor, its partners and employees, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor or them.
- 4 -
<PAGE> 6
The Trust's indemnification agreement contained in this paragraph 1.11 and the
Trust's representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of Distributor, its partners and employees, or any controlling person,
and shall survive the delivery of any Shares.
This agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several partners and employees, and their
respective estates, and to the benefit of the controlling persons and their
successors. The Trust agrees promptly to notify Distributor of the commencement
of any litigation or proceedings against the Trust or any of its officers or
Trustees in connection with the issue and sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the Trust, its
several officers and Trustees and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act free and harmless from and against any and
all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Trust, its officers or Trustees
or any such controlling person, may incur under the 1933 Act or under common law
or otherwise, but only to the extent that such liability or expense incurred by
the Trust, its officers or Trustees or such controlling person resulting from
such claims or demands, shall arise out of or be based upon any untrue, or
alleged untrue, statement of a material fact contained in information furnished
in writing by Distributor to the Trust and used in the answers to any of the
items of the registration statement or in the corresponding statements made in
the prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Distributor to the Trust required to be stated in such answers or
necessary to make such information not misleading. Distributor's agreement to
indemnify the Trust, its officers and Trustees, and any such controlling person,
as aforesaid, is expressly conditioned upon Distributor's being notified of any
action brought against the Trust, its officers or Trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in Columbus, Ohio, and sent to
Distributor by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served.
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Trust, if such action is
based solely upon such alleged misstatement or omission on Distributor's part,
and in any other event the Trust, its officers or Trustees or such controlling
person shall each have the right to participate in the defense or preparation of
the defense
- 5 -
<PAGE> 7
of any such action. The failure to so notify Distributor of any such action
shall not relieve Distributor from any liability which Distributor may have to
the Trust, its officers or Trustees, or to such controlling person by reason of
any such untrue or alleged untrue statement, or omission or alleged omission,
otherwise than on account of Distributor's indemnity agreement contained in this
paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 10(a) of
said Act is not on file with the Commission; provided, however, that nothing
contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any Shareholder in accordance with the provisions of the Trust's prospectus,
Declaration of Trust, or By-Laws.
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to the
registration statement or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or
prospectus then in effect or the initiation by service of process on
the Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement or
prospectus then in effect or which requires the making of a change in
such registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement or prospectus which may from
time to time be filed with the Commission.
- 6 -
<PAGE> 8
For purposes of this section, informal requests by or acts of the Staff
of the Commission shall not be deemed actions of or requests by the Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where
Distributor may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the State of Ohio.
2. SALE AND PAYMENT.
Under this Agreement, the following provisions shall apply with respect
to the sale of and payment of Shares of a Fund sold at an offering price which
includes a sales load (collectively, the "Load Shares;" individually, a "Load
Share") as described in the prospectuses of any Funds identified on Schedule B
hereto (collectively, the "Load Funds"; individually, a "Load Fund"):
(a) Distributor shall have the right, as principal, to
purchase Load Shares at their net asset value and to sell such Load
Shares to the public against orders therefor at the applicable public
offering price, as defined in Section 4 hereof. Distributor shall also
have the right, as principal, to sell Load Shares to dealers against
orders therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the amount
of the sales charge or underwriting discount, if any, referred to in
Section 3 below.
(b) Prior to the time of delivery of any Load Shares by a Load
Fund to, or on the order of, Distributor, Distributor shall pay or
cause to be paid to the Load Fund or to its order an amount in Boston
or New York clearing house funds equal to the applicable net asset
value of such Shares. Distributor may retain so much of any sales
charge or underwriting discount as is not allowed by Distributor as a
concession to dealers.
- 7 -
<PAGE> 9
3. PUBLIC OFFERING PRICE.
The public offering price of a Load Share shall be the net asset value
of such Load Shares, plus any applicable sales charge, all as set forth in the
current prospectus of the Load Fund. The net asset value of Shares shall be
determined in accordance with the provisions of the Declaration of Trust and
By-Laws of the Trust and the then current prospectus of the Load Fund.
4. ISSUANCE OF SHARES.
The Trust reserves the right to issue, transfer or sell Load Shares at
net asset value (a) in connection with the merger or consolidation of the Trust
or the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a pro
rata distribution directly to the holders of Shares in the nature of a stock
dividend or split; (c) upon the exercise of subscription rights granted to the
holders of Shares on a pro rata basis; (d) in connection with the issuance of
Load Shares pursuant to any exchange and reinvestment privileges described in
any then current prospectus of the Load Fund; and (e) otherwise in accordance
with any then current prospectus of the Load Fund.
5. TERM, DURATION AND MATTERS RELATING TO THE TRUST AS AN OHIO
BUSINESS TRUST.
This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date first set forth above (or, if a particular
Fund is not in existence on such date, on the date an amendment to Schedule A to
this Agreement relating to that Fund is executed), and, unless sooner terminated
as provided herein, shall continue in effect until July 9, 1998. Thereafter, if
not terminated as provided herein, this Agreement shall continue with respect to
a particular Fund in effect automatically for successive one-year periods ending
on July 9 of each year with respect to each of the Funds, provided such
continuance is specifically approved at least annually by (a) the Trust's Board
of Trustees or (b) by "vote of a majority of the outstanding voting securities"
(as defined below) of the Trust, provided, however, that in either event the
continuance is also approved by a majority of the Trust's Trustees who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, on not
less than sixty days' prior written notice, by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities (as defined in the
- 8 -
<PAGE> 10
1940 Act) of the Trust or by Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
The Sessions Group is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "The Sessions Group" entered into in the
name or on behalf thereof by any of the Trustees, officers, employees or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, officers, employees, agents or shareholders of the Trust
personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Funds of
the Trust must look solely to the assets of the Trust belonging to such Fund for
the enforcement of any claims against the Trust.
BISYS FUND SERVICES THE SESSIONS GROUP
LIMITED PARTNERSHIP
By BISYS Fund Services, Inc., By /S/ WALTER B. GRIMM
General Partner ---------------------
Name WALTER B. GRIMM
--------------------
By /S/ J. DAVID HUBER Title PRESIDENT
--------------------------- -------------------
Name J. DAVID HUBER
--------------------------
Title PRESIDENT
-------------------------
- 9 -
<PAGE> 11
Dated: June 30, 1997
Schedule A
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July 9, 1996
<TABLE>
<CAPTION>
NAME OF FUND DATE
- ------------ ----
<S> <C>
The KeyPremier Prime Money
Market Fund July 9, 1996
The KeyPremier Pennsylvania
Municipal Bond Fund July 9, 1996
The KeyPremier Established
Growth Fund October 30, 1996
The KeyPremier Intermediate
Term Income Fund October 30, 1996
The KeyPremier Aggressive
Growth Fund January 29, 1997
The KeyPremier U.S. Treasury
Obligations Money Market Fund June 30, 1997
The KeyPremier Limited Duration
Government Securities Fund June 30, 1997
</TABLE>
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By /S/ J. DAVID HUBER By /S/ WALTER B. GRIMM
------------------------- ---------------------------
Name J. DAVID HUBER Name WALTER B. GRIMM
------------------------ --------------------------
Title PRESIDENT Title PRESIDENT
------------------------ --------------------------
A-1
<PAGE> 12
Dated: June 30, 1997
Schedule B
to the
Distribution Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
July 9, 1996
<TABLE>
<CAPTION>
NAME OF LOAD FUND DATE
- ----------------- ----
<S> <C>
The KeyPremier Pennsylvania
Municipal Bond Fund July 9, 1996
The KeyPremier Established
Growth Fund October 30, 1996
The KeyPremier Intermediate
Term Income Fund October 30, 1996
The KeyPremier Aggressive
Growth Fund January 29, 1997
The KeyPremier Limited Duration
Government Securities Fund June 30, 1997
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner
By /S/ J. DAVID HUBER By /S/ WALTER B. GRIMM
------------------------- ---------------------------
Name J. DAVID HUBER Name WALTER B. GRIMM
------------------------ --------------------------
Title PRESIDENT Title PRESIDENT
------------------------ --------------------------
</TABLE>
B-1
<PAGE> 1
EXHIBIT (8)(b)
<PAGE> 2
CUSTODY AGREEMENT
Agreement made as of this 9th day of July, 1996, between The Sessions
Group, an Ohio business trust organized and existing under the laws of the State
of Ohio, having its principal office and place of business at 3435 Stelzer Road,
Columbus, Ohio 43219 (hereinafter called the "Fund"), and THE BANK OF NEW YORK,
a New York corporation authorized to do a banking business, having its principal
office and place of business at 48 Wall Street, New York, New York 10286
(hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Book-Entry System" shall mean the Federal Reserve/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 commitment to buy
or sell fixed income securities including, without limitation, U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
9. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
10. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
11. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
-2-
<PAGE> 4
12. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority, commercial
paper, certificates of deposit and bankers' acceptances, repurchase agreements
with respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale.
13. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
14. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Treasurer, any Assistant Secretary, any Assistant
Treasurer, and any other person or persons, whether or not any such other person
is an officer of the Fund, duly authorized by the Board of Trustees of the Fund
to execute any Certificate, instruction, notice or other instrument on behalf of
the Fund and listed in the Certificate annexed hereto as Appendix A or such
other Certificate as may be received by the Custodian from time to time.
15. "Option" shall mean a Call Option, Covered Call Option, Stock Index
Option and/or a Put Option.
16. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Officer or from a person reasonably believed
by the Custodian to be an Officer.
17. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
18. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
19. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to
-3-
<PAGE> 5
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 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 a Series during the period of
this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all moneys owned by a Series, at any time during the period
of this Agreement, and shall specify with respect to such Securities and money
the Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart. The
Custodian will not be responsible for any Securities and moneys not actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and moneys are
not finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the Custodian on a
continuous and ongoing basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities collateral. Prior
to a deposit of Securities specifically allocated to a Series in the Depository,
the Fund shall deliver to the Custodian a certified resolution of the Board of
Trustees of the Fund, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities specifically allocated to
such Series eligible for deposit therein, and to utilize the Depository to the
extent possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys deposited
in either the Book-Entry System or the Depository
-5-
<PAGE> 7
will be represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custodian
acts in a fiduciary or representative capacity and will be specifically
allocated on the Custodian's books to the separate account for the applicable
Series. Prior to the Custodian's accepting, utilizing and acting with respect to
Clearing Member confirmations for Options and transactions in Options for a
Series as provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees, substantially in the form
of Exhibit C hereto, approving, authorizing and instructing the Custodian on a
continuous and ongoing basis, until instructed to the contrary by a Certificate
actually received by the Custodian, to accept, utilize and act in accordance
with such confirmations as provided in this Agreement with respect to such
Series.
2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all moneys received by it for the account of the Fund with respect to such
Series. Money credited to a separate account for a Series shall be disbursed by
the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the Series account from
which payment is to be made and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series basis,
of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance with
this Agreement during said day. Where Securities are transferred to the account
of the Fund for a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Fund with a detailed statement, on a per Series basis, of the Securities and
moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except
-6-
<PAGE> 8
such Securities as are held in the Book-Entry System, shall be held by the
Custodian in that form; all other Securities held hereunder may be registered in
the name of the Fund, in the name of any duly appointed registered nominee of
the Custodian as the Custodian may from time to time determine, or in the name
of the Book-Entry System or the Depository or their successor or successors, or
their nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee or in
the name of the Book-Entry System or the Depository any Securities which it may
hold hereunder and which may from time to time be registered in the name of the
Fund. The Custodian shall hold all such Securities specifically allocated to a
Series which are not held in the Book-Entry System or in the Depository in a
separate account in the name of such Series physically segregated at all times
from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
held hereunder and therein deposited, shall promptly and diligently with respect
to all Securities held for the Fund hereunder in accordance with preceding
paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon
such Securities which are called, but only if either (i) the Custodian receives
a written notice of such call, or (ii) notice of such call appears in one or
more of the publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian without the prior notification or consent
of the Fund;
(c) Present for payment and collect the amount payable upon
all Securities which mature;
(d) Surrender Securities in temporary form for 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
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specifying: (a) the Series for which such short sale was made; (b) 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
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a Money Market Security, a Certificate or Oral Instructions specifying: (a) the
Series for which the Reverse Repurchase 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,
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and (f) the name of the broker, dealer, or financial institution to which the
loan was made. The Custodian shall deliver the 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.
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<PAGE> 24
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.
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.
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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 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
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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:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the moneys held in
the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate or Oral Instructions, or
which results in an overdraft in the separate account of such Series for some
other reason, or if the Fund is indebted to The Bank of New York under the
Fund's Cash Management and Related Services Agreement (except a borrowing for
investment or for temporary or emergency purposes using Securities as collateral
pursuant to a separate agreement and subject to the provisions of paragraph 2 of
this Article), such overdraft or indebtedness shall be deemed to be a loan made
by the Custodian to the Fund for such Series payable on
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demand and shall bear interest from the date incurred at a rate per annum (based
on a 360-day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such rate
to be adjusted on the effective date of any change in such prime commercial
lending rate but in no event to be less than 6% per annum. In addition, the Fund
hereby agrees that the Custodian shall have a continuing and enforceable lien
and security interest in and to any property specifically allocated to such
Series at any time held by it for the benefit of such Series or in which the
Series may have an interest which is then in the Custodian's possession or
control or in possession or control of any third party acting in the Custodian's
behalf, having at the time such overdraft or indebtedness is incurred a fair
market value equal to 150% of such overdraft or indebtedness. The Fund
authorizes the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any balance
of account standing to such Series' credit on the Custodian's books. In
addition, the Fund hereby covenants that on each Business Day on which either it
intends to enter a Reverse Repurchase Agreement and/or otherwise borrow from a
third party, or which next succeeds a Business Day on which at the close of
business the Fund had outstanding a Reverse Repurchase Agreement or such a
borrowing, it shall prior to 9 a.m., New York City time, advise the Custodian,
in writing, of each such borrowing, shall specify the Series to which the same
relates, and shall not incur any indebtedness not so specified other than from
the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
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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 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
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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.
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
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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 persons or Officers, or by
only a single Officer, nor for any alteration, omission, or failure to promptly
forward by the Intermediary.
9. The Custodian shall have no liability for any losses, damages,
injuries, claims, costs or expenses arising out of or in connection with any
hardware or software failure or malfunction of the Terminal Link, unless first,
such failure or malfunction is the direct result of the negligence of the
Custodian, and, second the Fund has both (a) complied with the provisions of
Section 11 of this Article, and (b) mitigated its damages by using either
Certificates delivered otherwise than through the Terminal Link or, where
appropriate, Oral Instructions. If the Custodian is liable for any such failure
or malfunction incident, its liability shall be limited to direct money damages
not exceeding $25,000.
10. Without limiting the generality of the foregoing, in no event shall
the Custodian or any manufacturer or supplier of its computer equipment,
software or services relating to the Terminal Link be responsible for any
special, indirect, incidental or consequential damages which the Fund or the
Intermediary may incur or experience by reason of its use of the Terminal Link
even if the Custodian or any manufacturer or supplier has been advised of the
possibility of such damages, nor with respect to the use of the Terminal Link
shall the Custodian or any such manufacturer or supplier be liable for acts of
God, or with respect to the following to the extent beyond such person's
reasonable control: machine or computer breakdown or malfunction, interruption
or malfunction of communication facilities, labor difficulties or any other
similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as promptly
as practicable, and in any event within 24 hours after the earliest of (i)
discovery thereof, (ii) the Business Day on which discovery should have occurred
through the exercise of reasonable care and (iii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error, it
being agreed that discovery and receipt of notice may only occur on a business
day. The Custodian shall promptly advise
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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 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
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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.
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.
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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.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
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(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.
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
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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 a Series, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the Custodian, the Fund and
the appointed institution.
8. The Custodian shall not be under any duty or obligation
(a) to ascertain whether any Securities at any time delivered to,
or held by it or by any Foreign Sub-Custodian, for the account of
the Fund and specifically allocated to a Series are such as
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properly may be held by the Fund or such Series under the provisions of its then
current prospectus, or (b) to ascertain whether any transactions by the Fund,
whether or not involving the Custodian, are such transactions as may properly be
engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between 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.
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
-35-
<PAGE> 37
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 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
-36-
<PAGE> 38
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
Series and held by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Series be deemed to be its own custodian and the Custodian shall thereby
be relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.
-37-
<PAGE> 39
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.
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.
-38-
<PAGE> 40
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: /S/ WALTER B. GRIMM
---------------------
[SEAL]
Attest:
/S/ NANCY E. CONVERSE
---------------------
THE BANK OF NEW YORK
By: /S/ STEPHEN E. GRUNSTON
-----------------------
Name: Stephen E. Grunston
Title: Vice President
[SEAL]
Attest:
/S/ IRA ROSNER
--------------
-39-
<PAGE> 41
APPENDIX A
I, Walter B. Grimm, President and I, Nancy E. Converse, Secretary, of
The Sessions Group, an Ohio business trust (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the
Fund and each has been duly elected or appointed by the Board of Trustees of the
Fund to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws, and the signatures set forth opposite their
respective names are their true and correct signatures:
<TABLE>
<CAPTION>
Name Position Signature
<S> <C> <C>
Walter B. Grimm ................ President /s/ Walter B. Grimm
Nancy E. Converse .............. Secretary /s/ Nancy E. Converse
</TABLE>
-40-
<PAGE> 42
June 30, 1997
APPENDIX B
To Custody Agreement dated October 9, 1996
Between The Sessions Group and
The Bank of New York
SERIES
<TABLE>
<CAPTION>
NAME OF FUND DATE
<S> <C>
The KeyPremier Prime Money Market Fund July 9, 1996
and The KeyPremier Pennsylvania Municipal
Bond Fund
The KeyPremier Established Growth Fund October 30, 1996
and The KeyPremier Intermediate Term
Income Fund
The KeyPremier Aggressive Growth Fund January 29, 1997
The KeyPremier U.S. Treasury Obligations June 30, 1997
Money Market Fund and The KeyPremier
Limited Duration Government Securities
Fund
</TABLE>
THE SESSIONS GROUP
By /S/ WALTER B. GRIMM
----------------------
Walter B. Grimm, President
THE BANK OF NEW YORK
By /S/ STEPHEN E. GRUNSTON
--------------------------
Stephen E. Grunston
Vice President
-41-
<PAGE> 43
APPENDIX C
I, Ira Rosner, a Vice President with THE BANK OF NEW YORK do
hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
-42-
<PAGE> 44
EXHIBIT A
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Session Group, an Ohio business
trust (the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996, (the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis to deposit in the Book-Entry System,
as defined in the Custody Agreement, all securities eligible for
deposit therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System to the
extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ WALTER B. GRIMM
-------------------
[SEAL]
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<PAGE> 45
EXHIBIT B
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Sessions Group, an Ohio business
trust (the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996 (the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement, to the contrary to
deposit in the Depository, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of the Series to
which the same are specifically allocated, and to utilize the
Depository to the extent possible in connection with its performance
thereunder, including, without limitation, in connection with
settlements of purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ WALTER B. GRIMM
-------------------
[SEAL]
-44-
<PAGE> 46
EXHIBIT B-1
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Sessions Group, an Ohio business
trust (the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996 (the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement, to the contrary to
deposit in the Participants Trust Company as Depository, as defined in
the Custody Agreement, all securities eligible for deposit therein,
regardless of the Series to which the same are specifically allocated,
and to utilize the Participants Trust Company to the extent possible in
connection with its performance thereunder, including, without
limitation, in connection with settlements of purchases and sales of
securities, loans of securities, and deliveries and returns of
securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ WALTER B. GRIMM
-------------------
[SEAL]
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<PAGE> 47
EXHIBIT C
CERTIFICATION
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting of The Sessions Group, an Ohio business trust (the
"Fund"), and further certifies that the following resolution was adopted by the
Board of Trustees of the Fund at a meeting duly held on May 16, 1996, at which a
quorum was at all times present and that such resolution has not been modified
or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund dated as
of July 9, 1996, (the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement, to the contrary, to
accept, utilize and act with respect to Clearing Member confirmations
for Options and transaction in options, regardless of the Series to
which the same are specifically allocated, as such terms are defined in
the Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ WALTER B. GRIMM
-------------------
[SEAL]
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<PAGE> 48
EXHIBIT D
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Sessions Group, an Ohio business
trust (the "Fund"), further certifies that the following resolutions were
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolutions have
not been modified or rescinded and are in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
the Custody Agreement between The Bank of New York and the Fund dated
as of July 9, 1996 (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to act in accordance with,
and to rely on Certificates (as defined in the Custody Agreement) given
by the Fund to the Custodian by a Terminal Link (as defined in the
Custody Agreement).
RESOLVED, that the Fund shall establish access codes and grant
use of such access codes only to Officers of the Fund as defined in the
Custody Agreement, shall establish internal safekeeping procedures to
safeguard and protect the confidentiality and availability of such
access codes, shall limit its use of the Terminal Link to those
purposes permitted by the Custody Agreement, shall require at least two
such officers to utilize their respective access codes in connection
with each such Certificate, shall review the safekeeping procedures of
the Intermediary to assure that all transmissions inputted by the Fund,
and only such transmissions, are forwarded by the omission by the
Intermediary, and shall use the Terminal Link only in a manner that
does not contravene the Investment Company Act of 1940, as amended, or
the rules and regulations thereunder.
RESOLVED, that Officers of the Fund shall, following the
establishment of such access codes and such internal safekeeping
procedures, advise the Custodian that the same have been established by
delivering a Certificate, as defined in the Custody Agreement, and the
Custodian shall be entitled to rely upon such advice.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of The
Sessions Group, as of the 9th day of July, 1996.
/s/ WALTER B. GRIMM
-------------------
[SEAL]
-47-
<PAGE> 49
EXHIBIT E
The undersigned, Walter B. Grimm, hereby certifies that he or she is
the duly elected and acting President of The Sessions Group, an Ohio business
trust (the "Fund"), further certifies that the following resolutions were
adopted by the Board of Trustees of the Fund at a meeting duly held on May 16,
1996, at which a quorum was at all times present and that such resolutions have
not been modified or rescinded and are in full force and effect as of the date
hereof.
RESOLVED, that the maintenance of the Fund's assets in each
country listed in Schedule I hereto be, and hereby is, approved by the
Board of Trustees as consistent with the best interests of the Fund and
its shareholders; and further
RESOLVED, that the maintenance of the Fund's assets with the
foreign branches of The Bank of New York (the "Bank") listed in
Schedule I located in the countries specified therein, and with the
foreign sub-custodians and depositories listed in Schedule I located in
the countries specified therein be, and hereby is, approved by the
Board of Trustees as consistent with the best interest of the Fund and
its shareholders; and further
RESOLVED, that the Sub-Custodian Agreements presented to this
meeting between the Bank and each of the foreign sub-custodians and
depositories listed in Schedule I providing for the maintenance of the
Fund's assets with the applicable entity, be and hereby are, approved
by the Board of Trustees as consistent with the best interests of the
Fund and its shareholders; and further
RESOLVED, that the appropriate officers of the Fund are hereby
authorized to place assets of the Fund with the aforementioned foreign
branches and foreign sub-custodians and depositories as hereinabove
provided; and further
RESOLVED, that the appropriate officers of the Fund, or any of
them, are authorized to do any and all other acts, in the name of the
Fund and on its behalf, as they, or any of them, may determine to be
necessary or desirable and proper in connection with or in furtherance
of the foregoing resolutions.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of The Sessions
Group, as of the 9th day of July, 1996.
/s/ WALTER B. GRIMM
-------------------
[SEAL]
-48-
<PAGE> 50
Dated: June 30, 1997
EXHIBIT F
TO THE CUSTODY AGREEMENT BETWEEN
THE SESSIONS GROUP AND THE BANK OF NEW YORK
JULY 9, 1996, AS AMENDED JUNE 30, 1997
AUTHORIZED PERSONS for the
following portfolios:
The KeyPremier Prime Money Market Fund
The KeyPremier Pennsylvania Municipal Bond Fund
The KeyPremier Established Growth Fund
The KeyPremier Intermediate Term Income Fund
The KeyPremier Aggressive Growth Fund
The KeyPremier U.S. Treasury Obligations Money Market Fund
The KeyPremier Limited Duration Government Securities Fund
Cash Movement of Shareholder Activity
(excluding Fund shareholder checks)
OFFICERS OF THE GROUP
<TABLE>
<CAPTION>
<S> <C>
Walter B. Grimm President
J. David Huber Vice President
William J. Tomko Vice President
George L. Stevens Secretary
Alaina V. Metz Assistant Secretary
Nancy E. Converse Assistant Secretary
</TABLE>
-49-
<PAGE> 1
EXHIBIT 8(d)
<PAGE> 2
CASH MANAGEMENT AND RELATED SERVICES AGREEMENT, dated as September 24,
1996 between The Sessions Group, an Ohio business trust (the "Group"), on behalf
of each portfolio series of the Group listed on Schedule A hereto (each a
"Fund", collectively the "Funds"), and The Bank of New York (the "Bank").
WITNESSETH:
That in consideration of the mutual agreements and covenants herein
contained, the Bank and each Fund hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever used in this Agreement, unless the context otherwise requires,
the following words shall have the meanings set forth below:
1. "ACCOUNT" shall mean an account registered in the name of a Fund or
such Fund's transfer agent for receiving and disbursing money as provided in
this Agreement.
2. "ACCOUNT AVAILABLE BALANCE" shall mean with respect to an Account
for any given day during a calendar month a positive or negative dollar amount
equal to (A) if such day is a Business Day, the Account Available Balance as of
the close of the last preceding Business Day plus a positive or negative dollar
amount equal to the difference, if any, between the Chargeable Credits with
respect to such day and such Account and the Chargeable Debits with respect to
such day and such Account, and (B) if such day is not a Business Day, the
Account Available Balance as of close of the last preceding Business Day, except
that both (A) and (B) shall be reduced by the United States Federal Reserve
reserve requirements then applicable to the Bank with respect to such Account.
The Account Available Balance of an Account shall be zero on the date
immediately preceding the first date on which an entry, consisting of either a
Chargeable Credit or Chargeable Debit, is first made to such Account hereunder.
3. "ACCESS" shall mean any on-line communication system provided by the
Bank hereunder whereby either the receiver of such communication is able to
verify by codes or otherwise with a reasonable degree of certainty the identity
of the sender of such communication, or the sender is required to provide a
password or other identification code.
4. "AUTHORIZED PERSON" shall mean either (A) any person duly authorized
by corporate resolutions of the board of directors or board of trustees of the
Group (the "Board") to give Oral and/or Written Instructions on behalf of the
Funds, such persons to be designated in a certificate, substantially in the form
of Exhibit A, which contains a specimen signature of such person, or (B) any
person sending or transmitting any instruction or direction through ACCESS.
<PAGE> 3
5. "BUSINESS DAY" shall mean any day on which the Federal Reserve Bank
of New York is open for business, except for any such day on which the Bank is
required by law or regulation to be closed, or elects to be closed.
6. "CALENDAR MONTH EARNINGS CREDIT" shall mean with respect to an
Account for any calendar month the dollar amount, whether positive or negative,
equal to the sum of the Gross Calendar Month Earnings Credit with respect to
such Account for such calendar month and the Monthly Overdraft Charges with
respect to such Account for such calendar month.
7. "CHARGEABLE CREDITS" shall mean with respect to an Account for any
given day during a calendar month a positive amount of dollars equal to the sum,
if any, of (A) the aggregate dollar amount of Federal Funds credited to such
Account by the Bank in accordance with the then applicable availability schedule
of the Federal Reserve Bank of New York, and (B) the aggregate dollar amount of
Bank internal transfers of Federal Funds to such Account.
8. "CHARGEABLE DEBITS" shall mean with respect to an Account for any
given day during a calendar month a negative dollar amount equal to the sum, if
any, of (A) the aggregate dollar amount of Federal Funds relating to such
Account charged against the Bank by the Federal Reserve Bank of New York on or
as of such day, and (B) the aggregate dollar amount of drafts drawn on such
Account which are deposited in the Bank by customers of the Bank on such day, or
Bank internal transfers from, or charges to, such Account.
9. "DAILY EARNINGS" shall mean with respect to an Account for any day
during a calendar month a positive dollar amount equal to the product of (A) the
positive Account Available Balance, if any, of such Account for such day,
multiplied by (B) the Daily Earnings Rate for such day. The Daily Earnings with
respect to an Account for any day during a calendar month on which the Account
Available Balance of such Account is negative shall be zero.
10. "DAILY EARNINGS RATE" shall mean for any day during a calendar
month one three hundred and sixty-fifth of the 91 day U.S. Treasury Bill
discount rate of the Monday auction first preceding such day (whether or not
such day is a Monday, and whether or not such Monday auction was in the
immediately prior month), as such Monday auction 91 day U.S. Treasury Bill
discount rate is reported in The Wall Street Journal.
11. "DAILY OVERDRAFT CHARGES" shall mean with respect to an Account for
any day during any calendar month a negative dollar amount equal to the product,
if any, of (A) the negative Account Available Balances, if any, with respect to
such Account for such day during such calendar month, multiplied by (B) the
Overdraft Rate.
12. "FEDERAL FUNDS" shall mean immediately available same day funds.
2
<PAGE> 4
13. "GROSS CALENDAR MONTH EARNINGS CREDIT" shall mean with respect to
an Account for any calendar month a positive dollar amount equal to the
aggregate sum of the Daily Earnings of such Account for such calendar month.
14. "MONTHLY OVERDRAFT CHARGES" shall mean with respect to an Account
for any calendar month a negative dollar amount equal to the aggregate sum of
the Daily Overdraft Charges with respect to such Account for such calendar month
which have not been previously paid to the Bank by the Fund to which such
Account relates.
15. "OMNIBUS ACCOUNT" shall mean an account at the Bank for the benefit
of the Funds into which money (A) to be deposited into an Account is initially
credited pending its transfer to such Account, or (B) transferred from an
Account is deposited pending its disbursement.
16. "ORAL INSTRUCTIONS" shall mean verbal instructions actually
received by the Bank from an Authorized Person or from a person reasonably
believed by the Bank to be an Authorized Person.
17. "OVERDRAFT RATE" shall mean with respect to an Account for any
calendar day during any calendar month a rate equal to one three hundred and
sixtieth of the sum of (A) one-half percent, and (B) the greater of (i) the
prime commercial lending rate of The Bank of New York, as publicly announced to
be in effect from time to time, in effect on such calendar day, and (ii) 6%.
18. "SHAREHOLDER" shall mean any record holder of any Shares, as
identified to the Bank from time to time pursuant to this Agreement.
19. "SHARES" shall mean all or any part of each class of the shares of
capital stock, beneficial interest, or limited partnership interest of a Fund,
as the case may be, which are authorized and/or issued from time to time.
20. "WRITTEN INSTRUCTIONS" shall mean written instructions actually
received by the Bank from an Authorized Person or from a person reasonably
believed by the Bank to be an Authorized Person by letter, memorandum, telegram,
cable, telex, telecopy facsimile or through ACCESS.
ARTICLE II
APPOINTMENT OF BANK: REPRESENTATIONS AND WARRANTIES
---------------------------------------------------
1. APPOINTMENT; ESTABLISHMENT OF ACCOUNTS. The Group hereby appoints
the Bank as its agent for the term of this Agreement to perform on behalf of
each Fund the cash management services set forth herein and in Schedules I and
II attached hereto and made a part
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hereof (as such Schedules may be amended or supplemented from time to time by
mutual agreement) which are selected by the Group from time to time. The Bank
hereby accepts appointment as such agent and agrees to establish and maintain
one or more Accounts and/or Omnibus Accounts as the parties shall determine are
necessary to receive and disburse money as provided in this Agreement.
2. REPRESENTATIONS AND WARRANTIES. The Group, for itself and each Fund,
hereby represents and warrants to the Bank, which representations and warranties
shall be deemed to be continuing and to be reaffirmed upon delivery to the Bank
of any Oral or Written Instructions, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its business as
now conducted, to enter into this Agreement and to perform its obligations
hereunder;
(b) This Agreement has been duly authorized, executed and delivered by
the Group in accordance with all requisite corporate action and constitutes a
valid and legally binding obligation of the Group and each Fund enforceable in
accordance with its terms, except to the extent such enforcement may be limited
by general equity principles or bankruptcy principles; and
(c) It is conducting its business in compliance with all applicable
laws and regulations, both state and federal, and has obtained all regulatory
licenses, approvals and consents necessary to carry on its business as now
conducted; there is no statute, regulation, rule, order or judgment binding on
it and no provision of its charter or by-laws, nor of any mortgage, indenture,
credit agreement or other contract binding on it or affecting its property which
would prohibit its execution or performance of this Agreement.
3. BOARD RESOLUTIONS. The Group shall provide the Bank with a certified
copy of a resolution of its Board appointing the Bank as its agent to act
hereunder and providing for the creation of each Fund's Account(s), the
utilization by the Funds of one or more Omnibus Accounts and the execution by
the Group of this Agreement, it being understood that receipt of the same by the
Bank shall be a condition precedent to the Bank's establishing an Account for
each Fund and such Fund's utilization of an Omnibus Account.
ARTICLE III
CASH MANAGEMENT SERVICES
------------------------
1. RECEIPT OF MONEY. The Bank shall receive money for credit to an
Account only:
(i) by personal presentment of drafts by a Fund, but not by a
Shareholder of such Fund, at the branch or branches in
Manhattan identified from time to time by the
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Bank to such Fund, provided such presentment is in accordance
with the time frames specified by the Bank to such Fund;
(ii) by mailing of drafts to a post office box designated by the
Bank for such purpose, provided such drafts are accompanied by
a properly completed investment stub;
(iii) by wire transfer to an account maintained at the Federal
Reserve Bank of New York as identified in writing by the Bank
to a Fund;
(iv) by transfer to an account identified in writing by the Bank to
a Fund through the New York Automated Clearing House;
(v) by transfer from another Account maintained by such Fund with
the Bank under this Agreement;
(vi) by transfer from another account maintained by such Fund with
the Bank, including such Fund's custodian account under its
Custody Agreement with the Bank as Custodian; or
(vii) by transfer from any other account maintained with the Bank.
All money received by the Bank shall be credited upon receipt, but subject to
final payment and receipt by the Bank of immediately available funds, and
receipt by the Bank of such forms, documents and information as are required by
the Bank from time to time and received in the appropriate time frames. If an
Omnibus Account has been established for the Funds, such money shall be
initially credited to the Omnibus Account pending its allocation to, and deposit
in, an Account. The Bank shall be entitled to reverse any credits previously
made to a Fund's Account or an Omnibus Account where money is not finally
collected or where a credit to such account was in error.
2. DISBURSEMENT OF MONEY. The Bank shall disburse money credited to an
Account or an Omnibus Account only:
(i) pursuant to Written Instructions of such Fund transmitted
through ACCESS (except as otherwise provided in Article V,
Section 7 hereof), to transfer funds as directed by such Fund
(including transfers through the Federal Reserve Bank of New
York transfer wire and the New York Automated Clearing House);
(ii) in payment of drafts drawn by an Authorized Person or
Shareholder (as appropriate for the particular Account),
subject to the terms hereof; or
(iii) in payment of charges to such Account representing amounts
payable to the Bank, and chargeable against such Account, as
provided in this Agreement.
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The Bank shall be required to disburse money in accordance with the foregoing
only insofar as such money is immediately available and on deposit with the
Bank. If an Omnibus Account has been established for the Funds, such money shall
be credited to the Omnibus Account pending such disbursement. All instructions
directing the disbursement of money credited to an Account or Omnibus Account
under this Agreement (whether through ACCESS or by Oral Instructions pursuant to
Article V hereof) must identify an account to which such money shall be
transferred, and include all other information reasonably required by the Bank
from time to time. It is understood and agreed that with respect to any such
instructions, when instructed to credit or pay a party by both name and a unique
numeric or alpha-numeric identifier (E.G., ABA number or account number), the
Bank and any other financial institution participating in the funds transfer may
rely solely on the unique identifier, even if it identifies a party different
than the party named. Such reliance on a unique identifier shall apply to
beneficiaries named in such instructions as well as any financial institution
which is designated in such instruction to act as an intermediary in a funds
transfer.
3. REDEMPTION DRAFTS; SHAREHOLDER INFORMATION. (a) Where a Fund offers
its Shareholders draft redemption privileges, each such Fund shall be entitled
to supply its Shareholders with redemption drafts, but only in a form and
substance agreed to by the Bank. The Bank agrees to give each Fund sixty (60)
days prior notice of any changes to the form or substance of redemption drafts
required by the Bank, provided that if such change is required by applicable
rules or procedures of the Federal Reserve or any clearinghouse through which
such drafts may be presented, the Bank may give less than sixty (60) days prior
notice of such change.
(b) Each Fund which offers its Shareholders draft redemption
privileges will promptly furnish to the Bank (i) the name, mailing address and
telephone number of each Shareholder of such Fund, and (ii) specimen signatures
for all individuals authorized to draw redemption drafts (whether on their own
behalf or on behalf of third parties). Each Fund will promptly advise the Bank
of individuals no longer authorized to draw redemption drafts, and those
individuals newly authorized. Such information shall be provided to the Bank in
a mutually agreed upon format.
4. REDEMPTION DRAFT RETURNS. The Group, on behalf of a Fund, may give
the Bank Oral or Written Instructions from time to time to return unpaid
redemption drafts of the Fund to the presenting financial institution for any
reason, and the Bank shall use reasonable efforts to comply with such Oral or
Written Instructions provided that such compliance would not prejudice or impair
any rights or privileges of the Bank under prevailing draft return procedures
and would not be contrary to prevailing industry rules, procedures, customs or
practices. Notwithstanding the foregoing, or any other provision in this
Agreement or the Schedules hereto, the Bank (i) may return redemption drafts
with unauthorized or missing signatures to the presenting financial institution
in accordance with prevailing banking industry draft return procedures, and (ii)
shall have no obligation to request Oral or Written Instructions with respect to
any redemption drafts.
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ARTICLE IV
ADVANCES, OVERDRAFTS OR INDEBTEDNESS
------------------------------------
1. If the Bank in its sole discretion advances funds, or if there shall
arise for whatever reason an overdraft or other indebtedness (except fee
indebtedness, the payment of which shall be governed solely by Article VI,
paragraph 10(b) hereof) in connection with any Account or Omnibus Account, such
advance, overdraft or indebtedness shall be deemed a loan made by the Bank to
the Group on behalf of the Fund to which the Account relates, or in the case of
an Omnibus Account, to which such advance, overdraft or indebtedness relates,
payable on demand and bearing interest from the date incurred at the Overdraft
Rate, such Overdraft Rate to be adjusted on the effective date of any change in
the prime commercial lending rate constituting a part thereof. In the event of
any advance, overdraft or other indebtedness in connection with an Omnibus
Account, the Bank shall be furnished promptly (and in any event by 12:00 p.m. on
the next Business Day after such advance, overdraft or indebtedness) with
Written Instructions identifying each Fund to which such advance, overdraft or
indebtedness relates. and the amount allocable to such Fund(s).
2. The Group, on behalf of each Fund, hereby agrees with respect to
such Fund's Account(s), any Omnibus Account(s) and any advances, overdrafts or
other indebtedness that the Bank shall have a continuing lien and security
interest in and to any property at any time held by it for the benefit of such
Fund either hereunder or under the Group's Custody Agreement with the Bank with
respect to such Fund, or in which the Fund may have an interest which is then in
the Bank's possession or control or in possession or control of any third party
acting in the Bank's behalf, including in its behalf as Custodian under the
Group's Custody Agreement with the Bank, having at the time such overdraft or
indebtedness is incurred a fair market value equal to 150% of such overdraft or
indebtedness. Subject to the provisions of Article VI, paragraph 10(b) hereof,
the Group, on behalf of each Fund, authorizes the Bank, in its sole discretion,
at any time to charge any advance, overdraft or indebtedness together with
interest due thereon at the Overdraft Rate against any balance of accounts
standing to the Fund's credit on the books of the Bank, including those books
maintained by the Bank in its capacity as Custodian for the Fund under its
Custody Agreement with the Group. Nothing contained herein shall be construed as
a waiver by any Fund of any right to contest in appropriate proceedings any
charge by the Bank pursuant hereto.
3. The Group, on behalf of each Fund, agrees that upon allocation of
all advances, overdrafts or indebtedness to its account pursuant to paragraph 1
above, its total borrowings from all sources (including the Bank) shall be in
conformity with the requirements and limitations set forth in the Investment
Company Act of 1940, as amended, and the Fund's Prospectus and Statement of
Additional Information. The Group, on behalf of each Fund, shall promptly (and
in any event within one Business Day) notify the Bank in writing whenever it
fails to comply with any of the foregoing requirements.
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<PAGE> 9
ARTICLE V
ACCESS; CALL-BACK SECURITY PROCEDURE
------------------------------------
1. SERVICES GENERALLY. The Group, on behalf of each Fund, shall be
permitted to utilize ACCESS to obtain direct on-line access to its Accounts and
Omnibus Accounts. ACCESS shall permit the Group at the times mutually agreed
upon by the Bank and the Group to receive reports, make inquiries, instruct the
Bank to disburse money in accordance with Article III, and perform such other
functions as are more fully set forth in Schedule I hereto.
2. PERMITTED USE; PROPRIETARY INFORMATION. (a) The Group, on behalf of
each Fund, shall use ACCESS and the services available thereby only for its own
internal and proper business purposes and shall not sell, lease or otherwise
provide, directly or indirectly, ACCESS or any of such services or any portion
thereof to any other person or entity. The Group 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 ACCESS and receive the
services thereby, and the Bank shall not be responsible for the reliability or
availability of any such equipment or any services used in connection with
ACCESS.
(b) The Group, on behalf of each Fund, acknowledges that all data bases
made available as part of, or through ACCESS, and any proprietary data,
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 Bank. The Group, on behalf of each Fund, shall keep
the Information confidential by using the same care and discretion that 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 Bank.
(c) Upon termination of this Agreement for any reason, the Group, on
behalf of each Fund, shall return to the Bank any and all copies of the
Information which are in the Group's possession or under its control, or
distributed to third parties. 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.
3. MODIFICATIONS. The Bank reserves the right to modify ACCESS from
time to time without notice to any Fund. The Group, on behalf of each Fund,
agrees not to modify or attempt to modify ACCESS without the Bank's prior
written consent. The Group acknowledges that ACCESS is the property of the Bank
and, accordingly, agrees that any modifications to ACCESS, whether by the Group
or the Bank and whether with or without the Bank's consent, shall become the
property of the Bank.
4. NO REPRESENTATIONS OR WARRANTIES. Neither the Bank nor any
manufacturers or suppliers it utilizes or the Group utilizes in obtaining ACCESS
makes any warranties or
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<PAGE> 10
representations, express or implied, in fact or in law, including but not
limited to warranties of merchantability and fitness for a particular purpose.
5. SECURITY; RELIANCE; UNAUTHORIZED USE. The Group, on behalf of each
Fund, will, and will cause all persons utilizing ACCESS to, treat the user and
authorization codes, passwords and authentication keys applicable to ACCESS with
extreme care. The Bank is hereby irrevocably authorized to act in accordance
with and rely on Written Instructions received by it through ACCESS. The Group
acknowledges that it is its sole responsibility to assure that only authorized
persons use ACCESS and that the Bank shall not be responsible nor liable for any
unauthorized use thereof.
6. LIMITATIONS OF LIABILITY. (a) Except as otherwise specifically
provided in Section 6(b) below, the Bank shall have no liability for any losses,
damages, injuries, claims, costs or expenses of a Fund arising out of or in
connection with any failure, malfunction or other problem relating to the
Group's use of ACCESS, except for money damages suffered as the direct result of
the negligence of the Bank in an amount not exceeding, in the aggregate for all
such losses, damages, injuries, claims, costs and expenses of a Fund arising
during any month, the total charges paid by the Group on behalf of such Fund to
the Bank for ACCESS and services hereunder which caused such loss, damage,
injury, claim, cost or expense during the 12 months preceding the month in
question, or such lesser number of months as the Group has used ACCESS if the
Group, on behalf of such Fund, has not received 12 months use of ACCESS;
provided however, that the Bank shall have no liability under this Section 6(a)
if the Group fails to comply with the provisions of Section 6(c).
(b) Without limiting the generality of the foregoing, it is hereby
agreed that in no event shall the Bank or any manufacturer or supplier of its
computer equipment, software or services be responsible for any special,
indirect, incidental or consequential damages which the Group or a Fund may
incur arising out of or in connection with ACCESS or the services provided
thereby, even if the Bank or such manufacturer or supplier has been advised of
the possibility of such damages and regardless of the form of action.
(c) The Group, on behalf of each Fund, shall notify the Bank of any
errors, omissions or interruptions in, or delay or unavailability of, ACCESS as
promptly as practicable, and in any event within one Business Day after the
earliest of (i) discovery thereof, (ii) the date discovery should have occurred
through the exercise of reasonable care, and (iii) in the case of any error, the
date of the earliest notice to such Fund which reflects such error.
(d) The Bank shall acknowledge through ACCESS its receipt of each
Written Instruction communicated through ACCESS, and in the absence of such
acknowledgement the Bank shall not be liable for any failure to act in
accordance with such Written Instruction and the Group may not claim that such
Written Instruction was received by the Bank.
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(e) In no event shall the Bank have any liability for failing to
execute Written Instructions for the transfer of funds which are received by it
through ACCESS other than through the applicable transfer module for the
particular instructions.
7. FUNDS TRANSFER BACK-UP PROCEDURE. (a) In the event ACCESS is
inoperable and the Group is unable to utilize ACCESS for the transmission of
Written Instructions to the Bank to transfer funds, the Group may give Oral
Instructions regarding funds transfers, it being expressly understood and agreed
that the Bank's acting pursuant to such Oral Instructions shall be contingent
upon the Bank's verification of the authenticity thereof pursuant to the
Call-Back Security Procedure set forth on Schedule III hereto (the "Procedure").
In this regard, the Group, on behalf of each Fund shall deliver to the Bank a
Funds Transfer Telephone Instruction Authorization in the form of Schedule 111-A
hereto, identifying the individuals authorized to deliver and/or confirm all
such Oral Instructions. The Group understands and agrees that the Procedure is
intended to determine whether Oral Instructions received pursuant to this
Section are authorized but is not intended to detect any errors contained in
such instructions. The Group, on behalf of each Fund, hereby accepts the
Procedure and confirms its belief that the Procedure is commercially reasonable.
(b) The Bank shall have no liability whatsoever for any funds transfer
executed in accordance with Oral Instructions delivered and confirmed pursuant
to this Section 7 and Schedule III hereto. The Bank's liability for its
negligence in executing or failing to execute any such Oral Instructions shall
be determined by reference to Section 6(b) of this Article.
(c) The Bank reserves the right to suspend acceptance of Oral
Instructions pursuant to this Section 7 if conditions exist which the Bank, in
its sole discretion, believes have created an unacceptable security risk.
ARTICLE VI
CONCERNING THE BANK
-------------------
1. STANDARD OF CARE; PRESENTMENT OF CLAIMS. Except as otherwise
provided herein, the Bank shall not be liable for any costs, expenses, damages,
liabilities or claims (including attorney's fees) incurred by the Group or a
Fund, except those costs, expenses, damages, liabilities or claims arising out
of the Bank's own negligence, bad faith or willful misconduct. Notwithstanding
the foregoing or anything contained in the Schedules hereto, the Bank shall not
be liable for any loss or damage, including attorney's fees, resulting from the
Bank paying any redemption draft containing a forged drawer signature, unless
such loss or damage arises out of the Bank's gross negligence, bad faith or
willful misconduct. All claims against the Bank hereunder shall be made by the
Group on behalf of the affected Fund as promptly as practicable, and in any
event within 6 months from the date of the action or inaction on which such
claim is based, and shall include reasonable documentation evidencing such claim
and loss.
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2. NO LIABILITY. The Bank shall have no obligation hereunder for costs,
expenses, damages, liabilities or claims, including attorney's fees, which are
sustained or incurred by reason of any action or inaction by the Federal Reserve
wire transfer system or the New York Automated Clearing House. Notwithstanding
any other provision elsewhere contained in this Agreement, in no event shall the
Bank be liable to the Group or any 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.
3. INDEMNIFICATION. The Group, on behalf of each Fund, shall indemnify
and exonerate, save and hold harmless the Bank from and against any and all
costs, expenses, damages, liabilities or claims, including reasonable attorney's
fees and expenses, which the Bank may sustain or incur or which may be asserted
against the Bank by reason of or as a result of any action taken or omitted by
the Bank in connection with its performance under this Agreement, except those
costs, expenses, damages, liabilities or claims arising out of the Bank's own
negligence, bad faith or wilful misconduct. This indemnity shall be a continuing
obligation of the Group on behalf of each Fund notwithstanding the termination
of this Agreement, any Account or Omnibus Account with respect to a Fund.
4. NO OBLIGATION TO INQUIRE. Without limiting the generality of the
foregoing, the Bank shall in no event be under any obligation to inquire into,
and shall not be liable for:
(a) the due authority of any Authorized Person acting on behalf of the
Group or a Fund in connection with this Agreement;
(b) the genuineness of any drawer signature on any draft deposited in
any Account or Omnibus Account, or whether such signature is a forgery, other
than the signature of the drawer of any draft drawn on the Bank;
(c) the existence or genuineness of any endorsement or any marking
purporting to be an endorsement on any draft deposited in any Account or Omnibus
Account, or whether such endorsement or marking is a forgery, is being expressly
understood that all risks associated with the acceptance by the Bank of any
draft payable to a payee other than a Fund for deposit in any Account or Omnibus
Account pursuant to Oral or Written Instructions by the Group shall be borne by
the Group on behalf of such Fund;
(d) any discrepancy between the pre-printed investment stub (other than
a substitute stub created by the Bank) and the payee either named on a draft or
written on the face thereof, provided the Bank has acted in accordance with the
investment stub;
(e) any discrepancy between the written amount for which any draft is
drawn and the Magnetic Inscription Character Recognition ("MICR") code inscribed
thereon by any bank other than the Bank on any draft presented, provided the
Bank has acted in accordance with the MICR code;
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<PAGE> 13
(f) any disbursement directed by the Group on behalf of a Fund,
regardless of the purpose therefor;
(g) any determination of the Share balance of any Shareholder whose
name is signed on any redemption draft,
(h) any determination of length of time any Shares have been owned by
any Shareholder or the method of payment utilized to purchase such Shares by
such Shareholder;
(i) any claims, liens, attachments, stays or stop payment orders with
respect to any Shares, proceeds, or money, other than a stop payment order
placed by the Group on a draft drawn by it on behalf of a Fund on its Account or
an Omnibus Account;
(j) the propriety and/or legality of any transaction in any Account or
Omnibus Account;
(k) the lack of authority of any person signing as a drawer of a draft,
provided such person and his specimen signature is specified in the certificate
of authorized signatures last received by the Bank; or
(l) whether any redemption draft equals or exceeds any minimum amount.
5. RELIANCE UPON INSTRUCTIONS. The Bank shall be entitled to rely upon
any Written or Oral Instructions received by the Bank. The Group agrees to
forward to the Bank Written Instructions confiding Oral Instructions in such
manner so that such Written Instructions are received by the Bank by the close
of business of the same day that such Oral Instructions are given to the Bank.
The Group, on behalf of each Fund, agrees that the fact that such confirming
Written Instructions are not timely received or that contrary Written
Instructions are received by the Bank shall in no way affect the validity or
enforceability of transactions previously authorized.
6. FORCE MAJEURE. The Bank shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including acts of God; earthquakes; fires; floods; wars; civil or
military disturbances; sabotage; epidemics; riots; interruptions, loss or
malfunctions of utilities, computers (hardware or software), transportation, or
communications service; mechanical breakdowns; interruption or loss of ACCESS
(except as otherwise provided in Section 7 of Article V); accidents; acts of
civil or military authority; governmental actions; labor disputes; or inability
to obtain labor, material, equipment or transportation.
7. NO IMPLIED DUTIES; PERFORMANCE ACCORDING TO APPLICABLE LAW. The Bank
shall have no duties or responsibilities except such duties and responsibilities
as are specifically set forth in this Agreement and Schedules I and II hereto,
and no covenant or obligation shall be implied against the Bank. The Bank's
duties and responsibilities hereunder shall be performed
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in accordance with applicable laws, regulations and rules, including but not
limited to Federal Reserve Regulation CC and the Operating Rules of the New York
Automated Clearing House, and the Bank shall have no obligation to take actions
which in the reasonable opinion of the Bank are either inconsistent with, or
prejudice or impair the Bank's rights under, any such laws, regulations and
rules.
8. REQUESTS FOR INSTRUCTIONS. At any time the Bank may apply to an
officer of the Group for Oral or Written Instructions with respect to any matter
arising in connection with the Bank's duties and obligations hereunder, and the
Bank shall not be liable for any action taken or permitted by it in good faith
in accordance with such Oral or Written Instructions. Such application for Oral
or Written Instructions may, at the option of the Bank, set forth in writing any
action proposed to be taken or omitted by the Bank with respect to its duties or
obligations hereunder and the date on or after which such action shall be taken,
and the Bank shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which shall be at least 5 days after the date of the Group's receipt of
such application) unless, prior to taking or omitting any such action, the Bank
has received Oral or Written Instructions in response to such application
specifying the action to be taken or omitted. The Bank may apply for and obtain
the advice and opinion of counsel to the Group or of its own counsel, at the
expense of the Group, and shall be fully protected with respect to anything done
or omitted by it in good faith in conformity with such advice or opinion.
9. DELEGATION OF DUTIES. The Bank may delegate any of its duties and
obligations hereunder to any delegee and may employ agents or attorneys-in-fact;
provided however, that no such delegation or employment by the Bank shall
discharge the Bank from its obligations hereunder. The Bank shall have no
liability or responsibility whatsoever if any delegee, agent or attorney-in-fact
shall have been selected or approved by the Group. Notwithstanding the
foregoing, nothing contained in this paragraph shall obligate the Bank to effect
any delegation or to employ any agent or attorney-in-fact.
10. FEES; INVOICES. (a) For its services hereunder, the Group, on
behalf of each Fund, agrees to pay the Bank (i) its out-of-pocket expenses, (ii)
the monthly fees and compensation set forth on Schedules I and II attached
hereto, and (iii) any negative Calendar Month Earnings Credits, and such other
amounts as may be mutually agreed upon from time to time. The Bank shall provide
the Group with a monthly activity analysis for each Fund detailing service
volumes, and including average Account Available Balances and average ledger
balances, and all fees owing for such month.
(b) The Bank shall submit periodic invoices specifying the amount of
all out-of-pocket expenses, fees, compensation and negative Calendar Month
Earnings Credits then due hereunder. The Bank may, and is hereby authorized by
the Group on behalf of each Fund, to charge such amounts to an Omnibus Account
or the appropriate Fund's Account(s), but only if such amounts remain unpaid for
ninety (90) days after the date an invoice for such amounts is sent to the
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Group and the Group has not contested such amounts in good faith by delivery of
written notice thereof to the Bank within such 90 days.
11. APPLICATION OF CALENDAR MONTH EARNINGS CREDITS. (a) Any positive
Calendar Month Earnings Credit for a calendar month shall be applied only as
follows and only in the specified order:
(i) First, applied against such compensation, fees, but not
out-of-pocket expenses, payable by the Group on behalf of such
Fund to the Bank under this Agreement for such month; and
(ii) Second, applied against such compensation, fees, and negative
Calendar Month Earnings Credits, but not out-of-pocket
expenses, payable by the Group on behalf of such Fund to the
Bank under this Agreement for any subsequent month in the same
calendar year.
(b) Except as provided above, in no event may any Calendar Month
Earnings Credit be applied to any month other than the month in which it was
earned. Calendar Month Earnings Credits may not be transferred to, or utilized
by, any other Fund, person or entity. The portion, if any, of any Calendar Month
Earnings Credit not used by a Fund may be carried, but only forward; provided,
however, that in no event may any Calendar Month Earnings Credit, including
those earned during the fourth calendar quarter, be carried beyond the end of
the calendar year in which earned.
12. ALLOCATION OF CALENDAR MONTH EARNINGS CREDITS. The Group agrees
that the Bank may pay Calendar Month Earnings Credits with respect to any
Omnibus Account as mutually agreed, and that it is the Group's responsibility to
allocate such Calendar Month Earnings Credits among and between the Funds.
ARTICLE VII
TERMINATION
-----------
1. NOTICE. This Agreement may be terminated by either the Bank giving
to the Group, or the Group giving to the Bank, a notice in writing specifying
the date of such termination and the affected Fund(s), which date shall be not
less than 90 days after the date of the giving of such notice. Notwithstanding
the foregoing, the Bank reserves the right to terminate this Agreement (a) at
any time upon 30 days prior written notice if the condition precedent set forth
in Article II, paragraph 3 is unfulfilled, and (b) upon notice if the Group, on
behalf of a Fund, either (i) fails to comply with Article IV, Section 3, or (ii)
borrows funds from the Bank in an amount exceeding the Bank's legal lending
limit.
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2. OBLIGATIONS UPON TERMINATION. Upon termination, the Bank's sole
obligations, which shall arise only after, and not before, each Fund which is
the subject of such termination has paid to the Bank all out-of-pocket expenses,
fees, compensation, negative Calendar Month Earnings Credits and other amounts
owed by the Group on behalf of such Fund to the Bank, shall be (i) to deliver to
the Group such records, if any, as may be owned by the Group on behalf of such
Fund(s), in the form and manner kept by the Bank on such date of termination,
and (ii) to pay to the Group any monies held for the account of the affected
Fund(s) hereunder.
ARTICLE VIII
MISCELLANEOUS
-------------
1. CERTIFICATES OF AUTHORIZED PERSONS. The Group agrees to furnish to
the Bank a new certificate of Authorized Persons in the event that any present
Authorized Person ceases to be an Authorized Person or in the event that any
other Authorized Persons are appointed and authorized. Until such new
certificate is received, the Bank shall be fully protected in acting under the
provisions of this Agreement upon Oral or Written Instructions or signatures of
the present Authorized Persons as set forth in the last delivered certificate.
2. NOTICES. (a) Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Bank, shall be sufficiently
given if addressed to the Bank and received by it at its offices at 90
Washington Street, 22nd Floor, New York, New York 10286, Attention: Division
Manager - Mutual Funds, or at such other place as the Bank may from time to time
designate in writing.
(b) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Group shall be sufficiently given if
addressed to the Group and received by it at 3435 Stelzer Road, Columbus, Ohio,
or at such other place as the Group may from time to time designate in writing.
3. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to the
Bank hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Bank to exercise, and
no delay in exercising, any right will operate as a waiver thereof, nor will any
single or partial exercise by the Bank of any right preclude any other or future
exercise thereof or the exercise of any other right.
4. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or obligations
shall not in any way be affected or impaired thereby, and if any provision is
inapplicable to any person or circumstances, it shall nevertheless remain
applicable to all other persons and circumstances.
15
<PAGE> 17
5. AMENDMENTS. This Agreement may not be amended or modified in any
manner except by a written agreement executed by the Bank and the Group on
behalf of each Fund to be bound thereby, and, except in the case of an amendment
to Schedules I and II hereto, authorized or approved by a resolution of the
Group's Board.
6. HEADINGS. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provisions hereof.
7. APPLICABLE LAW; CONSENT TO JURISDICTION: JURY TRIAL WAIVER. 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.
8. NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement are
intended to benefit only the Bank and the Group, on behalf of each Fund, and
their respective permitted successors and assigns. and no right shall be granted
to any other person by virtue of this Agreement.
9. SUCCESSORS AND ASSIGNS. 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 Group
without the written consent of the Bank and authorized or approved by a
resolution of the Group's Board.
10. COUNTERPARTS. 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.
11. SEVERAL OBLIGATIONS. The parties acknowledge that the obligations
of the Group, on behalf of each Fund, are several and not joint, that no Fund
shall be liable for any amount owing by another Fund and that the Group has
executed one instrument on behalf of the Funds for convenience only.
16
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunto duly authorized, as
of the day and year first above written.
THE SESSIONS GROUP
By: /s/ Walter B. Grimm
----------------------------
Walter B. Grimm
Title: President
-------------------------
THE BANK OF NEW YORK
By: /s/ Stephen E. Grunston
----------------------------
Stephen E. Grunston
Title: Vice President
-------------------------
17
<PAGE> 19
June 30, 1997
SCHEDULE A
To Cash Management and Related Services Agreement
dated September 24, 1996
Between The Sessions Group and
The Bank of New York
SERIES
NAME OF FUND DATE
------------ ----
The KeyPremier Prime Money Market Fund September 24, 1996
and The KeyPremier Pennsylvania Municipal
Bond Fund
The KeyPremier Established Growth Fund October 30, 1996
and The KeyPremier Intermediate Term
Income Fund
The KeyPremier Aggressive Growth Fund January 29, 1997
The KeyPremier U.S. Treasury Obligations June 30, 1997
Money Market Fund and The KeyPremier
Limited Duration Government Securities
Fund
THE SESSIONS GROUP
By /s/ Walter B. Grimm
------------------------------------
Walter B. Grimm, President
THE BANK OF NEW YORK
By /s/ Stephen E. Grunston
------------------------------------
(name) (title)
18
<PAGE> 1
EXHIBIT (9)(x)
<PAGE> 2
MANAGEMENT AND ADMINISTRATION AGREEMENT
This Agreement is made this 9th day of July, 1996, between The Sessions
Group, an Ohio business trust (the "Trust"), 3435 Stelzer Road, Columbus, Ohio
43219, and BISYS Fund Services Limited Partnership dba BISYS Fund Services, an
Ohio limited partnership ("Administrator"), 3435 Stelzer Road, Columbus, Ohio
43219.
WHEREAS, the Trust is an open-end management investment company,
organized as an Ohio business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain Administrator to furnish
management and administration services to certain investment portfolios of the
Trust and may retain Administrator to serve in such capacity with respect to
additional investment portfolios of the Trust, all as now or hereafter may be
identified in Schedule A hereto as such Schedule may be amended from time to
time (individually referred to herein as a "Fund" and collectively referred to
herein as the "Funds"); and
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Manager and Administrator
-------------------------------------
Subject to the direction and control of the Board of Trustees of the
Trust, Administrator will assist in supervising all aspects of the operations of
the Funds except those performed by the investment adviser for the Funds under
its Investment Advisory Agreement, the custodian for the Funds under its Custody
Agreement, the transfer agent for the Funds under its Transfer Agency Agreement
and the fund accountant for the Funds under its Fund Accounting Agreement.
Administrator will maintain office facilities (which may be in the
offices of Administrator or an affiliate but shall be in such location as the
Trust shall reasonably determine); furnish statistical and research data,
clerical, certain bookkeeping services and stationery and office supplies;
prepare the periodic reports to the Commission on Form N-SAR or any replacement
forms therefor; compile data for, assist the Trust or its designee in the
preparation of, and file, all the Funds' federal and state tax returns and
required tax filings other than those required to be made by the Funds'
custodian and transfer agent; prepare compliance filings pursuant to state
securities laws with the advice of the Trust's counsel; assist to the extent
requested by the Trust with the Trust's preparation of its Annual and
Semi-Annual Reports to Shareholders and its Registration Statements (on Form
N-1A or any replacement therefor); compile data for, prepare and file timely
Notices to the Commission required pursuant to Rule 24f-2 under the 1940 Act;
keep and maintain the financial accounts and records of the Funds, including
calculation of daily expense accruals; in the case of money market funds,
periodic review of the amount of the
<PAGE> 3
deviation, if any, of the current net asset value per share (calculated using
available market quotations or an appropriate substitute that reflects current
market conditions) from each money market fund's amortized cost price per share;
and generally assist in all aspects of the operations of the Funds. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Administrator
hereby agrees that all records which it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the Trust any of such
records upon the Trust's request. Administrator further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the 1940 Act. Administrator may delegate some
or all of its responsibilities under this Agreement.
Administrator may, at its expense, subcontract with any entity or
person concerning the provision of the services contemplated hereunder;
provided, however, that Administrator shall not be relieved of any of its
obligations under this Agreement by the appointment of such subcontractor and
provided further, that Administrator shall be responsible, to the extent
provided in Section 4 hereof, for all acts of such subcontractor as if such acts
were its own.
2. Fees; Expenses; Expense Reimbursement
-------------------------------------
In consideration of services rendered and expenses assumed pursuant to
this Agreement, each of the Funds will pay Administrator on the first business
day of each month, or at such time(s) as Administrator shall request and the
parties hereto shall agree, a fee computed daily and paid as specified below
calculated at the applicable annual rate set forth on Schedule A hereto. The fee
for the period from the day of the month this Agreement is entered into until
the end of that month shall be prorated according to the proportion which such
period bears to the full monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of a month shall be prorated
according to the proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to Administrator, the value
of the net assets of a particular Fund shall be computed in the manner described
in the Trust's Declaration of Trust or in the Prospectus or Statement of
Additional Information respecting that Fund as from time to time is in effect
for the computation of the value of such net assets in connection with the
determination of the liquidating value of the shares of such Fund.
Administrator will from time to time employ or associate with itself
such person or persons as Administrator may believe to be particularly fitted to
assist it in the performance of this Agreement. Such person or persons may be
partners, officers, or employees who are employed by both Administrator and the
Trust.
- 2 -
<PAGE> 4
The compensation of such person or persons shall be paid by Administrator and no
obligation may be incurred on behalf of the Funds in such respect. Other
expenses to be incurred in the operation of the Funds including taxes, interest,
brokerage fees and commissions, if any, fees of Trustees who are not partners,
officers, directors, shareholders or employees of Administrator or the
investment adviser or distributor for the Funds, Commission fees and state Blue
Sky qualification and renewal fees and expenses, advisory fees, pricing service
fees, custodian fees, transfer and dividend disbursing agents' fees, fund
accounting fees, certain insurance premiums, outside and, to the extent
authorized by the Trust, inside auditing and legal fees and expenses, costs of
maintenance of the Trust's existence, type- setting and printing prospectuses
for regulatory purposes and for distribution to current shareholders of the
Funds, costs of shareholders' and Trustees' reports and meetings, fees incurred
under the Trust's Distribution and Shareholder Service Plan and Administrative
Services Plan and any extraordinary expenses will be borne by the Funds.
If in any fiscal year the aggregate expenses of a particular Fund (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, Administrator will
reimburse such Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees respecting such Fund otherwise payable to
Administrator hereunder to the aggregate fees respecting such Fund otherwise
payable to Administrator hereunder, to Martindale Andres & Company, Inc. under
the Investment Advisory Agreement between Martindale Andres & Company, Inc. and
the Trust and to BISYS Fund Services, Inc. under the Fund Accounting Agreement
between BISYS Fund Services, Inc. and the Trust. The expense reimbursement
obligation of Administrator is limited to the amount of its fees hereunder for
such fiscal year, provided, however, that notwithstanding the foregoing,
Administrator shall reimburse a particular Fund for such proportion of such
excess expenses regardless of the amount of fees paid to it during such fiscal
year to the extent that the securities regulations of any state having
jurisdiction over the Trust so require. Such expense reimbursement, if any, will
be estimated daily and reconciled and paid on a monthly basis.
3. Proprietary and Confidential Information
----------------------------------------
Administrator agrees on behalf of itself and its partners and employees
to treat confidentially and as proprietary information of the Trust all records
and other information relative to the Trust and prior, present, or potential
shareholders, and not to use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Trust, which approval shall
not be unreasonably withheld and may not be withheld
- 3 -
<PAGE> 5
where Administrator may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
4. Limitation of Liability
-----------------------
Administrator shall not be liable for any loss suffered by the Funds in
connection with the matters to which this Agreement relates, except for a loss
resulting from willful misfeasance, bad faith or negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also a partner,
employee, or agent of Administrator, who may be or become an officer, Trustee,
employee, or agent of the Trust or the Funds shall be deemed, when rendering
services to the Trust or the Funds, or acting on any business of that party, to
be rendering such services to or acting solely for that party and not as a
partner, employee, or agent or one under the control or direction of
Administrator even though paid by it.
5. Term
----
This Agreement shall become effective as of the date first written
above (or, if a particular Fund is not in existence on that date, on the date an
amendment to Schedule A to this Agreement relating to that Fund is executed)
and, unless sooner terminated as provided herein, shall continue until July 9,
1999, and thereafter shall be renewed automatically for successive one-year
terms, unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term; provided that the performance of Administrator is specifically reviewed at
least annually by the Trust's Board of Trustees. Such review shall include the
review of acts of negligence, if any, by Administrator, and if such acts of
negligence are determined to be material by the Trustees, such acts shall be an
event of "cause" as used below. This Agreement is terminable with respect to a
particular Fund through a failure to renew at the end of a one-year term; upon
mutual agreement of the parties hereto; upon 180 days' written notice by the
Trust after the initial term hereof but only in connection with the
reorganization of the Funds into another registered management investment
company; or for "cause" (as defined below) by the party alleging "cause," on not
less than 60 days' notice by the Trust's Board of Trustees or by Administrator.
Written notice not to renew may be given for any reason, with or without
"cause."
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, acts of negligence by Administrator
determined by the Trustees to be material, or reckless disregard on the part of
the party to be terminated with respect to its obligations and duties set forth
herein; (b) a
- 4 -
<PAGE> 6
final, unappealable judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of criminal or unethical
behavior in the conduct of its business; (c) the dissolution or liquidation of
either party or other cessation of business other than a reorganization or
recapitaliza- tion of such party as an ongoing business; (d) financial
difficulties on the part of the party to be terminated which is evidenced by the
authorization or commencement of, or involvement by way of pleading, answer,
consent, or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time in effect, or any applicable law,
other than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors; or (e) any circumstance which substantially impairs the performance
of the obligations and duties of the party to be terminated, or the ability to
perform those obligations and duties as contemplated herein. Notwithstanding the
foregoing, the absence of an annual review of this Agreement by the Board of
Trustees shall not, in and of itself, constitute "cause" as used herein.
6. Governing Law and Matters Relating to the Trust as an
-----------------------------------------------------
Ohio Business Trust
-------------------
This Agreement shall be governed by the law of the State of Ohio. The
Sessions Group is a business trust organized under Chapter 1746, Ohio Revised
Code and under a Declaration of Trust, to which reference is hereby made and a
copy of which is on file at the office of the Secretary of State of Ohio as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The Sessions Group" entered into in the name or on
behalf thereof by any of the Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or shareholders of the Trust personally,
but bind only the assets of the Trust, as set forth in Section 1746.13(A), Ohio
Revised Code, and all persons dealing with any of the Funds of the Trust must
look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc.,
General Partner By /s/ Walter B. Grimm
---------------------------
Walter B. Grimm, President
By /s/ J. David Huber
-------------------------
(name) (title)
- 5 -
<PAGE> 7
Dated: June 30, 1997
Schedule A to the
Management and Administration Agreement
between The Sessions Group and
BISYS Fund Services Limited Partnership
dated July 9, 1996
Name of Fund Compensation* Date
The KeyPremier Annual rate of eleven July 9, 1996
Prime Money and one-half
Market Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven July 9, 1996
Pennsylvania and one-half
Municipal Bond one-hundredths of
Fund one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven October 30, 1996
Established and one-half
Growth Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven October 30, 1996
Intermediate and one-half
Term Income Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
- --------
*All fees are computed daily and paid periodically.
A-1
<PAGE> 8
The KeyPremier Annual rate of eleven January 29, 1997
Aggressive Growth and one-half
Fund one-hundredths of
one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven June 30, 1997
U.S. Treasury and one-half
Obligations Money one-hundredths of
Market Fund one percent (.115%)
of such Fund's average
daily net assets
The KeyPremier Annual rate of eleven June 30, 1997
Limited Duration and one-half
Government Securities one-hundredths of
Fund one percent (.115%)
of such Fund's average
daily net assets
BISYS FUND SERVICES LIMITED THE SESSIONS GROUP
PARTNERSHIP
By BISYS Fund Services, Inc. By /s/ Walter B. Grimm
General Partner ---------------------------
Walter B. Grimm, President
By /s/ J. David Huber
------------------------------
J. David Huber, President
A-2
<PAGE> 1
EXHIBIT (9)(y)
<PAGE> 2
FUND ACCOUNTING AGREEMENT
This Agreement is made as of July 9, 1996 between The Sessions Group
(the "Trust"), an Ohio business trust having its principal place of business at
3435 Stelzer Road, Columbus, Ohio 43219, and BISYS Fund Services, Inc.
("BISYS"), a Delaware corporation having its principal place of business at 3435
Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain fund accounting
services for each of The KeyPremier Prime Money Market Fund and The KeyPremier
Pennsylvania Municipal Bond Fund and such other investment portfolios of the
Trust identified on Schedule A hereto, as such Schedule may be amended from time
to time (individually referred to herein as a "Fund" and collectively as the
"Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
Section 1. SERVICES AS FUND ACCOUNTANT.
(a) MAINTENANCE OF BOOKS AND RECORDS. BISYS will keep and
maintain the following books and records of each Fund pursuant to Rule
31a-1 under the Investment Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized daily record in
detail of all purchases and sales of securities, all receipts
and disbursements of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income and expense
accounts, including interest accrued and interest received, as
required by subsection (b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by subsection
(b)(2)(ii) and (iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts
(except shareholder accounts) as required by subsection (b)(8)
of the Rule.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In addition to
the maintenance of the books and records specified above, BISYS shall
perform the following accounting services daily for each Fund:
<PAGE> 3
(i) Calculate the net asset value per share utilizing
prices obtained from the sources described in subsection
1(b)(ii) below;
(ii) Obtain security prices from independent pricing
services, or if such quotes are unavailable, then obtain such
prices from each Fund's investment adviser or its designee, as
approved by the Trust's Board of Trustees;
(iii) Verify and reconcile with the Funds' custodian
all daily trade activity;
(iv) Compute, as appropriate, each Fund's net income
and capital gains, dividend payables, dividend factors, 7-day
yields, 7-day effective yields, 30-day yields, and weighted
average portfolio maturity;
(v) Review daily the net asset value calculation and
dividend factor (if any) for each Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations, and
distribute net asset values and yields to NASDAQ;
(vi) Report to the Trust the daily market pricing of
securities in any money market Funds, with the comparison to
the amortized cost basis;
(vii) Determine unrealized appreciation and
depreciation on securities held in variable net asset value
Funds;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than face value, if
requested by the Trust;
(ix) Update fund accounting system to reflect rate
changes, as received from a Fund's investment adviser, on
variable interest rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to
instructions received from the Trust's Administrator;
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2) Fund share
transactions and (3) income and expense accounts;
-2-
<PAGE> 4
(xiii) Provide accounting reports in connection with
the Trust's regular annual audit and other audits and
examinations by regulatory agencies; and
(xiv) Provide such periodic reports as the parties
shall agree upon, as set forth in a separate schedule.
(c) SPECIAL REPORTS AND SERVICES
(i) BISYS may provide additional special reports upon
the request of the Trust or a Fund's investment adviser, which
may result in an additional charge, the amount of which shall
be agreed upon between the parties.
(ii) BISYS may provide such other similar services
with respect to a Fund as may be reasonably requested by the
Trust, which may result in an additional charge, the amount of
which shall be agreed upon between the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. BISYS shall also
perform the following additional accounting services for each
Fund:
(i) Provide monthly a download (and hard copy
thereof) of the financial statements described below, upon
request of the Trust. The download will include the following
items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the
following:
(A) federal and state income tax returns and
federal excise tax returns;
(B) the Trust's semi-annual reports with the
Securities and Exchange Commission ("SEC") on Form
N-SAR;
(C) the Trust's annual, semi-annual and
quarterly (if any) shareholder reports;
(D) registration statements on Form-N1A and
other filings relating to the registration of shares;
(E) the Administrator's monitoring of the
Trust's status as a regulated investment company
-3-
<PAGE> 5
under Subchapter M of the Internal Revenue Code, as
amended;
(F) annual audit by the Trust's auditors;
and
(G) examinations performed by the SEC.
Section 2. SUBCONTRACTING.
BISYS may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder; provided,
however, that BISYS shall not be relieved of any of its obligations under this
Agreement by the appointment of such subcontractor and provided further, that
BISYS shall be responsible, to the extent provided in Section 7 hereof, for all
acts of such subcontractor as if such acts were its own.
Section 3. COMPENSATION.
The Trust shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in,
Schedule A hereto, as such Schedule may be amended from time to time.
If in any fiscal year the aggregate expenses of a particular Fund (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, BISYS will
reimburse such Fund for a portion of such excess expenses equal to such excess
times the ratio of the fees respecting such Fund otherwise payable to BISYS
hereunder to the aggregate fees respecting such Fund otherwise payable to BISYS
hereunder, to Martindale Andres & Company, Inc. under the Investment Advisory
Agreement between Martindale Andres & Company, Inc. and the Trust and to BISYS
Fund Services Limited Partnership under the Management and Administration
Agreement between BISYS Fund Services Limited Partnership and the Trust. The
expense reimbursement obligation of BISYS is limited to the amount of its fees
hereunder for such fiscal year, provided, however, that notwithstanding the
foregoing, BISYS shall reimburse a particular Fund for such proportion of such
excess expenses regardless of the amount of fees paid to it during such fiscal
year to the extent that the securities regulations of any state having
jurisdiction over the Trust so require. Such expense reimbursement, if any, will
be estimated daily and reconciled and paid on a monthly basis.
Section 4. REIMBURSEMENT OF EXPENSES.
In addition to paying BISYS the fees described in Section 3 hereof, the
Trust agrees to reimburse BISYS for BISYS's out-of-pocket expenses in providing
services hereunder, including without limitation the following:
-4-
<PAGE> 6
(1) All freight and other delivery and bonding charges incur-
red by BISYS in delivering materials to and from the
Trust;
(2) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Trust, the Trust's investment adviser
or custodian, dealers or others as required for BISYS to
perform the services to be provided hereunder;
(3) The cost of obtaining security market quotes pursuant to
Section 1(b)(ii) above;
(4) The cost of microfilm or microfiche of records or other
materials;
(5) Any expenses BISYS shall incur at the written direction
of an officer of the Trust thereunto duly authorized by
the Trust's Board of Trustees; and
(6) Any additional out-of-pocket expenses reasonably incurred
by BISYS in the performance of its duties and obligations
under this Agreement.
Section 5. EFFECTIVE DATE. This Agreement shall become effective with
respect to a Fund as of the date first written above (or, if a particular Fund
is not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed) (the "Effective Date").
Section 6. TERM. This Agreement shall continue in effect with respect
to a Fund, unless earlier terminated by either party hereto as provided
hereunder, until July 9, 1999, and thereafter shall be renewed automatically for
successive one-year terms unless written notice not to renew is given by the
non-renewing party to the other party at least 60 days prior to the expiration
of the then-current term; provided, however, that after such termination, for so
long as BISYS, with the written consent of the Trust, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due BISYS and unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Trust, in addition to
the compensation described under Section 3 hereof, the amount of all of BISYS'
reasonable cash disbursements for services in connection with BISYS' activities
in effecting such termination, including without limitation, the delivery to the
Trust and/or its designees of the Trust's property, records, instruments and
documents, or any copies thereof. To the extent
-5-
<PAGE> 7
that BISYS may retain in its possession copies of any Trust documents or records
subsequent to such termination, which copies had not been requested by or on
behalf of the Trust in connection with the termination process described above,
for a reasonable fee, BISYS will provide the Trust with reasonable access to
such copies. The performance of BISYS under this Agreement shall be reviewed at
least annually by the Trust's Board of Trustees. Such review shall include the
review of acts of negligence, if any, by BISYS, and if such acts of negligence
are determined to be material by the Trustees, such acts shall be an event of
"cause" as used below. This Agreement is terminable with respect to a particular
Fund only upon mutual agreement of the parties hereto; upon 180 days' written
notice by the Trust after the initial term hereof but only in connection with
the reorganization of the Funds into another registered management investment
company; or for "cause" (as defined below) by the party alleging "cause," on not
less than 60 days' notice by the Trust's Board of Trustees or by BISYS.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, acts of negligence by BISYS as
determined by the Trustees to be material or reckless disregard on the part of
either party with respect to its obligations and duties set forth herein; (b) a
final, unappealable judicial, regulatory or administrative ruling or order in
which either party has been found guilty of criminal or unethical behavior in
the conduct of its business; (c) the dissolution or liquidation of either party
or other cessation of business other than a reorganization or recapitalization
of such party as an ongoing business; (d) financial difficulties on the part of
either party which is evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent, or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to
time is in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors; or (e) any circumstance
which substantially impairs the performance of either party's obligations and
duties as contemplated herein.
Section 7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION. BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. A Fund agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or nonactions with respect to the
performance
-6-
<PAGE> 8
of services under this Agreement with respect to such Fund or based, if
applicable, upon reasonable reliance on information, records, instructions or
requests with respect to such Fund given or made to BISYS by a duly authorized
representative of the Trust; provided that this indemnification shall not apply
to actions or omissions of BISYS in cases of its own bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties, and further provided that prior to confessing any claim against it which
may be the subject of this indemnification, BISYS shall give the Trust written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of BISYS.
Section 8. RECORD RETENTION AND CONFIDENTIALITY. BISYS shall keep and
maintain on behalf of the Trust all books and records which the Trust or BISYS
is, or may be, required to keep and maintain pursuant to any applicable
statutes, rules and regulations, including without limitation Rules 31a-1 and
31a-2 under the Investment Company Act of 1940, as amended (the "1940 Act")
relating to the maintenance of books and records in connection with the services
to be provided hereunder. BISYS further agrees that all such books and records
shall be the property of the Trust and to make such books and records available
for inspection by the Trust or by the Securities and Exchange Commission at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Trust and its shareholders; except when
requested to divulge such information by duly-constituted authorities or court
process.
Section 9. UNCONTROLLABLE EVENTS. BISYS assumes no responsibilitY
hereunder, and shall not be liable, for any damage, loss of data, delay or any
other loss whatsoever caused by events beyond its reasonable control.
Section 10. REPORTS. BISYS will furnish to the Trust and to its
properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Trust in writing, such reports and at such times as are prescribed pursuant
to the terms and the conditions of this Agreement to be provided or completed by
BISYS, or as subsequently agreed upon by the parties pursuant to an amendment
hereto. The Trust agrees to examine each such report or copy promptly and will
report or cause to be reported any errors or discrepancies therein no later than
three business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within ten days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and binding upon the Trust and any
other recipient, and except as provided in Section 7 hereof, BISYS shall have no
liability for errors or discrepancies therein and shall have no further
-7-
<PAGE> 9
responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Trust.
Section 11. RIGHTS OF OWNERSHIP. All computer programs and procedures
developed to perform services required to be provided by BISYS under this
Agreement are the property of BISYS. All records and other data except such
computer programs and procedures are the exclusive property of the Trust and all
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
Section 12. RETURN OF RECORDS. BISYS may at its option at any time, and
shall promptly upon the Trust's demand, turn over to the Trust and cease to
retain BISYS' files, records and documents created and maintained by BISYS
pursuant to this Agreement; provided, however, that to the extent needed by
BISYS in the performance of its services or for its legal protection, BISYS may
retain copies of such files, records and documents at BISYS' own expense. If not
so turned over to the Trust, such documents and records will be retained by
BISYS for six years from the year of creation. At the end of such six-year
period, such records and documents will be turned over to the Trust unless the
Trust authorizes in writing the destruction of such records and documents.
Section 13. REPRESENTATIONS OF THE TRUST. The Trust certifies to BISYS
that: (1) as of the close of business on the Effective Date, each Fund which is
in existence as of the Effective Date has authorized unlimited shares, and (2)
this Agreement has been duly authorized by the Trust and, when executed and
delivered by the Trust, will constitute a legal, valid and binding obligation of
the Trust, enforceable against the Trust in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
Section 14. REPRESENTATIONS OF BISYS. BISYS represents and warrants
that: (1) the various procedures and systems which BISYS has implemented with
regard to safeguarding from loss or damage attributable to fire, theft, or any
other cause of the blank checks, records, and other data of the Trust and BISYS'
records, data, equipment facilities and other property used in the performance
of its obligations hereunder are adequate and that it will make such changes
therein from time to time as are required for the secure performance of its
obligations hereunder, and (2) this Agreement has been duly authorized by BISYS
and, when executed and delivered by BISYS, will constitute a legal, valid and
binding obligation of BISYS, enforceable against BISYS in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
secured parties.
-8-
<PAGE> 10
Section 15. INSURANCE. BISYS shall notify the Trust should any of its
insurance coverage be cancelled or reduced. Such notification shall include the
date of change and the reasons therefor. BISYS shall notify the Trust of any
material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Trust from time to time as may be appropriate of the total outstanding claims
made by BISYS under its insurance coverage.
Section 16. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS. The
Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the
state in which such Declaration has been filed.
(b) Copies of the following documents:
(i) The Trust's By-Laws and any amendments thereto; and
(ii) Certified copies of resolutions of the Board of
Trustees covering the approval of this Agreement,
authorization of a specified officer of the Trust to
execute and deliver this Agreement and authorization
for specified officers of the Trust to instruct BISYS
thereunder.
(c) A list of all the officers of the Trust, together with
specimen signatures of those officers who are authorized
to instruct BISYS in all matters.
(d) Two copies of the Prospectus and Statement of Additional
Information for each Fund.
Section 17. INFORMATION FURNISHED BY BISYS.
(a) BISYS has furnished to the Trust the following:
(i) BISYS's Articles of Incorporation; and
(ii) BISYS's Bylaws and any amendments thereto.
(b) BISYS shall, upon request, furnish certified copies of
actions of BISYS covering the following matters:
(i) Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver
this Agreement; and
(ii) Authorization of BISYS to act as fund accountant
for the Trust and to provide accounting services
for the Trust.
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<PAGE> 11
Section 18. AMENDMENTS TO DOCUMENTS. The Trust shall furnish BISYS
written copies of any amendments to, or changes in, any of the items referred to
in Section 16 hereof forthwith upon such amendments or changes becoming
effective. In addition, the Trust agrees that no amendments will be made to the
Prospectuses or Statements of Additional Information of the Trust which might
have the effect of changing the procedures employed by BISYS in providing the
services agreed to hereunder or which amendment might affect the duties of BISYS
hereunder unless the Trust first obtains BISYS' approval of such amendments or
changes.
Section 19. COMPLIANCE WITH LAW. Except for the obligations of BISYS
set forth in Section 8 hereof, the Trust assumes full responsibility for the
preparation, contents and distribution of each prospectus of the Trust as to
compliance with all applicable requirements of the Securities Act of 1933, as
amended, the 1940 Act and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Trust's shares. The Trust
represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the Securities Act of 1933
and the 1940 Act has been declared or becomes effective.
Section 20. NOTICES. Any notice provided hereunder shall be
sufficiently given when sent by registered or certified mail to the party
required to be served with such notice, at the following address: 3435 Stelzer
Road, Columbus, Ohio 43219, or at such other address as such party may from time
to time specify in writing to the other party pursuant to this Section.
Section 21. HEADINGS. Paragraph headings in this Agreement are included
for convenience only and are not to be used to construe or interpret this
Agreement.
Section 22. ASSIGNMENT. This Agreement and the rights and duties
hereunder shall not be assignable with respect to a Fund by either of the
parties hereto except by the specific written consent of the other party.
Section 23. GOVERNING LAW. This Agreement shall be governed by and
provisions shall be construed in accordance with the laws of the State of Ohio.
Section 24. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
The Sessions Group is a business trust organized under Chapter 1746, Ohio
Revised Code and under a Declaration of Trust, to which reference is hereby made
and a copy of which is on file at the office of the Secretary of State of Ohio
as required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The Sessions Group" entered into in the name or on
behalf thereof by any of the Trustees, officers, employees or
-10-
<PAGE> 12
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Funds of
the Trust must look solely to the assets of the Trust belonging to such Fund for
the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE SESSIONS GROUP
By /s/ Walter B. Grimm
---------------------------------
Walter B. Grimm, President
BISYS FUND SERVICES, INC.
By /s/ J. David Huber
----------------------------------
(name) (title)
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<PAGE> 13
Dated: June 30, 1997
SCHEDULE A
TO THE
FUND ACCOUNTING AGREEMENT
BETWEEN
THE SESSIONS GROUP
AND
BISYS FUND SERVICES, INC.
JULY 9, 1996
Name Of Fund Compensation* Date
- ------------ ------------- ----
The KeyPremier Prime The greater of (i) the July 9, 1996
Money Market Fund annual rate of .03% of
and The KeyPremier such Fund's average
Pennsylvania daily net assets or (ii)
Municipal Bond Fund the applicable annual
minimum fee of $30,000 per fund
($35,000 for a municipal or
tax-exempt fund).
The KeyPremier The greater of (i) the October 30, 1996
Established Equity annual rate of .03% of
Fund and The such Fund's average
KeyPremier daily net assets or (ii)
Intermediate Term the applicable annual
Income Fund minimum fee of $30,000
per fund ($35,000 for a
municipal or tax-exempt
fund).
The KeyPremier The greater of (i) the January 29, 1997
Aggressive Growth annual rate of .03% of
Fund such Fund's average
daily net assets or (ii)
the applicable annual
minimum fee of $30,000
per fund ($35,000 for a
municipal or tax-exempt
fund).
The KeyPremier The greater of (i) the June 30, 1997
U.S. Treasury annual rate of .03% of
Obligations Money such Fund's average
Market Fund and daily net assets or (ii)
The KeyPremier the applicable annual
Limited Duration minimum fee of $30,000
Government per fund ($35,000 for a
Securities Fund municipal or tax-exempt
fund).
BISYS FUND SERVICES, INC. THE SESSIONS GROUP
By /s/ J. David Huber By /s/ Walter B. Grimm
------------------------- -------------------------------
J. David Huber, President Walter B. Grimm, President
* All fees are computed daily and paid periodically.
<PAGE> 1
EXHIBIT (9)(z)
<PAGE> 2
TRANSFER AGENCY AGREEMENT
-------------------------
This Agreement is made as of July 9, 1996, between The Sessions Group
(the "Trust"), an Ohio business trust having its principal place of business at
3435 Stelzer Road, Columbus, Ohio 43219, and BISYS Fund Services, Inc.
("BISYS"), a Delaware corporation having its principal place of business at 3435
Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust desires that BISYS perform certain services for
those series of the Trust set forth in the Schedule A attached hereto, as such
Schedule may be amended from time to time (individually referred to herein as a
"Fund" and collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
Section 1. SERVICES. BISYS shall perform for the Trust the transfer
agent services set forth in Schedule B hereto.
BISYS also agrees to perform for the Trust such special
services incidental to the performance of the services enumerated herein as
agreed to by the parties from time to time. BISYS shall perform such additional
services as are provided on an amendment to Schedule B hereof, in consideration
of such fees as the parties hereto may agree.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the Trust
(individually, a "Subtransfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Trust or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
Section 2. FEES. The Trust shall pay BISYS for the services to be
provided by BISYS under this Agreement in accordance with, and in the manner set
forth in, Schedule C hereto. Fees for any additional services to be provided by
BISYS pursuant to an amendment to Schedule B hereto shall be subject to mutual
agreement at the time such amendment to Schedule C is proposed.
Section 3. REIMBURSEMENT OF EXPENSES. In addition to paying BISYS
the fees described in Section 2 hereof, the Trust agrees to
reimburse BISYS for BISYS' out-of-pocket expenses in providing
services hereunder, including without limitation the following:
<PAGE> 3
A. All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and from the
Trust and in delivering all materials to shareholders;
B. All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Trust, the Trust's investment adviser
or custodian, dealers, shareholders or others as required for
BISYS to perform the services to be provided hereunder;
C. Costs of postage, couriers, stock computer paper,
statements, labels, envelopes, checks, reports, letters,
tax forms, proxies, notices or other form of printed
material which shall be required by BISYS for the
performance of the services to be provided hereunder;
D. The cost of microfilm or microfiche of records or other
materials; and
E. Any expenses BISYS shall incur at the written direction
of an officer of the Trust thereunto duly authorized by
the Trust's Board of Trustees.
Section 4. EFFECTIVE DATE. This Agreement shall become effective as
of the date first written above (the "Effective Date").
Section 5. TERM. This Agreement shall continue in effect, unless
earlier terminated by either party hereto as provided hereunder, until July 9,
1999. Thereafter, this Agreement shall be renewed automatically for successive
one-year terms unless written notice not to renew is given by the non-renewing
party to the other party at least 60 days prior to the expiration of the
then-current term; provided, however, that after such termination, for so long
as BISYS, with the written consent of the Trust, in fact continues to perform
any one or more of the services contemplated by this Agreement or any Schedule
or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due BISYS and unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Trust, in addition to
the fees and disbursements provided by Sections 2 and 3 hereof, the amount of
all of BISYS' reasonable cash disbursements for services in connection with
BISYS' activities in effecting such termination, including without limitation,
the delivery to the Trust and/or its distributor or investment advisers and/or
other parties, of the Trust's property, records, instruments and documents, or
any copies thereof. To the extent that BISYS may retain in its possession copies
of any Trust documents or records subsequent to such termination which copies
had not been requested by or on behalf of the Trust in connection
- 2 -
<PAGE> 4
with the termination process described above, BISYS, for a reasonable fee, will
provide the Trust with reasonable access to such copies. The performance of
BISYS under this Agreement shall be reviewed at least annually by the Trust's
Board of Trustees. Such review shall include the review of acts of negligence,
if any, by BISYS, and if such acts of negligence are determined to be material
by the Trustees, such acts shall be an event of "cause" as used below. Further,
this Agreement is terminable with respect to a particular Fund only upon mutual
agreement of the parties hereto; upon 180 days' written notice by the Trust
after the initial term hereof but only in connection with the reorganization of
the Funds into another registered management investment company; or for "cause"
(as defined below) by the party alleging "cause," on not less than 60 days'
notice by the Trust's Board of Trustees or by BISYS.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, acts of negligence by BISYS determined
by the Trustees to be material, or reckless disregard on the part of the party
to be terminated with respect to its obligations and duties set forth herein;
(b) a final, unappealable judicial, regulatory or administrative ruling or order
in which the party to be terminated has been found guilty of criminal or
unethical behavior in the conduct of its business; (c) financial difficulties on
the part of the party to be terminated which are evidenced by the authorization
or commencement of, or involvement by way of pleading, answer, consent, or
acquiescence in, a voluntary or involuntary case under Title 11 of the United
States Code, as from time to time is in effect, or any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors; or (d) any circumstance which substantially impairs the performance
of the obligations and duties as contemplated herein of the party to be
terminated.
Section 6. UNCONTROLLABLE EVENTS. BISYS assumes no responsibility
hereunder, and shall not be liable, for any damage, loss of data, delay or any
other loss whatsoever caused by events beyond its reasonable control.
Section 7. LEGAL ADVICE. BISYS shall notify the Trust at any time
BISYS believes that it is in need of the advice of counsel (other than counsel
in the regular employ of BISYS or any affiliated companies) with regard to
BISYS' responsibilities and duties pursuant to this Agreement; and after so
notifying the Trust, BISYS, at its discretion, shall be entitled to seek,
receive and act upon advice of legal counsel of its choosing, such advice to be
at the expense of the Trust or Funds unless relating to a matter involving
BISYS' willful misfeasance, bad faith, negligence or reckless disregard with
respect to BISYS' responsibilities and duties hereunder and BISYS shall in no
event be liable to the Trust
- 3 -
<PAGE> 5
or any Fund or any shareholder or beneficial owner of the Trust for any action
reasonably taken pursuant to such advice.
Section 8. INSTRUCTIONS. Whenever BISYS is requested or authorized to
take action hereunder pursuant to instructions from a shareholder or a properly
authorized agent of a shareholder ("shareholder's agent"), concerning an account
in a Fund, BISYS shall be entitled to rely upon any certificate, letter or other
instrument or communication, whether in writing, by electronic or telephone
transmission, believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the Trust or by
the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Trust or
any other person authorized by the Trust's Board of Trustees or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statements of Additional
Information of the Trust relating to the Funds to the extent that such services
are described therein unless BISYS receives written instructions to the contrary
in a timely manner from the Trust.
Section 9. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION. BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Trust agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or nonactions with respect to the
performance of services under this Agreement or based, if applicable, upon
reasonable reliance on information, records, instructions or requests given or
made to BISYS by the Trust, the investment adviser and on any records provided
by any fund accountant or custodian thereof; provided that this indemnification
shall not apply to actions or omissions of BISYS in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Trust written notice of and reasonable opportunity to defend against said
claim in its own name or in the name of BISYS.
- 4 -
<PAGE> 6
Section 10. RECORD RETENTION AND CONFIDENTIALITY. BISYS shall keep and
maintain on behalf of the Trust all books and records which the Trust or BISYS
is, or may be, required to keep and maintain pursuant to any applicable
statutes, rules and regulations, including without limitation Rules 31a-1 and
31a-2 under the Investment Company Act of 1940, as amended (the "1940 Act"),
relating to the maintenance of books and records in connection with the services
to be provided hereunder. BISYS further agrees that all such books and records
shall be the property of the Trust and to make such books and records available
for inspection by the Trust or by the Securities and Exchange Commission (the
"Commission") at reasonable times and otherwise to keep confidential all books
and records and other information relative to the Trust and its shareholders;
except when requested to divulge such information by duly-constituted
authorities or court process, or requested by a shareholder, or shareholder's
agent, with respect to information concerning an account as to which such
shareholder has either a legal or beneficial interest or when requested by the
Trust, the shareholder, or shareholder's agent, or the dealer of record as to
such account.
Section 11. REPORTS. BISYS will furnish to the Trust and to its
properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Trust in writing, such reports at such times as are prescribed in Schedule D
attached hereto, or as subsequently agreed upon by the parties pursuant to an
amendment to Schedule D. The Trust agrees to examine each such report or copy
promptly and will report or cause to be reported any errors or discrepancies
therein no later than three business days from the receipt thereof. In the event
that errors or discrepancies, except such errors and discrepancies as may not
reasonably be expected to be discovered by the recipient within ten days after
conducting a diligent examination, are not so reported within the aforesaid
period of time, a report will for all purposes be accepted by and binding upon
the Trust and any other recipient, and, except as provided in Section 9 hereof,
BISYS shall have no liability for errors or discrepancies therein and shall have
no further responsibility with respect to such report except to perform
reasonable corrections of such errors and discrepancies within a reasonable time
after requested to do so by the Trust.
Section 12. RIGHTS OF OWNERSHIP. All computer programs and procedures
developed to perform services required to be provided by BISYS under this
Agreement are the property of BISYS. All records and other data except such
computer programs and procedures are the exclusive property of the Trust and all
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
Section 13. RETURN OF RECORDS. BISYS may at its option at any
time, and shall promptly upon the Trust's demand, turn over to the Trust
- 5 -
<PAGE> 7
and cease to retain BISYS' files, records and documents created and maintained
by BISYS pursuant to this Agreement; provided, however, that to the extent
needed by BISYS in the performance of its services or for its legal protection,
BISYS may retain copies of such files, records and documents at BISYS' own
expense. If not so turned over to the Trust, such documents and records will be
retained by BISYS for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
Section 14. BANK ACCOUNTS. The Trust and the Funds shall establish and
maintain such bank accounts with such bank or banks as are selected by the
Trust, as are necessary in order that BISYS may perform the services required to
be performed hereunder. To the extent that the performance of such services
shall require BISYS directly to disburse amounts for payment of dividends,
redemption proceeds or other purposes, the Trust and Funds shall provide such
bank or banks with all instructions and authorizations necessary for BISYS to
effect such disbursements.
Section 15. REPRESENTATIONS OF THE TRUST. The Trust certifies to BISYS
that: (a) as of the close of business on the Effective Date, each Fund which is
in existence as of the Effective Date has authorized unlimited shares, and (b)
by virtue of its Declaration of Trust, shares of each Fund which are redeemed by
the Trust may be sold by the Trust from its treasury, and (c) this Agreement has
been duly authorized by the Trust and, when executed and delivered by the Trust,
will constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
Section 16. REPRESENTATIONS OF BISYS. BISYS represents and warrants
that: (a) BISYS has been in, and shall continue to be in, substantial compliance
with all provisions of law, including Section 17A(c) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), required in connection with the
performance of its duties under this Agreement; and (b) the various procedures
and systems which BISYS has implemented with regard to safekeeping from loss or
damage attributable to fire, theft, or any other cause of the blank checks,
records, and other data of the Trust and BISYS' records, data, equipment,
facilities and other property used in the performance of its obligations
hereunder are adequate and that it will make such changes therein from time to
time as are required for the secure performance of its obligations hereunder.
Section 17. INSURANCE. BISYS shall notify the Trust should its
insurance coverage with respect to professional liability or errors and
omissions coverage be cancelled or reduced. Such notification shall include the
date of change and the reasons therefor. BISYS shall notify the Trust of any
material claims against it with
- 6 -
<PAGE> 8
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Trust from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
Section 18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the
state in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments thereto;
2. Certified copies of resolutions of the Board of
Trustees covering the following matters:
a. Approval of this Agreement and authorization
of a specified officer of the Trust to execute
and deliver this Agreement and authorization
of specified officers of the Trust to instruct
BISYS hereunder; and
b. Authorization of BISYS to act as Transfer
Agent for the Trust on behalf of the Funds.
(c) A list of all officers of the Trust, together with
specimen signatures of those officers, who are authorized
to instruct BISYS in all matters.
(d) Two copies of the following (if such documents are
employed by the Trust):
1. Prospectuses and Statements of Additional
Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the
Trust authorized, issued, and outstanding as of the
Effective Date of BISYS' appointment as Transfer Agent
(or as of the date on which BISYS' services are
commenced, whichever is the later date) and as to receipt
of full consideration by the Trust for all shares
outstanding, such statement to be certified by the
Treasurer of the Trust.
- 7 -
<PAGE> 9
Section 19. INFORMATION FURNISHED BY BISYS. BISYS has furnished to
the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' Bylaws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the
following matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver
this Agreement;
2. Authorization of BISYS to act as Transfer Agent for
the Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with
the Commission pursuant to Rule 17Ad-13 of the Exchange Act.
Section 20. AMENDMENTS TO DOCUMENTS. The Trust shall furnish BISYS
written copies of any amendments to, or changes in, any of the items referred to
in Section 18 hereof forthwith upon such amendments or changes becoming
effective. In addition, the Trust agrees that no amendments will be made to the
Prospectuses or Statement of Additional Information of the Trust which might
have the effect of changing the procedures employed by BISYS in providing the
services agreed to hereunder or which amendment might affect the duties of BISYS
hereunder unless the Trust first obtains BISYS' approval of such amendments or
changes.
Section 21. RELIANCE ON AMENDMENTS. BISYS may rely on any amendments
to or changes in any of the documents and other items to be provided by the
Trust pursuant to Sections 18 and 20 of this Agreement and the Trust hereby
indemnifies and holds harmless BISYS from and against any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses of every nature and character which may
result from actions or omissions on the part of BISYS in reasonable reliance
upon such amendments and/or changes. Although BISYS is authorized to rely on the
above-mentioned amendments to and changes in the documents and other items to be
provided pursuant to Sections 18 and 20 hereof, BISYS shall be under no duty to
comply with or take any action as a result of any of such amendments or changes
unless the Trust first obtains BISYS' written consent to and approval of such
amendments or changes.
Section 22. COMPLIANCE WITH LAW. Except for the obligations of BISYS
set forth in Section 10 hereof, the Trust assumes full responsibility for the
preparation, contents and distribution of each prospectus of the Trust as to
compliance with all applicable requirements of the Securities Act of 1933, as
amended (the "1933 Act"), the 1940 Act and any other laws, rules and regulations
of
- 8 -
<PAGE> 10
governmental authorities having jurisdiction. BISYS shall have no obligation to
take cognizance of any laws relating to the sale of the Trust's shares. The
Trust represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the 1933 Act and the 1940
Act has been declared or becomes effective.
Section 23. NOTICES. Any notice provided hereunder shall be
sufficiently given when sent by registered or certified mail to the party
required to be served with such notice, at the following address: 3435 Stelzer
Road, Columbus, Ohio 43219, or at such other address as such party may from time
to time specify in writing to the other party pursuant to this Section.
Section 24. HEADINGS. Paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or
interpret this Agreement.
Section 25. ASSIGNMENT. This Agreement and the rights and duties
hereunder shall not be assignable by either of the parties hereto
except by the specific written consent of the other party. This
Section 25 shall not limit or in any way affect BISYS' right to
appoint a Sub-transfer Agent pursuant to Section 1 hereof.
Section 26.GOVERNING LAW. This Agreement shall be governed by and
provisions shall be construed in accordance with the laws of the
State of Ohio.
Sectin 27. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
The Sessions Group is a business trust organized under Chapter 1746, Ohio
Revised Code and under a Declaration of Trust, to which reference is hereby made
and a copy of which is on file at the Office of the Secretary of State of Ohio
as required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The Sessions Group" entered into in the name or on
behalf thereof by any of the Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or shareholders of the Trust personally,
but bind only the assets of the Trust, as set forth in Section 1746.13(A), Ohio
Revised Code, and all persons dealing with any of the Funds of the Trust must
look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
BISYS FUND SERVICES, INC. THE SESSIONS GROUP
By /s/ J. David Huber By /s/ Walter B. Grimm
- --------------------------------- ----------------------------
(name) (title) Walter B. Grimm, President
- 9 -
<PAGE> 11
Dated: June 30, 1997
SCHEDULE A
TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN
THE SESSIONS GROUP
AND
BISYS FUND SERVICES, INC.
JULY 9, 1996
Name of Fund Date
------------ ----
The KeyPremier Prime Money Market Fund July 9, 1996
and The KeyPremier Pennsylvania Municipal
Bond Fund
The KeyPremier Established Growth Fund October 30, 1996
and The KeyPremier Intermediate Term
Income Fund
The KeyPremier Aggressive Growth Fund January 29, 1997
The KeyPremier U.S. Treasury Obligations
Money Market Fund and The KeyPremier
Limited Duration Government Securities Fund June 30, 1997
THE SESSIONS GROUP
By /s/ Walter B. Grimm
------------------------------------
Walter B. Grimm, President
BISYS FUND SERVICES, INC.
By /s/ J. David Huber
------------------------------------
J. David Huber, President
- 10 -
<PAGE> 12
SCHEDULE B
----------
TRANSFER AGENCY SERVICES
------------------------
1. Shareholder Transactions
------------------------
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identifications numbers and wire
instructions.
c. Issue confirmations in compliance with Rule 10 under the
Exchange Act.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares through dividend reinvestment.
2. Shareholder Information Services
--------------------------------
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through
duplicate or special order statements upon request.
c. Provide mailing labels for distribution of financial
reports, prospectuses, proxy statements, or marketing
material to current shareholders.
3. Compliance Reporting
--------------------
a. Provide reports to the Securities and Exchange
Commission, the National Association of Securities
Dealers and the States in which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue
Service forms for corresponding Fund and shareholder
income and capital gains.
c. Issue tax withholding reports to the Internal Revenue
Service.
- 11 -
<PAGE> 13
4. Dealer/Load Processing (if applicable)
--------------------------------------
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchases of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and
provide for payment of commissions on direct shareholder
purchases in a load Fund.
5. Shareholder Account Maintenance
-------------------------------
a. Maintain all shareholder records for each account in the
Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each
shareholder.
- 12 -
<PAGE> 14
Date: July 9, 1996
SCHEDULE C
----------
Fees
----
Transfer Agent:
---------------
Annual fees per fund:
- ---------------------
Daily dividend fund base fee $ 25 per shareholder
Variable NAV fund fee $ 23 per shareholder
Annual Minimums per fund: $20,000
Multiple classes of shares:
- ---------------------------
Classes of shares which have different net asset values or pay different daily
dividends will be treated as separate classes, and the fee schedule above,
including the appropriate minimums, will be charged for each separate class.
Additional services:
- --------------------
Additional services such as IRA processing are subject to additional fees which
will be quoted upon request. Programming costs or data base management fees for
special reports or specialized processing will be quoted upon request.
Out of pocket charges:
- ----------------------
Out-of-pocket costs, including postage, Tymnet charges, statement/confirm paper
and forms, and microfiche, will be added to the transfer agent fees.
THE SESSIONS GROUP
By /s/ Walter B. Grimm
---------------------------
Walter B. Grimm, President
BISYS FUND SERVICES, INC.
By /s/ J. David Huber
---------------------------
J. David Huber, President
- 13 -
<PAGE> 15
SCHEDULE D
----------
REPORTS
-------
I. Daily Shareholder Activity Journal
II. Daily Fund Activity Summary Report
A. Beginning Balance
B. Dealer Transactions
C. Shareholder Transactions
D. Reinvested Dividends
E. Exchanges
F. Adjustments
G. Ending Balance
III. Daily Wire and Check Registers
IV. Monthly Dealer Processing Reports
V. Monthly Dividend Reports
VI. Sales Data Reports for Blue Sky Registration
VII. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Exchange Act.
- 14 -
<PAGE> 1
EXHIBIT (11)(a)
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees of
The Sessions Group
We consent to the use of report dated August 26, 1996 included in post-effective
amendment No. 37 to the Registration Statement on Form N-1A of The Sessions
Group and referenced in Part C (Item 24) of this post-effective amendment; and
to the reference to our firm under the headings "Auditors" in the Statement of
Additional Information included in this post-effective amendment and "Financial
Highlights" included in post-effective amendment No. 37 to the Registration
Statement on Form N-1A of The Sessions Group and referenced in Part C (Item 24)
of this post-effective amendment.
KPMG PEAT MARWICK LLP
Columbus, Ohio
July 28, 1997
<PAGE> 1
<TABLE>
<CAPTION>
THE SESSIONS
KEY PREMIER FUNDS
EXHIBIT 16
TOTAL RETURN
AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
WITH SALES CHARGE OF: 0.00%
------------------------------------------------------------------
<S> <C> <C>
T = (ERV/P)*1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
N = NUMBER OF DAYS
<CAPTION>
<S> <C> <C> <C>
EXAMPLE:
SINCE INCEPTION: ( 07/01/94 TO 05/31/97):
( 1,714.60/1,000*(1/(1066 /365))-1) = 20.28%
ONE YEAR: ( 06/01/96 TO 05/31/97):
( 1,082.00/1,000) - 1 = 8.20%
TWO YEAR: ( 06/01/95 TO 05/31/97):
( 1,476.01/1,000*(1/( 730 /365))-1) = 21.49%
<CAPTION>
<S> <C> <C>
AGGREGATE TOTAL RETURN
WITH SALES CHARGE OF: 0.00%
------------------------------------------------------------------
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: ( 01/01/97 TO 05/31/97):
1,063.10/1,000) - 1 = 6.31%
QUARTERLY: ( 03/01/97 TO 05/31/97):
1,036.10/1,000) - 1 = 3.61%
MONTHLY: ( 05/01/97 TO 05/31/97):
1,116.10/1,000) - 1 = 11.61%
SIX MONTH: ( 12/01/96 TO 05/31/97):
1,076.80/1,000) - 1 = 7.68%
SINCE INCEPTION: ( 07/01/94 TO 05/31/94):
1,714.60/1,000) - 1 = 71.46%
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
THE SESSIONS
KEY PREMIER FUNDS
EXHIBIT 16
TOTAL RETURN
AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
WITH SALES CHARGE OF: 4.50%
-----------------------------------------------------------
<S> <C>
T = (ERV/P)*1/N - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
N = NUMBER OF DAYS
EXAMPLE:
SINCE INCEPTION: ( 07/01/94 05/31/97):
( 1,638.23/1,000*(1/( 1066 /365))-1) = 18.41%
ONE YEAR: ( 06/01/96 TO 05/31/97):
( 1,032.90/1,000) - 1 = 3.29%
TWO YEAR: ( 06/01/95 TO 05/31/97):
( 1,409.75/1,000*(1/( 730 /365))-1) = 18.73%
|
|
|
|
|
|
AGGREGATE TOTAL RETURN
WITH SALES CHARGE OF: 4.50%
-----------------------------------------------------------
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END
OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE
BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
YEAR TO DATE: ( 01/01/97 TO 05/31/97):
1,015.10/1,000) - 1 = 1.51%
QUARTERLY: ( 03/01/97 TO 5/31/97):
989.00/1,000) - 1 = -1.10%
MONTHLY: ( 05/01/97 TO 5/31/97):
1,066.10/1,000) - 1 = 6.61%
SIX MONTH: ( 12/01/96 TO 05/31/96):
1,027.60/1,000) - 1 = 2.76%
SINCE INCEPTION: ( 07/01/94 TO 5/31/97):
1,638.23/1,000) - 1 = 63.82%
</TABLE>
<PAGE> 1
EXHIBIT (19)(b)
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the caption of "Legal Counsel" included in or made a part of the
Registration Statement on Form N-1A, File No. 33-21489, filed under the
Securities Act of 1933, as amended, of The Sessions Group.
BAKER & HOSTETLER LLP
Columbus, Ohio
July 30, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832403
<NAME> THE SESSIONS GROUP
<SERIES>
<NUMBER> 15
<NAME> THE KEYPREMIER AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JAN-31-1997
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 70,132,097
<INVESTMENTS-AT-VALUE> 102,838,512
<RECEIVABLES> 63,423
<ASSETS-OTHER> 10,271
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 102,912,206
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 79,874
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,364,506
<SHARES-COMMON-STOCK> 10,284,001
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,791
<ACCUMULATED-NET-GAINS> 764,203
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32,706,415
<NET-ASSETS> 102,832,332
<DIVIDEND-INCOME> 262,653
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 185,890
<NET-INVESTMENT-INCOME> 76,763
<REALIZED-GAINS-CURRENT> 764,203
<APPREC-INCREASE-CURRENT> 157,416
<NET-CHANGE-FROM-OPS> 998,382
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (76,763)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (2,791)
<NUMBER-OF-SHARES-SOLD> 10,684,331
<NUMBER-OF-SHARES-REDEEMED> 400,443
<SHARES-REINVESTED> 113
<NET-CHANGE-IN-ASSETS> 102,832,332
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 305,187
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 412,277
<AVERAGE-NET-ASSETS> 93,607,773
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> .061
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
